Nilesh Steel & Alloys Pvt Ltd., Jalna V. ACIT, Aurangabad

ITA 1590/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0836 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MASAR AKRAM
• Keywords: Reopening of assessment; Rejection of books of accounts; Unexplained investment; Search and seizure; Opportunity of being heard; Additional evidence; Retraction
• Section: 69C; 143(3); 153A; 260A; 147; 145; 132; 144

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.1636 & 1637/PN/2012 !$ $ / ASSESSMENT YEARS : 2004-05 & 2009-10 ACIT, CIRCLE-1, AURANGABAD . / APPELLANT V/S M/S. NILESH STEEL & ALLOYS PVT. LTD. P.NO.D-69, ADDL MIDC, JALNA 431 203 PAN NO. AABCN4686K . / RESPONDENT . / ITA NOS.1589 & 1590/PN/2012 !$ $ / ASSESSMENT YEARS : 2004-05 & 2009-10 M/S. NILESH STEEL & ALLOYS PVT. LTD. P.NO.D-69, ADDL MIDC, JALNA 431 203 PAN NO. AABCN4686K . / RESPONDENT V/S ACIT, CIRCLE-1, AURANGABAD . / APPELLANT / ASSESSEE BY : SHRI S.N. PURANIK / RESPONDENT BY : SHRI MASAR AKRAM / ORDER PER BENCH : ITA NOS.1636 TO 1637/PN/2012 FILED BY THE REVENUE AND I TA NOS.1589 TO 1590/PN/2012 FILED BY THE ASSESSEE ARE CROS S APPEALS AND ARE DIRECTED AGAINST THE SEPARATE ORDER DATED 28-05-201 2 OF THE / DATE OF HEARING :16.11.2015 / DATE OF PRONOUNCEMENT:30.11.2015 2 ITA NO.1636 & 1637, 1589 &1590/PN/2012 CIT(A) AURANGABAD RELATING TO ASSESSMENT YEAR 2004-05 A ND 2009- 10 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE BOTH TH E CROSS APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.1637/PN/2012 (BY REVENUE) (A.Y. 2009-10) : ITA NO.1590/PN/2012 (BY ASSESSEE) (A.Y. 2009-10) : 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ENGAGED IN THE MANUFACTURE OF MS IN GOTS / BILLETS. THE ASSESSEE HAD FURNISHED RETURN OF INCOME DEC LARING TOTAL INCOME OF RS.32,14,410/- ON 24.09.2009. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF TH E ACT WAS ISSUED TO THE ASSESSEE. FURTHER, THE CASE WAS REFERRED SEEKING DIRECTIONS UNDER SECTION 144A OF THE ACT AND IN RESPONSE TO WHICH, THE JCIT ISSUED SPECIFIC WRITTEN DIRECTIONS VIDE LETTER DATED 14.12.2011. THE ASSESSING OFFICER RECEIVED INFORMATION FROM TH E OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD VIDE LETTER DATED 29.03.2010 THAT THE ASSESS EE HAD INDULGED IN SUPPRESSION OF PRODUCTION AND CLANDESTINE REMOV AL OF FINISHED PRODUCTS WITHOUT PAYMENT OF EXCISE DUTY. THE ADJUDICATION ORDER OF CCE, AURANGABAD QUANTIFYING THE VALU E OF SUPPRESSED PRODUCTION WAS ALSO AVAILABLE WITH THE ASSESS ING OFFICER. IN VIEW THEREOF, THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE AMOUNT OF INCOME ESCAPING ASSESSMENT SHOULD NOT BE ADDED IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER CONSIDER ED THE MANUFACTURING PROCESS OF THE ASSESSEE IN DETAIL AND NOTE D THAT THE ELECTRICITY WAS ONE OF THE MAJOR COST INPUT IN THE MANUFAC TURE OF INGOTS / BILLETS AND ALSO ACCOUNTS FOR MAJOR SHARE OF EXPE NSES. AFTER GOING THROUGH THE INFORMATION FURNISHED BY THE ASSES SEE I.E. 3 ITA NO.1636 & 1637, 1589 &1590/PN/2012 THE FIGURES OF INPUT AND OUTPUT RATIO AND MONTH-WISE ELECT RICITY CONSUMPTION / PRODUCTION OF MT STEEL BARS FURNISHED BY TH E ASSESSEE IN RESPONSE TO THE QUERY RAISED BY THE ASSES SING OFFICER, THE ASSESSING OFFICER OBSERVED THAT THE MINIMUM ELECTRICITY CONSUMPTION COMES TO 1124 UNITS PER MT AND MAXIMUM ELEC TRICITY CONSUMPTION COMES TO 1411 UNITS PER MT. AS PER THE AS SESSING OFFICER, THERE WAS DEVIATION IN ELECTRICITY UNIT CONSUMPTION PE R MT I.E. 287 UNITS WHICH WAS UNREASONABLE AND UNACCEPTABLE. BE CAUSE OF THE HUGE DEVIATION IN THE ELECTRICITY CONSUMPTION, THE PRESUMPTION OF THE ASSESSING OFFICER WAS THAT THE PRODUCT ION DISCLOSED IN THE BOOKS WAS SUBSTANTIALLY SUPPRESSED. TH E ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY AD DITION IN HIS HANDS SHOULD NOT BE MADE. IN VIEW OF SIMILAR ADDITION BE ING MADE IN OTHER STEEL CASES AND ALSO BECAUSE OF THE VARIAT ION IN ELECTRICITY CONSUMPTION DURING THE YEAR, THE ASSESSING OFFIC ER HELD THAT THE ASSESSEE HAS FAILED TO JUSTIFY THE EXCESS ELEC TRICITY CONSUMPTION AND THE WIDE VARIATIONS FROM MONTH TO MONTH. THE ASSESSING OFFICER ACCORDINGLY, COMPUTED THE ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED PRODUCTION A T RS.4,64,65,600/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. FURTHER, ADDITION OF RS.58,12,720/- WAS MADE ON ACCOUNT OF WORKING CAPITAL REQUIRED FOR THE UNRECORDED PRODUCTION . 3. IN APPEAL THE LD.CIT(A) OBSERVED THAT THE ISSUES RAIS ED IN THE PRESENT APPEAL ARE COMMON TO THE ISSUES RAISED IN THE C ASE OF OTHER MANUFACTURERS OF MS INGOTS/BILLETS. THE CIT(A) ACCORDINGLY H ELD AS UNDER : 4 ITA NO.1636 & 1637, 1589 &1590/PN/2012 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE RIVAL CONTENTIONS RAISED BY THE APPELLANT IN PARA-7.1 ABO VE AND RAISED BY THE A.O. MENTIONED IN PARA-5 ABOVE. ON PERUSAL OF THE SAME, IT HAS BEEN OBSERVED AS UNDER (1) THE APPELLANT HAS CLANDESTINELY REMOVED MS INGO TS/BILLETS AND HAS EVADED EXCISE DUTY AND HAS NOT ACCOUNTED FOR THE SA ID SALE OF MS INGOTS/BILLETS AS IS EVIDENT FROM THE INVESTIGATION AND ENQUIRIES MADE BY DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE (DG CEI). (2) THE APPELLANT HAS ALSO ADMITTED THE SAID CLANDE STINE REMOVAL OF GOODS IN THE STATEMENT RECORDED IN INVESTIGATION BY DGCEI AND ALSO BEFORE THE SETTLEMENT COMMISSION OF CUSTOMS AND EXC ISE DEPARTMENT AND HAS PAID EXCISE DUTY AND THE SETTLEMENT COMMISS ION HAS LEVIED TOKEN PENALTY IN RESPECT OF THE SAID CLANDESTINE SA LE OUT OF THE BOOKS. (3) THE COMMISSIONER OF EXCISE IN HIS ORDER AND THE A.O. HAVE REASONABLY ESTIMATED, AFTER CONSIDERING VARIOUS REP ORTS AND STUDIES IN RESPECT OF ELECTRICITY CONSUMPTION REQUIRED FOR PRO DUCING MS INGOTS/BILLETS, AT 1026 ELECTRICITY UNITS PER METRI C TON. (4) THE A.O. HAS ALSO POINTED OUT THAT THERE IS SUB STANTIAL VARIATION IN VARIOUS MONTHS AND IN RESPECT OF VARIOUS MANUFACTUR ERS OF MS INGOTS/BILLETS IN ELECTRICITY CONSUMPTION REQUIRED FOR THE QUANTUM OF GOODS PRODUCED, WHICH IS ABNORMAL. THE A.O. HAS ALSO NOTE D SUBSTANTIAL VARIATION IN YIELD AND SHORTAGES DURING VARIOUS MON THS IN THE YEARS UNDER APPEAL. (5) THE DECISION IN THE CASE OF ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TTJ 627 (PUNE ) HAS BEEN RELIED ON BY THE APPELLANT. THE FACTS BEFORE THE HON'BLE ITAT WHILE DECIDING THE SAID CASES WERE 'AFFERENT TO SOME EXTENT. IN THE SA ID CASES, CLANDESTINE REMOVAL OF GOODS BY THE APPELLANT AND THE ADMISSION OF THE APPELLANT ABOUT THE SAID FACT OF UNACCOUNTED TRANSACTIONS WAS NOT BEFORE THE HON'BLE ITAT. FURTHER, THE DETAILED ORDER OF THE CO MMISSIONER OF EXCISE AND THE OTHER FACTS BROUGHT ON RECORD BY THE A.O. I N THE ASSESSMENT ORDER WAS NOT BEFORE THE HON'BLE ITAT, PUNE WHILE D ECIDING THE ABOVE REFERRED CASES. FURTHER IN THE SAID CASES ACTION U/ S 132 WAS CONDUCTED AND THE APPELLANT WAS ASSESSED U/S 153A OF THE ACT AND HENCE ADDITION IN RESPECT OF COMPLETED ASSESSMENTS IN SUCH CASES C OULD BE MADE ONLY ON THE BASIS OF MATERIAL FOUND IN SEARCH ACTION. IN VIEW OF THE ABOVE FACTS, THE RELIANCE PLACED BY THE APPELLANT ON THE ABOVE R EFERRED DECISION IS MISPLACED. FURTHER, THE OTHER DECISIONS RELIED ON B Y THE APPELLANT IN SUPPORT OF ITS ABOVE CONTENTION ARE ALSO DISTINGUIS HABLE ON FACTS AS IN THE SAID CASES THE CLANDESTINE REMOVAL OF GOODS WAS NOT PROVED AND ADMITTED AS IN THE CASE OF THE APPELLANT. FURTHER, THE REASONS FOR ESTIMATING THE PRODUCTION ON THE BASIS OF ELECTRICI TY UNITS CONSUMED WERE NOT PRESENT IN THE SAID CASES. (6) THE CONTENTION OF THE APPELLANT THAT THE BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND AUDITED CANNOT BE ACCEPTED IN VIEW OF THE CLANDESTINE REMOVAL OF GOODS AND THE UNACCOUNTED PU RCHASES AND SALES ADMITTED BY THE APPELLANT AND ALSO IN VIEW OF VARIO US REASONS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. (7) THE APPELLANT HAS NOT MAINTAINED INFORMATION IN FORM NO.G-7, WHICH IS COMPULSORY, SHOWING DAILY CONSUMPTION OF POWER IN U NITS. (8) THE FACTS OF THE DECISIONS RELIED ON BY THE APP ELLANT ARE DIFFERENT AND RATIO LAID DOWN BY THE SAID DECISIONS IN THE CASE O F ACIT VS. SRJ PEETY 5 ITA NO.1636 & 1637, 1589 &1590/PN/2012 STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. ( 2011) 137 TTJ 627 (PUNE) IN RESPECT OF GROSS PROFIT ADDITION CAN ONLY BE APPLIED WITH SOME ALTERATION CONSIDERING THE FACT OF THE CASE OF THE APPELLANT. (9) THE VARIOUS MANUFACTURERS OF MS INGOTS/BILLETS HAVE FILED PETITION FOR STAY OF RECOVERY OF EXCISE ON ALLEGED UNDISCLOSED P RODUCTION SOLD BEFORE HON'BLE CESTAT. THE HON'BLE APPELLATE TRIBUNAL, WES T ZONAL BENCH HAS PASSED ORDER DATED 01/03/2011 ON THE SAID STAY PETI TION. IN THIS ORDER, THE HON'BLE APPELLATE TRIBUNAL HAS OBSERVED THAT THE FA CTS OF THE CASE INCLUDING R.A. CASTINGS RELIED ON BY THE APPLICANTS CANNOT BE FOLLOWED AS PRECEDENT AS IN THE SAID CASE NO CORROBORATIVE EVID ENCE WAS FOUND BY THE BENCH. THE HON'BLE APPELLATE TRIBUNAL HAS FURTHER O BSERVED THAT THE CRUCIAL EVIDENTIARY FINDINGS HAVE BEEN NOTED IN THE CASES OF THE APPLICANTS INCLUDING THE APPELLANT. THE SAID FINDINGS IN THE C ASE OF - THE APPELLANT ARE AS UNDER '(A) COST OF ELECTRICITY AND RAW MATERIAL SHOWN TO BE 125% OF SELLING PRICE OF INGOTS. (B) SANCTIONED AUXILIARY LOAD WAS ONLY 7. 8% OF THE TOTAL SANCTIONED LOAD BUT CLAIMED TO BE 25% BY APPELLANT IN STATEMEN T; (C) COMMISSIONER OF INCOME TAX (APPEALS)' CONFIRMED NET ADDITION OF INCOME OF RS.23.5 LAKHS ON ACCOUNT OF SUPPRESSED PRODUCTION OF INGOTS FOR ASSESSMENT YEARS 2001 -02 TO 2006-07. (D) CLANDESTINE CLEARANCE FOR SPECIFIC CASE ADMITTE D BEFORE SETTLEMENT COMMISSION. THE HON'BLE CESTAT HAS ALSO TAKEN SUPPORT OF DECISI ON OF HON'BLE MADRAS HIGH COURT IN THE CASE OF ALAGAPPA CEMENT PV T. LTD. VS. CEGAT & CCE, TRICHY (2010-TIOL-770-HC-MAD-CX) AND H ELD THAT THE REVENUE CANNOT BE FAULTED FOR DEMANDING DUTY ON THE STEEL INGOTS WHICH COULD HAVE BEEN MANUFACTURED BY CONSUMING EXC ESS QUANTITY OF ELECTRICITY. THE HON'BLE APPELLATE TRIBUNAL HAS HELD IN CONCLUDING PARA-22 THAT 'NONE OF THE APPELLANTS EXCEPT M/S SHR EE STEEL CASTINGS HAS MADE OUT THE PRIMA-FACIE CASE ON MERITS. THEY C ANNOT RAISE A VALID PLEA OF LIMITATION EITHER. SUPPRESSION OF REL EVANT FACTS IS INBUILT IN CLANDESTINE PRODUCTION OF EXCISABLE GOODS AND ITS R EMOVAL WITHOUT PAYMENT OF DUTY, AND THE SAME, PRIMA-FACIE, STANDS ESTABLISHED IN THESE CASES. THE DECISIONS RELIED ON BY THE APPELL ANT IN SUPPORT OF THE CONTENTION THAT NO ADDITION CAN BE MADE ON THE BASIS OF ELECTRICITY CONSUMPTION ARE DISTINGUISHABLE ON FACTS OF THE CAS E OF THE APPELLANT AND THE FACTS IN THE SAID DECISIONS. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 6 ITA NO.1636 & 1637, 1589 &1590/PN/2012 GROUNDS BY REVENUE : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PROD UCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGE D IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAXES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT TH AT MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE P RODUCTION SHOWN IN THE BOOKS OF ACCOUNTS? 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THA T THE WORKING CAPITAL IS REQUIRED FOR PURCHASE OF RAW MATERIAL AND DAY TO DAY ACTIVITIES FOR PRODUCTION OF GOODS EVERY YEAR. 4. THE ORDER OF THE AO BE RESTORED AND THAT OF THE C IT(A) BE VACATED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. GROUNDS BY ASSESSEE : 1. THE ASSESSMENT ORDER PASSED U/S. 143(3) RWS 144A IS BAD IN LAW AND THE SAME MAY PLEASE BE CANCELLED. 2. WITHOUT PREJUDICE TO ABOVE GROUND, DIRECTIONS ISSUE D U/S. 144A BY JOINT COMMISSIONER OF INCOME TAX RANGE 1 ARE BAD I N LAW AS NO OPPORTUNITY OF BEING HEARD WAS GIVEN TO ASSESSEE BEFORE ISSUING DIRECTIONS AND ENTIRE ASSESSMENT ORDER BASED ON SUCH DIREC TIONS MAY PLEASE BE QUASHED. 3. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LOWER AUT HORITIES WERE NOT JUSTIFIED IN REJECTING BOOKS OF ACCOUNTS AND IT IS PRAYED THAT PROFIT ARRIVED FROM AUDITED BOOKS OF ACCOUNTS MAY PLEASE BE A CCEPTED. 4. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LOWER AUT HORITIES WERE NOT JUSTIFIED IN HOLDING THAT THERE IS SUPPRESSED PRODU CTION AND THEY HAVE ERRED IN ESTIMATING SUPPRESSED PRODUCTION BASED ON ELECTRICITY UNITS CONSUMPTION BASIS. 5. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING ASSESSING OFFICER'S ESTIMATE OF ALLEGED SUPPRESSED PRODUCTION WITHOUT ASSESSING OFFICER GRANTING THE COPIES MATERIAL RELIED BY ASSESSING OFFICE R AND OPPORTUNITY TO EXAMINE THE PARTIES. 6. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LEARNED C IT(A) ERRED IN CONFIRMING ADDITION OF RS. 58,12,720/- UNDER THE HEAD GROSS PROFIT ON SUPPRESSED SALES AND THE SAME ADDITION MAY PLEASE BE DELET ED. 7. ASSESSEE DENIES ITS LIABILITY OF INTEREST U/S. 234 ABC O F INCOME TAX ACT AND THE SAME MAY PLEASE BE DELETED. 7 ITA NO.1636 & 1637, 1589 &1590/PN/2012 8. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , MODIFY AND/OR WITHDRAW ANY OF THE GROUND/S DURING THE COURSE OF HEARING AS OCCASION MAY DEMAND. 9. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF TH E COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF BHAGYALAXMI STEEL ALLOY S PVT. LTD. AND VICE-VERSA VIDE ITA NOS.1292/PN/2012 & 1478/PN /2012 FOR A.Y. 2009-10 AND OTHER CONNECTED APPEALS VIDE CONSOLID ATED ORDER DATED 15-07-2015. FURTHER, THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MAHAVIR STEEL RE-ROLLING MILLS VS. ACIT AND VICE-VERSA VIDE ITA NOS. 1072 TO 1076/PN/2012 AND ITA NOS. 1446 TO 1450/PN/2012 ORDER DATED 05-03-2015 HAS ALSO DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE. SINCE THE ADDITION SUSTAIN ED BY THE CIT(A) HAS BEEN DELETED IN ALL THESE CASES, THEREFORE, THE APPEAL FILED BY THE REVENUE HAS TO BE DISMISSED AND THE GROUNDS RA ISED BY THE ASSESSEE IN SO FAR AS SUSTENANCE OF THE ADDITION IS CONCE RNED HAS TO BE ALLOWED. SO FAR AS OTHER LEGAL GROUNDS ARE CONCERNED THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR THE SAME. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND FAIRLY CONCEDED THAT THE ISSUE STANDS DECIDED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE BY THE VARIOUS DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL. 7. AFTER HEARING BOTH THE SIDES, WE FIND THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE TRIBUNAL. WE FIND THE TRIBUNAL IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD.,(SUPRA) AND OTHER CONNECTED APPEALS HAS D ISCUSSED 8 ITA NO.1636 & 1637, 1589 &1590/PN/2012 THE ISSUE AND DECIDE THE SAME IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT SET OF APPEALS RELA TING TO ASSESSMENT YEAR 2009-10 IS IDENTICAL TO THE ISSUE R AISED IN THE EARLIER APPEALS RELATING TO ASSESSMENT YEARS 2006-0 7 TO 2008-09 IN THE CASE OF DIFFERENT ASSESSEES. WE HAVE BY ORDER OF EVEN DATE ALREADY ADJUDICATED THE ISSUE OF ADDITION IN THE HA NDS OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED PRODUCTION/SALES ON THE BASIS OF ERRATIC ELECTRICITY CONSUMPTION. IN THE FACTS RELE VANT TO ASSESSMENT YEAR 2009-10, THE ASSESSEE WAS HELD TO HAVE CLANDES TINELY MANUFACTURED AND CLEARED ITS MATERIAL WITHOUT PAYME NT OF EXCISE DUTY, IN TURN RELYING ON THE INVESTIGATION CONDUCTE D AGAINST THE FURNACE COMPANIES IN THE EARLIER YEARS. THE CCE, A URANGABAD HAD MADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON T HE BASIS OF THE STUDY CONDUCTED BY DR.N.K. BATRA, PROFESSOR, IIT, K ANPUR AND AS PER HIS STUDY REPORT FOR MANUFACTURING ONE MT OF MS ING OT, ELECTRICITY SHOULD BE CONSUMED FROM 555 UNITS TO 1046 UNITS. H OWEVER, THE ASSESSEES WERE SHOWING MORE CONSUMPTION OF ELECTRI CITY FOR PRODUCTION PER MT. THE CCE, AURANGABAD RAISED THE DEMANDS BY CONFIRMING THE ORDER OF ADJUDICATING AUTHORITY. HO WEVER, IN THE CASE OF DIFFERENT ASSESSEES TRIALS / EXPERIMENTS WERE C ONDUCTED IN THE FACTORY OF MOST OF THE APPELLANTS AND ON SUCH EXPER IMENTS / TRIALS, THE CONSUMPTION OF ELECTRICITY WAS FOUND TO BE MORE THAN 1026 UNITS PER MT. IN VIEW THEREOF, THE FACTS OF THE PRESENT CASE ARE AT VARIANCE TO THE FACTS BEFORE THE TRIBUNAL IN ASSESS MENT YEARS 2006- 07 AND 2007-08 WHEREIN THE CASE OF THE EXCISE AUTHO RITY WAS THAT THE CONSUMPTION OF ELECTRICITY WAS NOT IN ACCORDANC E WITH THE REPORT OF DR. BATRA. HOWEVER, THE SAID FACTUAL ASPECT HAS BEEN OVERTURNED BY THE INVESTIGATION CARRIED OUT BY THE EXCISE AUTH ORITY AT THE PREMISES OF THE ASSESSEE ON DIFFERENT DATES AS MENT IONED HEREINABOVE AND THE FINDINGS OF THE AUTHORITY WERE AS UNDER :- SR. NO. APPEAL NO. MANUFACTURER APPELLANT PERIOD OF DISPUTE DUTY AMOUNT AND PENALTY DETAILS OF EXPERIMENT 1. E/86268/2014 SRJ PEETY STEEL PVT. LTD. JANUARY 2008 TO MARCH 2009 RS.12,41,64,392 & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 4.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1496 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 2. E/86151/2014 BHAGYALAXMI STEEL ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.5,91,23,193 & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 25.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1503.5 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 3. E/86275/2014 MAHAVEER STEEL RE- ROLLING MILLS APRIL 2008 - MARCH 2009 RS.79,74,603/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 22.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1209 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 4. E/86152/2014 REGENT STEEL PVT. LTD. FEBRUARY 200 8 TO MARCH 2009 RS.96,27,516/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 19.3.2009 SHOWED 9 ITA NO.1636 & 1637, 1589 &1590/PN/2012 ELECTRICITY CONSUMPTION OF 1199 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 5. E/86348/2014 JAILAXMI CASTING & ALLOYS PVT. LTD. 2008-09, 2009-10 (UP TO JULY 2009) RS.1,92,94,575/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 18.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1147.74 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 6. E/86249/2014 GAJLAXMI STEEL PVT. LTD. FEBRUARY 2 008 TO MARCH 2009 RS.2,76,52,805/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 20.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1433.78 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 7. E/86242/2014 KALIKA STEEL & COMMODITIES PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3,19,92,292/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 25.1.2009 SHOWED ELECTRICITY CONSUMPTION OF 1371.5 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 8. E/86330/2014 META ROLLS & COMMODITIES PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3,26,84,318/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 20.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1251 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 9. E/86220/2014 NILESH STEEL & ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.2,06,54,292/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 22.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1253 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 10. E/86349/2014 OM SAIRAM STEEL & ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3,90,21,947/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION WAS DONE ON 25.3.2009; HOWEVER COPY THEREOF WAS NOT GIVE TO APPELLANT. 11. E/86331/2014 SAPTASHRUNGI ALLOYS (P) LTD. APRIL 2008 TO MARCH 2009 RS.1,61,53,031/- & EQUAL PENALTY NO VERIFICATION OF ELECTRICITY CONSUMPTION WAS DONE DURING THE RELEVANT PERIOD. 10. THE DIVISION BENCH OF CESTAT HAD SET-ASIDE THE ORDER OF THE CCE, AURANGABAD ON ACCOUNT OF ADDITIONS MADE IN THE HANDS OF THE ASSESSEE BECAUSE OF ERRATIC CONSUMPTION OF ELECTRIC ITY. THE RELEVANT FINDING OF THE ORDER OF CESTAT READS AS UN DER :- IN THE IMPUGNED ORDER THE ADJUDICATING AUTHORITY H AS NOT CONSIDERED THE SPECIFIC VERIFICATION CONDUCTED BY THE DEPARTMENTAL OFFICERS, WHO ASCERTAINED THE ACTUAL CONSUMPTION OF ELECTRICITY T O MANUFACTURE OF 1MT OF MS INGOTS IS MORE THAN 1026 UNITS FOR PER MT AS ALL EGED IN THE SCNS, WHEN THE APPELLANTS HAVE SPECIFICALLY TAKEN THIS DE FENSE. IN FACT, THE SPECIFIC INSPECTION/EXPERIMENT WHICH HAS BEEN CONDU CTED TO ASCERTAIN THE ELECTRICITY CONSUMPTION TO MANUFACTURE 1MT OF MS IN GOTS IS VITAL EVIDENCE, WHICH HAS NOT BEEN CONSIDERED BY THE ADJUDICATING A UTHORITY. IF THE PHYSICAL VERIFICATION REPORT CONDUCTED BY THE REVEN UE WOULD HAVE BEEN TAKEN INTO CONSIDERATION BY THE ADJUDICATING AUTHOR ITY, THEN THE 10 ITA NO.1636 & 1637, 1589 &1590/PN/2012 ADJUDICATING AUTHORITY WAS NOT REQUIRED TO CONSIDER THE OTHER EVIDENCES. MOREOVER, ALL THE EVIDENCES RELIED UPON BY THE LD. ADJUDICATING AUTHORITY ARE THEORETICAL AND HAVE BEEN CONSIDERED BY THIS TR IBUNAL IN APPELLANTS OWN CASES FOR THE EARLIER PERIOD; WHEREIN THIS TRIB UNAL RELIED ON THE DECISION OF R.A. CASTING PVT. LTD. VS. CCE, MEERUT REPORTED IN 2009 (273) ELT 674 AND HELD THAT ON THE BASIS OF STUDY REPORT OF DR. N.K. BATRA, THE ELECTRICITY CONSUMPTION CANT BE THE BASIS FOR DEMA NDS. THE ORDER OF THIS TRIBUNAL WAS CHALLENGED BY THE REVENUE BEFORE THE H ONBLE HIGH COURT AND THE HONBLE HIGH COURT OF ALLAHABAD VIDE ORDER DT. 9.9.2010 IN APPEAL NO.67/2009 DISMISSED THE APPEAL FILED BY THE REVENU E, AND AGAINST THE DECISION OF THE HONBLE HIGH COURT, THE REVENUE FIL ED SLP BEFORE THE HONBLE APEX COURT AND THE HONBLE SUPREME COURT AL SO DISMISSED THE SLP VIDE ORDER DT. 31.3.2011. THEREAFTER, THE REVE NUE SOUGHT TO FILE REVIEW PETITION, BUT THE THEN ATTORNEY GENERAL OF I NDIA, THE SHRI GOUTAM VAHANVATI OPINED NOT TO FILE REVIEW PETITION VIDE L ETTER NO.276/417/2010 CX 8A DATED 26.05.2011. THEREFORE, THE RELIANCE ON TH E STUDY ANALYSIS CONDUCTED BY DR. N.K. BATRA, PROFESSOR IIT KANPUR, IS NOT AN EVIDENCE TO ASCERTAIN THE ELECTRICITY CONSUMPTION FOR MANUFACTU RE OF 1MT OF MS INGOTS. 7. IN APPELLANTS OWN CASE FOR THE EARLIER PERIOD ON THE BASIS OF THE EVIDENCE RELIED UPON BY THE ADJUDICATING AUTHORITY, TRIBUNAL CAME TO THE CONCLUSION THAT THE 1026 UNITS OF ELECTRICITY FOR M ANUFACTURE OF 1MT OF MS INGOTS IS NOT CORRECT AND SET ASIDE THE ADJUDICATIO N ORDERS. IN THE CASES IN HAND THERE IS ADDITIONAL EVIDENCE OF SPECIFIC VERIF ICATION/TRIAL CONDUCTED BY THE REVENUE TO ASCERTAIN THE ACTUAL ELECTRICITY CON SUMPTION WHICH WORKS OUT TO MORE THAN 1026 UNITS OF ELECTRICITY CONSUMPT ION PER 1MT OF MS INGOTS. THEREFORE, RELYING ON THE DECISION OF THE EARLIER PERIOD IN APPELLANTS OWN CASES AND THE ADDITIONAL EVIDENCES, COLLECTED BY WAY SPECIFIC VERIFICATION, WE HOLD THAT IMPUGNED ORDERS ARE NOT LEGAL AND PROPER WHEREAS DURING THE IMPUGNED PERIOD, THE PHYSICAL VE RIFICATION WAS CONDUCTED AND THE ELECTRICITY CONSUMPTION FOR MANUF ACTURE OF 1MT OF MS INGOTS WAS FOUND TO BE MORE THAN 1026 UNITS OF ELEC TRICITY. 8. IN THESE CIRCUMSTANCES, WE SET ASIDE THE IMPUGNE D ORDERS AND ALLOW THE APPEALS WITH CONSEQUENTIAL RELIEF AND STA Y APPLICATIONS ARE ALSO DISPOSED OF IN THE ABOVE TERMS. 11. THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTIO N MADE IN THE HANDS OF THE ASSESSEE WAS DELETED BY THE DIVISI ON BENCH OF CESTAT VIDE ORDER DATED 22.10.2014, WHEREIN ON SPEC IFIC INSPECTION / EXPERIMENTS BY THE AUTHORITIES, CONDUC TED TO ASCERTAIN THE ELECTRICITY CONSUMPTION TO MANUFACTURE ONE MT F OUND THAT THE CONSUMPTION OF ELECTRICITY WAS MORE THAN 1026 UNITS PER MT. THE CASE OF THE EXCISE DEPARTMENT WAS THAT 1026 UNITS P ER MT WERE REQUIRED TO MANUFACTURE ONE MT OF MS INGOTS / BILLE TS AND THE ASSESSEE WAS ISSUED SHOW CAUSE NOTICE IN THIS REGAR D. HOWEVER, SINCE THE PHYSICAL VERIFICATION CONDUCTED BY THE EX CISE DEPARTMENT REFLECTED HIGHER CONSUMPTION OF ELECTRICITY, THE TR IBUNAL CAME TO A FINDING THAT IN VIEW OF THE ADDITIONAL EVIDENCES OF SPECIFIC VERIFICATION / TRIAL CONDUCTED BY THE REVENUE TO ASCERTAIN THE A CTUAL ELECTRICITY CONSUMPTION, WHICH WORKED OUT TO MORE THAN 1026 UNI TS PER MT, THERE WAS NO BASIS FOR MAKING ANY ADDITION IN THE H ANDS OF THE ASSESSEE. THE TRIBUNAL ALSO REFERRED TO ITS EARLIE R ORDER IN THE CASE OF DIFFERENT ASSESSEES, WHERE SIMILAR ADDITION WAS DELETED. 12. THE TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDE R IN ITA NOS.284 TO 286/PN/2012 RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT . LTD. VS. ADDL.CIT AND CROSS APPEAL FILED BY THE REVENUE IN I TA NOS.437 TO 439/PN/2012 RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 ALONG WITH OTHER CONNECTED APPEALS WHILE DECIDING T HE ISSUE OF 11 ITA NO.1636 & 1637, 1589 &1590/PN/2012 ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION BECAUS E OF ERRATIC CONSUMPTION OF ELECTRICITY, HELD AS UNDER :- 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGU MENT WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RELIED ON BY BOTH THE PARTIES. 18. BEFORE ADDRESSING THE ISSUE ON MERITS, WE WOULD LIKE TO MAKE A MENTION OF THE PROCEEDINGS BEFORE THE BENCH OF TH E PRESENT CASES LISTED BEFORE US, WHICH WERE MADE VIDE ORDER SHEET ENTRY DATED 07.05.2015. THE PRESENT APPEALS WERE FIXED FOR HEA RING INITIALLY ON 10.03.2015 AND WERE ADJOURNED AT THE REQUEST OF THE SPECIAL AR FOR THE REVENUE AS HE WAS NOT READY TO ARGUE THE APPEAL S. THE REASONS STATED IN THE LETTER DATED 10.03.2015 FOR S EEKING ADJOURNMENT I.E. CONTEMPLATION OF FILING MA AGAINST THE EARLIER ORDERS OF THE TRIBUNAL, WAS REJECTED. THE APPEALS WERE AD JOURNED TO 13.03.2015 AND THEN 05.05.2015 AT THE REQUEST OF TH E SPECIAL AR. ON 05.05.2015, THE COUNSEL FOR THE ASSESSEE OPENED HIS ARGUMENTS WHICH WERE REPLIED TO BY SPECIAL AR FOR THE REVENUE . ON 05.05.2015 ITSELF, THE SPECIAL AR FILED WRITTEN SUB MISSIONS ALONGWITH COMPILATION OF CASE LAWS AND THE MATTER WAS ADJOURN ED TO 07.05.2015 FOR FURTHER HEARING. ON 07.05.2015, THE CASE WAS TAKEN UP IN THE PRE-LUNCH HOUR AND WAS ARGUED AT LENGTH B Y THE SPECIAL AR FOR THE REVENUE. THE COUNSEL FOR THE ASSESSEE STRO NGLY OPPOSED THE SAME ON THE GROUND THAT THE SPECIAL AR FOR THE REVENUE HAD CONCLUDED HIS ARGUMENTS ON EARLIER DATE AND TODAY T HE MATTER WAS FIXED FOR HIS REJOINDER. THE HEARING COULD NOT BE CONCLUDED IN THE PRE-LUNCH HOUR SESSION AND IT WAS DIRECTED THAT THE HEARING WOULD CONTINUE AT 03:00 PM I.E. AFTER THE LUNCH HOUR TO W HICH BOTH THE PARTIES CONSENTED. ON REASSEMBLING OF THE BENCH, T HE SPECIAL AR FOR THE REVENUE FURNISHED LETTER UNDER HIS SIGNATUR E STATING THAT THE PR.CIT, AURANGABAD WAS CONTEMPLATING TO FILE CERTAI N PETITIONS BEFORE THE HONBLE PRESIDENT/VICE PRESIDENT, ITAT, MUMBAI AND THEREFORE THE MATTER SHOULD BE ADJOURNED FOR THREE WEEKS. HOWEVER, THE NATURE AND CONTENTS OF THE PETITION CONTEMPLATE D WAS NOT MADE KNOWN. THE SPECIAL AR FOR THE REVENUE WAS ASKED TO CONTINUE HIS ARGUMENTS BY THE BENCH, BUT HE REFERRED TO HIS ADJO URNMENT LETTER. 19. THE COUNSEL FOR THE ASSESSEE STARTED HIS ARGUME NT. HOWEVER, THE SPECIAL AR FOR THE REVENUE WALKED OFF FROM THE COURT ROOM. THE COUNSEL FOR THE ASSESSEE ALSO FURNISHED WRITTEN REJOINDER IN REPLY TO THE SUBMISSIONS FILED BY THE SPECIAL AR FOR THE REVENUE, PARAWISE WHICH WERE GONE INTO AT LENGTH. THOUGH, IN THE COURSE OF HEARING, THE SPECIAL AR FOR THE REVENUE L EFT THE COURT PROCEEDINGS, ON THE OTHER HAND, SMT. M.S. VERMA, LD . CIT-DR AND SHRI RAJESH DAMOR, LD. ADDL.CIT-DR WERE PRESENT IN THE COURT. THEREAFTER, OTHER CASES WHICH WERE TO BE ARGUED BY THE LD. CIT-DR AND LD. ADDL.CIT-DR WERE TAKEN UP FOR HEARING AND T HE MATTERS IN ITA NOS.125, 127, 430 & 431/PN/2012 ALONG WITH ITA NO.1525/PN/2012, ITA NO.1476/PN/2012, ITA NOS.179 T O 182/PN/2012, ITA NOS.656 TO 659/PN/2012, ITA NO.108 4/PN/2012, ITA NO.1468/PN/2012, ITA NO.1558/PN/2012, ITA NO.1629/PN/2012, ITA NO.1516/PN/2012 AND ITA NO.163 8/PN/2012 WERE HEARD. ALL THE OTHER APPEALS ARE ADJOURNED TO 08.05.2015 AS PART HEARD. 12 ITA NO.1636 & 1637, 1589 &1590/PN/2012 20. ON 08.05.2015, ON CALLING OF THE MATTERS, WE FI ND THAT THE LD. SPECIAL AR IS NOT PRESENT IN THE COURT ROOM AND THE RE IS NO INTIMATION ABOUT HIS ABSENCE IN THE BUNCH OF MATTER S, WHICH ARE LISTED FOR HEARING. THE CIT-DR WAS PRESENT AND WAS ASKED TO EXPLAIN HIS ABSENCE. IN REPLY SHE STATED THAT SHE HAD NO INTIMATION. IN VIEW OF CONTINUED DEFIANCE OF THE LD. SPECIAL AR IN YESTERDAYS HEARING AND HIS NON-APPEARANCE IN TODAYS HEARING, CONDUCT OF THE LD. SPECIAL AR IS TO BE TAKEN NOTE OF. THE CIT-DR WAS INFORMED IN THE BENCH AS TO WHY COSTS SHOULD NOT BE IMPOSED ON THE DEPARTMENT FOR HIS CONTINUED DEFIANCE AND FOR INTER RUPTING PROCEEDINGS OF THE BENCH. THE HEARING IS TO CONTIN UE IN THE LISTED MATTERS AS ANNEXED ON 13.05.2015 AS PART-HEARD. 21. ON 13.05.2005, SHRI J.P. BAIRAGRA WAS PRESENT F OR THE ASSESSEE AND SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-DR & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEP ARTMENT. THE MATTER WAS FINALLY HEARD ON 14.05.2015 WHEN SHRI J. P. BAIRAGRA PRESENT FOR THE ASSESSEE AND SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-DR & SHRI RAJESH DAMOR WERE PR ESENT FOR THE DEPARTMENT. 22. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT THE ISSUES RAISED BY THE ASSESSE ARE FOUR-FOLD ON THE FOLLOWING ACCOUNTS:- A) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NO N-SUPPLY OF REASONS FOR REOPENING THE ASSESSMENT UNDER SECTI ON 147 OF THE ACT; B) NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AFTER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT; AND C) ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US S TANDARDS AND EVASION OF EXCISE DUTY BY THE MANUFACTURERS OF TMT BARS IN JALNA CLUSTER FOUND BY DIRECTOR GENERAL OF CENTR AL EXCISE AND CUSTOMS; AND WORKING OUT THE ADDITION BY APPLYI NG GP RATE OF 4% ON THE ALLEGED SUPPRESSION OF SALES, AFT ER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE ACT. D) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHA SES RELATING TO SUPPRESSION OF SALE. 23. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGA INST THE ORDER OF CIT(A) ON THE FOLLOWING GROUNDS:- A) IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% AS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOU NT OF THE TOTAL SUPPRESSED PRODUCTION, WHERE THE ASSESSEE WAS FOUND TO BE INDULGING IN CLANDESTINE REMOVAL OF GOODS WIT HOUT PAYMENT OF EXCISE DUTY; AND B) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UN-ACCOUNTED PRODUCTION WORKED OUT BY THE ASSES SING OFFICER. 24. THE STEEL GROUP OF CASES WERE HEARD FROM DAY-TO -DAY ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD 13 ITA NO.1636 & 1637, 1589 &1590/PN/2012 ALONG WITH WRITTEN SUBMISSIONS, NOTES FILED BY THEM AND THE COMPILATION OF CASE LAWS RELIED UPON BY THE RESPECT IVE AUTHORIZED REPRESENTATIVES. IT MAY BE PUT ON RECORD THAT THE ISSUES RAISED BY THE DIFFERENT ASSESSEES BEFORE US ARE RELATABLE TO THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION AND EVASION OF DUTY ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. 25. NOW, WE ARE COMING TO THE MERITS OF THE ISSUE R AISED BEFORE US. WE HAVE HEARD THIS BUNCH OF APPEALS WHERE DIFF ERENT ISSUES ARE RAISED I.E. IN SOME CASES WHERE THE ASSESSMENT IS C OMPLETED UNDER SECTION 143(3) R.W.S. 148 OF THE ACT, THE ASSESSEE HAS RAISED THE ISSUE AGAINST RE-OPENING OF ASSESSMENT, NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 AND ALSO NON-SERVICE O F NOTICE UNDER SECTION 143(2) AFTER RECORDING OF REASONS UNDER SEC TION 147 OF THE ACT. HOWEVER, IN SOME CASES, THE ASSESSMENT HAS BE EN COMPLETED UNDER SECTION 143(3) OF THE ACT AND THERE ARE NO IS SUES AGAINST RE- OPENING OF THE ASSESSMENT. THE LD. AUTHORIZED REPR ESENTATIVE FOR THE ASSESSEE IN THE PRESENT BUNCH OF APPEALS RELATI NG TO BHAGYALAXMI STEEL ALLOYS PVT. LTD. AT THE OUTSET ST ATED THAT THE GROUNDS OF APPEAL NOS.1, 2 AND 10 IN RELATION TO RE -OPENING OF THE ASSESSMENT UNDER SECTION 147 AND NON-SUPPLY OF REAS ONS FOR RE- OPENING UNDER SECTION 147 OF THE ACT, ARE NOT PRESS ED. HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 26. THE NEXT ISSUE IS THE WORKING OF THE SUPPRESSED PRODUCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRE SSED PRODUCTION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVES TMENT IN SUCH SUPPRESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT SUPPRESSED PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE O F SRJ PEETY STEEL PVT. LTD. (SUPRA). THOUGH BOTH THE PARTIES HAVE RA ISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORDER OF THE TRI BUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA), WE FIRST REFER TO TH E DECISION OF THE TRIBUNAL AND THEN MEET WITH THE RESPECTIVE OBJECTIO NS OF BOTH THE AUTHORIZED REPRESENTATIVES. 27. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE WAS THAT THE ISSUE RAISED IN THE P RESENT APPEAL WAS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). HOWEVER, THE LD. SPECIAL AR STR ESSED THAT THE ISSUE WAS AT VARIANCE AND MADE ELABORATE SUBMISSION S. IT MAY BE PUT ON RECORD THAT M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) IS A CASE OF FURNACE, WHICH IS ENGAGED IN THE MANUFACTURE OF INGOTS / BILLETS. IN THE CASE OF M/S. SRJ PEETY STEELS PVT. LTD. (SUP RA), THERE WAS AN ORDER OF CENTRAL EXCISE COMMISSIONER, AURANGABAD IN RELATION TO SUPPRESSION OF PRODUCTION ON ACCOUNT OF ERRATIC CON SUMPTION OF ELECTRICITY. THE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER OF CCE, AURANGABAD BEFORE THE CESTAT AND THE THIRD MEM BER OF CESTAT DELETED THE ADDITION MADE IN THE HANDS OF RE SPECTIVE FURNACE CASES. ALSO, IN THE CASE OF THE ASSESSEE B EFORE US, THERE IS ORDER OF CCE, AURANGABAD AND THERE IS ORDER OF THIR D MEMBER OF CESTAT. IN SOME OF THE YEARS, THE OWNERS OF FURNAC E ON THE BASIS OF CERTAIN INFORMATION GATHERED BY THE DGCEI HAD MO VED A PETITION BEFORE THE SETTLEMENT COMMISSION AND OFFERED ADDITI ONAL PRODUCTION, WHICH WAS ACCEPTED BY THE SETTLEMENT CO MMISSION IN ENTIRETY. THE ASSESSING OFFICER OBSERVED THAT THER E WAS SUPPRESSION OF PRODUCTION BY THE FURNACE COMPANIES IN JALNA CLUSTER ON THE GROUND OF VARIANCE IN CONSUMPTION OF ELECTRI CITY VERSUS 14 ITA NO.1636 & 1637, 1589 &1590/PN/2012 PRODUCTION. THE ASSESSING OFFICER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURNACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD. AND OTHERS AND RELYING ON THE ADDITION MA DE IN THE HANDS OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), IN TURN, O N THE BASIS OF THE ORDER OF CCE, AURANGABAD, MADE ADDITIONS IN THE HAN DS OF PRESENT SET OF ASSESSES BEFORE US. 28. THE TRIBUNAL HAD ELABORATELY CONSIDERED ALL THE ASPECTS OF ADDITION IN THE HANDS OF THE FURNACE OWNERS I.E. M/ S. SRJ PEETY STEELS PVT. LTD., ON THE BASIS OF ERRATIC CONSUMPTI ON OF ELECTRICITY, WHICH IN TURN, WAS THE BASIS FOR MAKING THE ADDITIO NS IN THE HANDS OF THE ASSESSEE THEREIN BY CCE, AURANGABAD AND VIDE OR DER DATED 16.01.2015 HELD THAT SINCE THE ORDER OF THE CCE, AU RANGABAD HAS BEEN OVERRULED BY THE THIRD MEMBER OF CESTAT, THERE WAS NO BASIS FOR ADDITION IN THE HANDS OF THE ASSESSEE. T HE OTHER ASPECTS OF THE ISSUE THAT THE ASSESSEE THEREIN HAD MADE THE PETITION BEFORE SETTLEMENT COMMISSION IN RESPECT OF CLANDESTINE REM OVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS ALSO C ONSIDERED BY THE TRIBUNAL AND IN THE ABSENCE OF ANY INQUIRY / INVEST IGATION OR MATERIAL COLLECTED BY THE ASSESSING OFFICER, THE TRIBUNAL HE LD THAT THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF THE ASSESS EE IN ASSESSMENT YEAR 2007-08. FURTHER, IN ASSESSMENT YEAR 2008-09, THERE WAS NO ADMISSION OF ANY CLANDESTINE REMOVAL OF MATERIAL WI THOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION AND IN THE ABSENCE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFICER OR ANY OTHER EVIDENCE BEING BROUG HT ON RECORD, THE TRIBUNAL HELD THAT NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. THE ISSUE BEFORE THE TRIBUNAL IN M/S. SR J PEETY STEELS PVT. LTD. WAS SUMMARIZED UNDER PARA 9, WHICH READS AS UNDER:- 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEAL S FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAIN ST THE FINDING OF THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRES SED PRODUCTION/SALES OF INGOTS AND BILLETS CANNOT BE TREATED AS INCOME OF T HE ASSESSEE AND SOME REASONABLE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO ADOP T GROSS PROFIT @ 4% ON THE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES AN D ACCORDINGLY, PARTLY SUSTAINED THE ADDITIONS. NOW, WE FIRST DECIDE THE CORE ISSUE IN THIS CASE (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHE THER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS. 39,20,36,546/- IN THE A.Y. 2007-08 AND RS.40,75,72,486/- IN THE A.Y. 2008-09 O N ALLEGED SUPPRESSION OF PRODUCTION/SALES AND; (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT PICTURE OF THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF A CCOUNT NEEDS TO BE REJECTED. 29. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE IN PARAS 10 TO 10.5 AT PAGES 12 TO 16 AND ALSO SUMMARIZING T HE SUBMISSIONS OF THE LD. SPECIAL AR IN PARAS 11 TO 11.6 AT PAGES 16 TO 22 AND THE REJOINDER OF THE ASSESSEE IN PARAS 12 TO 12.1 AT P AGES 22 TO 24 OF THE ORDER, THE TRIBUNAL OBSERVED AS UNDER:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED A RGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS F ILED NOTES OF HIS ARGUMENT ON 05-11-2014 WHICH ARE PLACED ON RECO RD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RE LIED ON BY BOTH 15 ITA NO.1636 & 1637, 1589 &1590/PN/2012 THE PARTIES. THE ASSESSEE IS MANUFACTURER OF INGOT S/BILLETS. SO FAR AS A.Y. 2007-08 IS CONCERNED THE ORIGINAL ASSESSMEN T OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT ON 31 -12-2009. WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT, IN THE OPINION OF THE ASSESSING OFFICER THE ELECTRICITY CO NSUMPTION SHOWN BY THE ASSESSEE WAS AT HIGHER SIDE AS COMPARED TO T HE QUANTUM OF PRODUCTION DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION ON THE BASIS OF THE AL LEGED SUPPRESSION OF THE PRODUCTION/SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTION OF THE INGOT/BILLETS. SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFICE OF THE CCE, AU RANGABAD VIDE THEIR LETTER DATED 29-03-2010 AS WELL AS ADJUDICATI ON ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCT ION AND ALLEGED EVASION OF EXCISE DUTY, THE ASSESSING OFFICER INIT IATED THE RE- ASSESSMENT PROCEEDINGS FOR A.Y. 2007-08 AGAINST THE ASSESSEE COMPANY U/S. 147 OF THE ACT. IN REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE TO THE ASSESSEE CO MPANY U/S. 147 FOR A.Y. 2007-08 THE ASSESSING OFFICER GAVE REFERE NCE OF THE COMMUNICATION AND ORDER OF THE CCE AURANGABAD RECEI VED FROM THE CENTRAL EXCISE OFFICE AT AURANGABAD. 14. THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCTED BY DGCE (INTELLIGEN CE) AGAINST THE FEW BROKERS AND SUB-BROKERS WHO WERE INVOLVED IN TH E TRADING INTO THE INGOT/BILLETS AND TMT BARS. THE ASSESSING OFFI CER ALSO REFERRED TO THE PETITION FILED BY THE ASSESSEE BEFO RE THE CENTRAL EXCISE AND CUSTOM SETTLEMENT COMMISSION, MUMBAI BEN CH, MUMBAI FOR WAIVER OF PENALTY, INTEREST AND FOR GETT ING IMMUNITY FROM A PROSECUTION. THE ASSESSING OFFICER PROCEEDE D TO DECIDE THE ALLEGED SUPPRESSION OF PRODUCTION BY THE ASSESS EE ADMITTEDLY WHICH WAS BASED ON THE INFORMATION RECEIVED FROM CE NTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDICATION ORDER OF THE CCE, AURANGABAD. IT IS PERTINENT TO NOTE HERE THAT IN T HIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE ASSESSE E AND ITS GROUP COMPANIES BY THE INCOME-TAX DEPT. ON 17-03-20 06 AND IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION U/S. 1 32(1) THE ASSESSMENTS OF THE ASSESSEE HAVE BEEN FRAMED U/S. 1 53A R.W.S. 143(3) FOR THE A.YS. 2000-01 TO 2006-07. IT IS ALS O PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERAT ION NO INCRIMINATING EVIDENCE WAS FOUND SUGGESTING THAT TH E ASSESSEE HAS SUPPRESSED THE PRODUCTION AS COMPARED TO THE CO NSUMPTION OF THE ELECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZ URE ACTION AGAINST THE ASSESSEE U/S. 153A R.W.S. 143(3) HAVE R EACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER R EFER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT AND C ERTAIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAM ED BY THE ASSESSING OFFICER. IT IS ALSO TO BE TAKEN NOTE THA T THE A.YS. 2007- 08 AND 2008-09 BEFORE US ARE IMMEDIATELY NEXT ASSES SMENT YEARS AFTER THE ASSESSMENTS IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WERE COMPLETED. 15. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EV EN FOR THE A.YS. 2007-08 AND 2008-09, NO INDEPENDENT INVESTIGATION O R ANY ENQUIRY IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOM E TAX AUTHORITIES. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLACED HIS RELIANCE ONLY ON THE INFORMATION RECEIVE D FROM THE CENTRAL EXCISE AUTHORITIES AND THE PROCEEDING BEFOR E THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, M UMBAI. THE INVESTIGATION WAS CARRIED OUT BY CENTRAL EXCISE AUT HORITIES I.E. DGCEI, AGAINST FEW BROKERS/SUB-BROKERS AND THOSE BR OKERS GAVE 16 ITA NO.1636 & 1637, 1589 &1590/PN/2012 THE NAMES OF MANY COMPANIES WHO ARE IN THE MANUFACT URING OF INGOT/BILLETS AND TMT BARS. AS PER THE STATEMENT G IVEN BEFORE THE CENTRAL EXCISE AUTHORITIES BY THOSE BROKERS AS WELL AS SUB-BROKERS NAMELY SHRI UMESH MODI, MUMBAI, SHRI ANIL D LINGADE , SHRI MUKESH GUPTA IT WAS ADMITTED THAT THEY WERE INVOLVE D IN CLEARING THE CONSIGNMENTS FROM THE FACTORY ON WEIGHMENT SLIP S ONLY AND NO EXCISE DUTY WAS PAID AND THEY WERE INVOLVED IN PROV IDING FAKE TRADING BILLS AND CHALLANS WHICH ACCOMPANIED THE VE HICLES CARRYING THOSE CONSIGNMENTS. AS PER THE MODUS OPERANDI ADOP TED BY THE BROKERS THEY USED TO RECOVER THE SAID FAKE TRADING BILLS AND CHALLANS AFTER THE GOODS REACHED THEIR DESTINATION. AS NOTED BY THE ASSESSING OFFICER THOSE BROKERS/SUB-BROKERS ALSO AD MITTED THAT THE ENTIRE EVIDENCE WAS DESTROYED BY THEM AND THEY USED TO GET THE COMMISSION OF RS.100/- PER MT. THE ASSESSING OFFIC ER HAS DISCUSSED THE INFORMATION GATHERED BY THE DGCEI, ZO NAL UNIT, MUMBAI IN PARA NOS. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 OF THE ASSESSMENT ORDER. SO FAR AS ACTION AGAINST THE BRO KERS AND SUB- BROKERS ARE CONCERNED THE CENTRAL EXCISE AUTHORITY ISSUED SHOW CAUSE TO THE ASSESSEE AS WELL AS THE OTHER MANUFACT URERS WHO WERE INVOLVED IN CLEARING THE EXCISABLE GOODS WITHO UT PAYMENT OF DUTY. ALL THE MANUFACTURERS OF THE INGOTS/BILLETS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE IS ONE OF THEM . AS PER THE INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITIE S, THE ASSESSEE WHO IS MANUFACTURING OF INGOTS/BILLETS SUPPLIED 288 .500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MANUFACTURING OF TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO A STATEMENT OF SHRI SURENDRA S. PEETY, MANAGING DIRECTOR OF THE AS SESSEE RECORDED ON 12-01-2007, BY THE DGCEI WHO ALLEGEDLY ADMITTED THAT THE GOODS SUPPLIED TO SHRI OM ROLLING MILLS PV T. LTD. I.E. INGOTS/ BILLETS, WERE REMOVED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUTY AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS. THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLIN G MILLS PVT. LTD. AND HENCE, THERE WAS NO ACCOUNTING. THE ASSESSEE A DMITTED THE SAID CHARGE OF THE CENTRAL EXCISE AUTHORITIES I.E. DGCEI AND APPROACHED THE SETTLEMENT COMMISSION AND PAID THE E XCISE DUTY TO THE EXTENT OF RS.7,79,313/- FOR CLEARING THE GOO DS WITHOUT PAYMENT OF EXCISE DUTY. THE DECLARATION FILED BY T HE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE AUTHORITIES. THE SETTLEMENT COMMISS ION LEVIED THE PENALTY OF RS.8,000/-. 16. THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUS SED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN THE ASSESSMENT ORDER. AT THIS STAGE WE ARE NOT CONC ERNED WITH THE SAID DISCUSSION WHICH IS IN PARA NO. 4.1 OF THE ASS ESSMENT ORDER. THE ASSESSING OFFICER IN HIS DISCUSSION FOR ARRIVIN G AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF T HE ELECTRICITY SHOWN BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER, HAS GIVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUF ACTURERS AGAINST WHOM ACTION TAKEN BY THE CENTRAL EXCISE AUT HORITIES. AS OBSERVED BY THE ASSESSING OFFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EXECUTIVE DIRECTOR, ALL INDIA INDUCT ION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAKING TE CHNOLOGY IN THE 21 ST CENTURY WHICH IS AVAILABLE ON THE INTERNET WHICH IS ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTI CLE THE POWER CONSUMPTION IN INDUCTION FURNACE IS BETWEEN 650 TO 820 UNITS PER MT DEPENDING UPON THE INPUT CHARGE USED. THE ASSES SING OFFICER ALSO REFERRED TO THE TECHNICAL REPORT OF THE IIT, W HICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURING 1 MT OF M .S. INGOTS WHERE MELTING SCRAP IS USED AS AN INPUT, VARIES FRO M 555 TO 754 UNITS AND WHERE SPONGE IRON IS USED AS AN INPUT, THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. THE ASS ESSING OFFICER, THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSME NT FRAMED BY 17 ITA NO.1636 & 1637, 1589 &1590/PN/2012 THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURA NGABAD IN RESPECT OF THE ALLEGED SUPPRESSION OF PRODUCTION AF TER CONSIDERING THE ELECTRICITY CONSUMPTION DECLARED BY THE ASSESSE E AND THE PRODUCTION RATE OF UNITS OF ELECTRICITY PER METRIC TON ADOPTED BY THE CCE, AURANGABAD ARE VERY MUCH REASONABLE, FAIR AND JUSTIFIED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLEGED UNACCOUNTED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT ORDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME-TAX ACT BY G IVING THE REASON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PICTURE. THE ASSESSING OFFICER ADOPTED THE SUPPRES SION OF PRODUCTION DETERMINED BY THE CCE, AURANGABAD AS PER HIS ADJUDICATION ORDER AND HELD THAT THE ASSESSEE HAS S UPPRESSED THE PRODUCTION AND ACCORDINGLY, WORKED THE SUPPRESSED P RODUCTION OF THE A.Y. 2007-08 AS UNDER: A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. IN THE A.Y. 2007-08, THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8,44,01,504/- WHICH WAS IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFICER WHILE COMPLE TING THE ASSESSMENT U/S. 143(3) OF THE ACT IN THE ORDER DATE D 31-12- 2008 AND MADE THE NET ADDITION OF RS.30,76,35,042/- . SO FAR AS A.Y. 2008-09 IS CONCERNED NO ADJUSTMENT WAS MADE IN THE A.Y. 2008-09 AS IT WAS THE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. EVEN THOUGH IN THE A.Y. 2008-09, THE ASSE SSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NOT RELEVANT, BUT FINAL LY THE ASSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDE R PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD AS PER THE VALUE DETERMINED IN THE ADJUD ICATION ORDER FOR THE PURPOSE OF LEVY OF EXCISE DUTY ADOPTI NG STATISTIC OF POWER CONSUMPTION. IN THE COMPUTATION FOR THE A .Y. 2008- 09 THE ASSESSING OFFICER MADE THE MISTAKES BY MENTI ONING RS. (-) 1,91,62,000/- AS PER THE ORDER U/S. 143(3) WHEN IN FACT THE SAID FIGURE IS AS PER THE RETURN OF INCOME FILE D BY THE ASSESSEE FOR THE A.Y. 2008-09. 30. AFTER ANALYZING THE SUBMISSIONS OF THE ASSESSEE , THE TRIBUNAL NOTED THAT IN BOTH THE YEARS BEFORE IT, THE ASSESSI NG OFFICER HAD DETERMINED THE ALLEGED SUPPRESSION OF PRODUCTION / SALES AS DETERMINED BY THE CCE, AURANGABAD ON THE BASIS OF E RRATIC CONSUMPTION OF ELECTRICITY. THE BASIS OF THE ORDER OF CCE, AURANGABAD WAS THE REPORT OF DR. N.K. BATRA, PROFES SOR OF IIT, KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP OF CAS ES OF FURNACE OWNERS HELD THAT THE ORDER OF CCE, AURANGABAD WAS N OT SUSTAINABLE AND HAD TO BE CANCELLED IN TURN, RELYING ON THE RAT IO LAID DOWN IN R.A. CASTING (SUPRA). THE RELEVANT FINDING OF THE TRIBU NAL IN TURN, INCORPORATING THE ORDER OF THIRD MEMBER OF CESTAT I N PARAS 19 TO 19.4, WHICH READ AS UNDER:- 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YE ARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSIO N OF THE PRODUCTION/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL 18 ITA NO.1636 & 1637, 1589 &1590/PN/2012 EXCISE AND CUSTOM, AURANGABAD ON THE BASIS OF POWER CONSUMPTION. THE COPY OF THE ADJUDICATION ORDER PA SSED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM AND SERVI CE TAX, AURANGABAD DATED 28-08-2009 (IN SHORT REFERRED TO A S THE CCE) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 OF THE P/B-I. THE CCE, AURANGABAD HAS OBSERVED THAT D URING THE SCRUTINY OF ELECTRICITY BILLS, IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCURRED BY THE ASSESSEE TOWARDS THE COST OF POWER CONSUMPTION (PRIMARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRUTINY OF THE VARIOUS RECO RDS, THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE VALUE, LE AVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, SALARI ES, COST OF MAINTENANCE ETC. THE LD. COMMISSIONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (II T), KANPUR AND HAS OBSERVED THAT AS PER THE SAID TECHNICAL OPINIO N REPORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF ONE M ETRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY, ELECTRICITY EFFICIENCY AND NATURE OF MIX OF RAW MATERIAL. AS OBSERVED BY THE LD. CCE IN THE CASE O F THE ASSESSEE AS PER THEIR ELECTRICITY BILLS, THE AVERAGE CONSUMP TION OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 14 54 TO 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KAN PUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODU CTION OF M.S. INGOT/BILLETS ON THE BASIS OF CONSUMPTION OF 1026 U NITS (MAXIMUM LIMIT) OF ELECTRICITY FOR PER MT OF MS INGOTS PRODU CED, IT IS NOTICED THAT THERE IS A HUGE DIFFERENCE IN THE ACTUAL/NORMA L PRODUCTION AND THE RECORDED FIGURES IN THE ASSESSEES RECORDS. TH E LD. CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFUL LY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN T HEIR RECORDS WITH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY A ND, HAVE INVOLVED THEMSELVES IN THE CLANDESTINE REMOVAL OF F INAL PRODUCTS. HE ALSO REFERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WHICH MATTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE SETTLEMENT COMMISSION. THE LD. COMM ISSIONER ALSO REFERRED TO NON-MAINTENANCE OF THE PROPER ELEC TRICITY CONSUMPTION RECORD MORE PARTICULARLY IN FORM G-7. THE LD. COMMISSIONER ALSO GAVE THE DATA OF PRODUCTION FROM APRIL, 2003 TO MARCH, 2008 IN HIS ORDER. HE HAS ALSO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE ASSESSE D EMANDED THE CROSS EXAMINATION OF DR. N.K. BATRA, PROFESSOR OF I IT, KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE CCE, AURANGABA D. THE LD. COMMISSIONER OBSERVED THAT THE SAID DR. N.K. BATRA WAS NO MORE AND HENCE, HIS CROSS EXAMINATION WAS NOT POSSIBLE. HE HAS ALSO DISCUSSED AND REFERRED TO THE DIFFERENT DECISIONS O F THE TRIBUNAL. THE LD. COMMISSIONER ALSO RELIED ON THE INVESTIGATI ON MADE BY THE DGCEI AND SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HOW THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION A ND ADMITTED THE EVASION AND PAID THE EXCISE DUTY AND O BTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE LD. COMMIS SIONER CONFIRMED THE DEMAND RAISED IN THE SHOW CAUSE NOTIC E AND ALSO LEVIED THE PENALTY TO THE EXTENT OF RS.33,07,22,069 /-. 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHA LLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENTRAL EXCISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OP INION BETWEEN THE LD. MEMBERS OF THE CESTAT, I.E. LD. VICE-PRESID ENT AND LD. TECHNICAL MEMBER AND THE MATTER WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: 19 ITA NO.1636 & 1637, 1589 &1590/PN/2012 A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 3 1 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CA STINGS PVT. LTD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASID E AND THE APPEAL ALLOWED. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABOVE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRIVENI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNAL S DECISION IN THE CASE OF RATTAN STEELS WORKS (SUPRA), NAGPAL STE EL (SUPRA) AND HANS CASTINGS PVT. LTD. (SUPRA), THE IMPUGNED O RDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDE R PASSED BY LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGAB AD WAS NOT SUSTAINABLE AND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDEN T CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE ELECTRICITY CONSUMPTIO N WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVERAGE ELECTRICITY CONSUMPTION IN THE INSTANT APPEALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORT S AND CLARIFICATIONS FOR HIS CONSIDERATION- (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLA NT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 1000 TO 1800 UNITS PER TON OR EVEN HIGHER, AS PER LETTERS DATED 18.3.2008 AND 25.4.2008 OF SAME MR. R.P. VARSHNEY [ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMING THAT HIS ARTICLE PREPARED IN 1989-90 WAS FOR CONCAST STEEL MAKING [THUS NOT FOR INDUCTION FURNACE], (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22,6.2008 FROM ELECTROTHERM, (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A C LIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER- CONSUMPTION, AND ANOTHER LETTER DATED 5.4.2008 OF ELECTROTHERM AGREEING-., WITH .THE VIEWS OF INDUCTI ON FURNACE 'ASSOCIATION AND INFORMING THAT IT IS VERY DIFFICULT TO DEFINE ANY RANGE OF POWER CONSUMPTION. 20 ITA NO.1636 & 1637, 1589 &1590/PN/2012 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERE NT ELECTRICITY CONSUMPTION FIGURES FOR PRODUCTION OF 1 MT OF MS INGOTS, REPORTED IN FOLLOWING DIFFERENT REPOR TS- (I). 555 TO 1046 (KWH/T) AS PER DR. BATRA'S REPORT; (II). 1800 KWH/T AS PER THE REPORT BY JOINT PLANT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 KWH/T AS PER THE REPORT OF NISST, MANDI, GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CCE, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINE D THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEE L INGOT&, AND THAT THIS RENDERS THE NORM OF 1046 UNIT S ADOPTED BY THE REVENUE AS ARBITRARY. AFTER THIS FIN DING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS BEEN DISMISSED, THERE WAS NO REASON FOR THE COMMISSIONER IN THE INSTANT CASES TO CONSIDER THE NORM OF 1026 UNITS ALLEGEDLY AS PER RE PORT OF DR. BATRA, FOR ARRIVING AT DEEMED PRODUCTION. MOREOVER, THE TRIAL RUN CONDUCTED BY THE DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSUMPTION WAS ACTUALLY HIGHER THAN THAT REPORTED IN DR. BATRA'S R EPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R,A, CASTING (SUPRA) WERE MAINLY- (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 YEARS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALANCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE STOCK BROKERS AND RECEIVING CHEQUES OF PROFITS AGAINST THE CASH SO DEPOSITED, (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY 21 ITA NO.1636 & 1637, 1589 &1590/PN/2012 CONSUMPTION AS SUCH BECAUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GOODS IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMATIVE AND INCONTROVERTIBLE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PREMISES, AND NON-ACCOUNTING THEREOF IN THE STATUTORY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDESTINE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LABOUR EMPLOYED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECORDS OF SECURITY OFFICERS, .DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE TO ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOADING OF GOODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUCH AS L.RS, STATEMENTS OF LORRY DRIVERS, ENTRIES AT DIFFERENT CHECK POSTS, FORMS OF THE COMMERCIAL TAX DEPARTMENT AND THE RECEIPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIGNOR AND ITS DISPOSAL, 20.5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVIDENCE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE, NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER, CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS .RAISED. SIMILA R IS THE FACT SITUATION IN THE INSTANT APPEALS, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APPEALS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CASES AND/OR ANY PROCEEDINGS UNDER INCOME TAX, D). CLAIM OF HIGHER AUXILIARY LOAD, E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION, 22 ITA NO.1636 & 1637, 1589 &1590/PN/2012 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED, THE COMMISSIONER IS HOT RELYING ON THE SAME AND THE FINDINGS OF THE COMMISSIONER, AS RECORDED EARLIER, HAVE NOT BEEN CHALLENGED BY THE REVENUE. ALL THESE OTHER ALLEGATIONS WERE ALSO LEVE LLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (SUPRA) THAT IT WOULD BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTOR Y OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFER ENT DATES TO ADOPT-THE TEST RESULTS AS THE BASIS TO ARR IVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. IT WAS FUR THER HELD THAT- '23. THE TRIBUNAL HAS CONSISTENTLY TAKEN THE VIEW THAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED AS THE BASIS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIES HAVE BEEN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFE RENT FACTORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERA GE TO BE ADOPTED AS A NORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVENUE IN THE PRESENT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WHATSOEVER CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OT HERS AND THAT TOO ON DIFFERENT DATES TO ADOPT THE TEST R ESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOP TED FOR FUTURE. THE IMPUGNED DEMAND BASED MERELY ON ASSUMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NOR COULD BE JUSTIFIED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF ALLEGED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PROVE WHAT IT ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE ABSENCE OF ANY POSITIVE EVIDENCE BROUGHT BY THE REVENUE TO DISCHARGE ITS ONUS, THE IMPUGNED ORDER CANNOT BE SUSTAINED.' 20.8 IN THE PRESENT APPEALS, NONE OF THE SO CALLED OTHER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PRO VE CLANDESTINE CLEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS ADMITTEDLY EXCESS ELECTRICITY CONSUMPTION BASED ON BENCHMARK ADOPTED ALLEGEDLY- 'FROM REPORT OF DR. BATRA, WHICH WAS ALREADY HELD T O BE ARBITRARY BY HON'BLE TRIBUNAL IN RA CASTING (SUPRA) . THUS, IN MY OPINION THE PRIMARY EVIDENCE RELIED IN THE IMPUGNED ORDER IS ITSELF INADMISSIBLE, AND NO OTHER EVIDENCE IN THE INSTANT CASE PROVES CLANDESTINE PRODUCTION AND CLEARANCE TO SUSTAIN, THE DEMAND, IT IS CONTENDED BY REVENUETHAT FURNACES INSTALLED IN THE FACTORY OF PRESENT APPELLANTS WERE IN SOUND CONDITI ON AS COMPARED TO R.A. CASTING (SUPRA), HOWEVER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT, NOR ANY SUCH FINDING IN THE ORDERS 23 ITA NO.1636 & 1637, 1589 &1590/PN/2012 IMPUGNED IN THE APPEALS. THE REVENUE SOUGHT TO REL Y ON AN ORDER PASSED BY TRIBUNAL IN GUIABCHAND SILK MILLS PVT. LTD., V/S. CCE, HYDERABAD-II, 2005 (184) ELT 263, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTING (SUPRA). IT HAS BEEN CONTENTION OF THE DEPARTMENT THAT THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS CASE TO ITS MATHEMATICAL PRECISION, BY RE LYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CAS E OF D. BHOORMULL - 1983 (13) ELT 1546 (SC), RELIED UPON BY THE COMMISSIONER AS WELL AS THE HON'BLE MEMBER (TECHNICAL). IT IS SEEN THAT EVEN THIS JUDGM ENT WAS CONSIDERED IN R.A. CASTING (SUPRA), 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJUDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS DEFINITELY TO BE ESTABLISHED ON THE BASI S OF PREPONDERANCE OF PROBABILITIES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND ASSUMPTIONS , REGARDING THE CLAIM OF THE REVENUE THAT SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTURING ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLANTS, I AM OF THE VIEW T HAT IT CANNOT BE-.A' BASIS TO SUSTAIN THE FINDINGS IN THE IMPUGNED ORDERS BY ASSUMING THAT THERE COULD NOT BE ANY REASON FOR LOWER CONSUMPTION OF ELECTRICITY DUR ING THE SUBSEQUENT PERIOD. I ALSO AGREE WITH THE FINDIN G OF THE HON'BLE VICE PRESIDENT THAT IN. ANY EVENT, THIS ADDITIONAL MATERIAL IS ALSO ONLY OF POWER CONSUMPTI ON. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTION UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FURNACE. HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIV ITY IN. ELECTRIC ARC FURNACE IS HIGHER THAN INDUCTION F URNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THERE IS NO S UCH REASON TO DISCARD THE REPORT AND IN ANY EVENT THE L ETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELECTRIC CONSUMPTION IN INDUCTION FURNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RECORD. SINCE, VARYING REPO RTS ARE ON RECORD, THE RATIO OF R.A. CASTING (SURA) IS SQUARELY APPLICABLE. 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V /S. THE COMMISSIONER TRADE TAX, U.P, - 2007-TIOL-14- SC-CT, THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COU RT IN THE CASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF INCOME TAX, 2014-TIOL-203-HC- AHM-IT, AND AN UNREPORTED ORDER DTD. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMANA STONE CRUSHERS COMPANY V/S. STATE OF ANDHRA PRADESH. IN THE CASE OF MELTON INDIA (SUPRA), FOR THE NORM, OF POWER CONSUMPTION, ACTUAL ELECTRICITY CONSUMPTION OF THE ASSESSMENT YEAR 2000-01 WAS TAKEN AS 'NORM' AND THE 24 ITA NO.1636 & 1637, 1589 &1590/PN/2012 SAME WAS APPLIED IN SUBSEQUENT ASSESSMENT YEARS 2001-02 AND 2002-03.THIS WAS FOLLOWED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENUE. IN THE CASE OF RAJMOTI INDUSTRIES, FACTS OF THE CASE ARE THAT F OR THE ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS, NOT ONLY FOR THE REASON OF UNEXPLAINED WIDE FLUCTUATIONS IN THE PRODUCTIVITY A S COMPARED TO THAT IN A.Y. 2004-05, BUT ALSO BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE WORK-IN- PROGRESS IN THE BOOKS OF ACCOUNTS. I AM THEREFORE O F THE OPINION THAT THESE CASES, APART FROM BEING UNDE R STATUTES OTHER THAN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTAINING THE FINDINGS RECORDED IN THE IMPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RELIED FOR ARRIVING AT DEEMED PRODUCTION. 24. FURTHER, IN SARVANA ALLOYS STEELS PVT LTD, 2011 - (274) ELT 248 (TRI-BANG.) SIMILAR ORDER BASED ON POWER CONSUMPTION WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED AFTER CONSIDERING INTER ALIA THE JUDGMENTS IN D. BHOORMULL (SUPAR), GULABCHAND SILK MILLS (SUPRA), AS ALSO HANS CASTING (SUPRA). IN A.K . ALLOYS, 2012 (275) E.L.T. 232 (TRI. - DEL.) THE TRI BUNAL FOLLOWED THE DECISION OF R.A. CASTING (SUPRA) AND ALLOWED THE APPEAL, AS THE DEMAND WAS BASED MAINL Y ON THE EVIDENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTINE REMOVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON'BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. CASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 30-07-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FILED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES . THE COPY OF THE MAJORITY ORDER IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HERE THAT TH E LD. COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE DGCEI AGAINST SOME BROKERS AND IN CONSEQUENCE T HE SHOW CAUSE NOTICES (SCN) WERE ISSUED TO THE ASSESSE E AND OTHER COMPANIES AND THE ASSESSEE AND OTHER COMPANIE S CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND P AID THE EXCISE DUTY. HENCE, THE INVESTIGATION OF THE D GCEI MADE AGAINST THE BROKERS AND SUB-BROKERS REFERRED BY THE ASSESSING OFFICER WAS ALSO BEFORE THE LD. COMMISSIO NER, AURANGABAD. ON PERUSAL OF THE ASSESSMENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSMENTS ARE MERELY BASED ON THE A LLEGED SUPPRESSION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FOR MANU FACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER, EVEN IF IN T HE A.Y. 2008-09, THE ASSESSING OFFICER HAS OBSERVED THAT TH E INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHOR ITIES HAS 25 ITA NO.1636 & 1637, 1589 &1590/PN/2012 NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER, IT IS SEEN THAT ENTIRE ORDER IS COPY OF ORDE R PASSED FOR THE A.Y. 2007-08. AS VARY BASIS OF THE ASSESSMENT ORDER I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CC E), AURANGABAD HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINION THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT( A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION OF THE PRODUCTION/SALES HAVE NO LEGAL LEGS TO STAND. 31. THE TRIBUNAL THEREAFTER, DEALT WITH THE ARGUMEN TS OF LD. SPECIAL AR THAT EVEN THE MINORITY DECISION OF LD. T ECHNICAL MEMBER OF CESTAT WAS A LEGAL ORDER. THIS PLEA OF THE LD. SPECIAL AR WAS REJECTED BY THE TRIBUNAL IN VIEW OF THE DECISION OF THIRD MEMBER OF THE CESTAT. 32. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR WAS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PAS SED IN THE CASE OF SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE C CE, AURANGABAD IN ITS ORDER HAD TAKEN INTO CONSIDERATION THE SAID MATERIAL WHILE DETERMINING THE VALUE OF ALLEGED SUPPRESSED PRODUCT ION AND HAD MADE OBSERVATIONS VIDE PARA 19. THE RELEVANT OBSER VATIONS OF THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WERE AS UNDER:- 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. T HE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF THE SETTLEMENT COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES. IT IS TRUE THAT THE A SSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BA SIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BROKERS AND SUB-BROKERS DEALING IN THE INGOTS/BILLETS AND TMT B ARS SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE COMPANY AND MATTE R WAS SETTLED. LD. CCE, AURANGABAD IN HIS ORDER HAS TAKE N IN TO CONSIDERATION SAID MATTER WHILE DETERMINING THE VAL UE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS U NDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VIOLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS FOUND TO BE INVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPROACHED THE SETTLEMENT COMMISSION, ADMITTED THE EVASION OFFENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRIMINAL PROCEEDINGS. THE ASSESSEE HAS HOWEVER ARGUED THAT EACH CASE HAS TO BE TREATED AS A SEPARA TE CASE BASED ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE ASSESSEE IS ACCEPTED. NO RELIANCE HAS BEEN PLACED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FINDINGS IN THIS CASE ARE BASED ONLY ON MATERIAL AN D EVIDENCE THAT HAVE BEEN BROUGHT ON RECORD IN THE INSTANT CASE. 33. THE TRIBUNAL THEREAFTER, NOTED ANOTHER ASPECT O F THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE R EVENUE, BUT THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF IN FORMATION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD, W HICH IN TURN, HAD BEEN CANCELLED BY THE THIRD MEMBER OF CESTAT. THE TRIBUNAL 26 ITA NO.1636 & 1637, 1589 &1590/PN/2012 THUS, HELD THAT THE FOUNDATION FOR ASSESSMENT DOES NOT EXIST. IT WAS ALSO NOTED BY THE TRIBUNAL IN PARA 21 THAT THE INVE STIGATION BY THE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COMMISS ION WERE CONSIDERED BY THE CCE IN ITS ADJUDICATION ORDER, WH ICH IN TURN, WAS THE SUBJECT MATTER OF CESTAT AND THE SAID ORDER HAS BEEN SET- ASIDE, HENCE, IT WAS NOT NECESSARY TO DEAL WITH THE DECISIONS RELIED UPON BY THE LD. SPECIAL AR, WHICH ARE IN THE CONTEX T OF ADMISSION OF THE DIRECTOR IN THE COURSE OF INVESTIGATION MADE BY THE DGCEI. 34. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G-7 IN RESPECT OF ELECTRICITY CONSUMPTION, WAS ALSO BEFORE THE CESTAT AND THE TRIBUNAL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND UPHELD THE ARGUMENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDER OF CESTAT HAD TO BE APPLIED . THE RELEVANT PARA OF THE TRIBUNAL ORDER READS AS UNDER:- 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND R ELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COUR T MORE PARTICULARLY ON THE BINDING NATURE OF THE ADMISSIO N OF ANY PERSON-SEC. 17, SEC. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BUT THE FACT REMAINS THAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPENDENT INVESTIGATION IS MA DE BY THE REVENUE BUT THE ENTIRE ASSESSMENTS ARE FRAMED O N THE BASIS OF THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOR EOVER, AS OBSERVED ABOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD HAS BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AND HENCE, FOUNDATION OF ASSESSMENTS FOR A. YRS. 2007-08 & 2008-09 DO NOT EX IST. THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FILES AN APPEAL CHALLENGING AN ORDER OF THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDER GE TS MERGED WITH THE ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT. MOREOVER, INVESTIGATION BY DGCEI AND PROCEEDING BEFORE THE SETTLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY THE CCE, AURANGABAD IN HIS ADJUD ICATION ORDER. THE SAID ORDER WAS SUBJECT MATTER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SET ASIDE. HENCE, WE DO NO T CONSIDER IT NECESSARY TO DEAL WITH DECISIONS RELIED ON BY LD. SPL AR OF THE REVENUE WHICH ARE IN CONTEXT OF ADMIS SION OF THE DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVES TIGATION MADE BY DGCEI MORE PARTICULARLY UNDER THE INDIAN EV IDENCE ACT AS THOSE DECISIONS ARE NOT RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCUSSION. SO FAR AS MAINTAINING OF FORM G-7 IN RESPECT OF THE ELECTRICITY CONSUMPTION, THE SAID IS SUE WAS ALSO BEFORE THE CESTAT WHILE DECIDING THE FATE OF ORDER OF THE LD. CCE, AURANGABAD. LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT, MUMBAI BENCH, MUMBAI I S NOT CORRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UND ER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 1944 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBS ERVATION WHETHER THAT ORDER IS RIGHT OR WRONG. 35. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE FORUM UNDER THE CUSTOMS ACT, 1962 AND CENTRAL EXCISE ACT, 1954 AND THE TRIBUNAL (INCOME-TAX) COULD NOT ACT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER WAS RIGHT OR WRO NG. 27 ITA NO.1636 & 1637, 1589 &1590/PN/2012 36. THE TRIBUNAL FURTHER REFERRED TO SEARCH AND SEI ZURE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 AGAINST M/S. SRJ PEETY STEELS PVT. LTD. AND THE ASS ESSMENT FRAMED UNDER SECTION 153A R.W.S. 143(3) OF THE ACT. THE A SSESSEE THEREIN I.E. M/S. SRJ PEETY STEELS PVT. LTD. HAD FILED AN A PPEAL BEFORE THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL IS REPORTED IN 137 TTJ (PUNE) 627. THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LT D. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUNAL IN EARLIER PROCEEDINGS RELATING TO ASSESSMENT YEARS 2000-01 TO 2006-07 UND ER SECTION 153A R.W.S 143(3) OF THE ACT AND HELD THAT IN THE S AID CASE OF SEARCH AND SEIZURE, IT WAS ALSO HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL, INGOTS / BILLETS DEP ENDING ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE TH E ASSESSEE THAT IT HAD SUPPRESSED THE PRODUCTION AND INDULGED INTO UNA CCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENG ED BY THE DEPARTMENT BEFORE THE HONBLE BOMBAY HIGH COURT AND THE REVENUES APPEAL WAS DISMISSED BY COMMON ORDER DATE D 10.02.2014 IN THE CASE OF ASSESSEE AND OTHER COMPAN IES BY THE HONBLE BOMBAY HIGH COURT AND THERE WERE OBSERVATIO NS ON THE ESTIMATION OF PRODUCTION BASED ON THE CONSUMPTION O F ELECTRICITY. THE TRIBUNAL WHILE DECIDING THE APPEAL OF M/S. SRJ PEETY STEELS PVT. LTD. IN THIS REGARD OBSERVED AS UNDER:- 22. WE HAVE ALREADY MENTIONED HERE-IN-ABOVE THAT I N THE CASE OF THE ASSESSE, THE SEARCH AND SEIZURE OPERATION WAS C ARRIED OUT U/S. 132(1) OF THE INCOME-TAX ACT ON 17-03-2006 AND ACCO RDINGLY THE ASSESSMENT ORDERS FOR THE A.YS. 2000-01 TO 2006-07 WERE FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE A.YS. 2000-01 TO 2006- 07 AND ONE OF THE REASONS WAS THAT ALLEGED SUPPRESS ED PRODUCTION WHICH WAS COMPUTED ON THE BASIS OF CONSUMPTION OF T HE ELECTRICITY. THE ASSESSING OFFICER DEVISED A FORMULA ON THE BASI S OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UNIFORMLY IN O RDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESUL TANT CONCEALED INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1,600 UNITS AS CONSUMPTION PER MT WHICH WAS A LOWES T AS SHOWN BY THE ASSESSEE. THE ASSESSING OFFICER, ACCORDINGL Y, WORKED OUT THE ALLEGED SUPPRESSED PRODUCTION AND MADE THE ADDI TION IN ALL THE YEARS WHILE COMPLETING THE ASSESSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OFFICER HAD SIMPLY TAKEN THE LOWEST ELECT RICITY CONSUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDI NGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF THE FORMULA HE WORKED OUT THE ALLEGED CONCEALED INCOME. THERE ARE CERTAIN IMPORTANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED O N 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISE S OF SRJ PEETY GROUP, JALNA COVERING THE PREMISES OF THE ASS ESSEE COMPANY AS WELL. PRIOR TO THE SEARCH, THE RETURNS O F INCOME FOR THE ASST. YRS. 2000-01 TO 2005-06 HAD ALREADY B EEN FILED UNDER S. 139(1) OF THE ACT ACCOMPANIED BY ALL REQUI SITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINA TING MATERIALS WERE FOUND RELATING TO AFORESAID YEARS WH ICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 15 3A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICIT Y FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS VERY 28 ITA NO.1636 & 1637, 1589 &1590/PN/2012 WELL PLACED BEFORE THE AUTHORITIES BELOW IN THE DIR ECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UN IT PRODUCTION OF EACH YEAR WHICH WERE ACCEPTED YEAR AF TER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWING CHART SHOWS THE YEAR-WISE PRODUCTION VIS-A-VIS ELECTRICITY CONSUMPTION WHICH HAS BEEN PLACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR: ASST. YR. ELECTRICITY CONSUMPTION PRODUCTION (MT) YEARLY AVERAGE CONSUMPTION (UNITS) 2000-01 24331059 18,524.239 1313 2001-02 25528565 17,010.558 1501 2002-03 31404354 19,709.654 1593 2003-04 31623843 20,396.313 1550 2004-05 43123824 23,240.189 1856 2005-06 62650888 29,582.434 2118 2006-07 70440580 36,017.983 1956 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE AL L DETAILS REGARDING ELECTRICITY VIS-A-VIS PRODUCTION WERE BEF ORE THE DEPARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARD ING THE SAME, IT COULD HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN THE ASSESSMENT PROCEEDINGS U NDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY OF THESE ASSES SMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS COULD NOT BE DISTURBED ON THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000-01 TO 2005 -06 ARE NOT CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING T HE COURSE OF SEARCH. THE RELEVANT IT RETURNS FOR SAID YEARS W ERE FILED PRIOR TO THE SEARCH IN NORMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT-MATTERS WERE ALREADY ON RECORD. THE RETU RNS HAVE ALREADY BEEN ACCEPTED AND NO ASSESSMENT AS SUCH COU LD BE SAID TO BE PENDING ON THE DATE OF INITIATION OF SEA RCH AND ABATED IN LIGHT OF THE PROVISIONS OF S. 153A. 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARD TO INVO KING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLE TENESS OF ACCOUNTS OF THE ASSESSEE OR WHERE NO METHOD OF ACCO UNTING PROVIDED IN SUB-S. (1) OR ACCOUNTING STANDARDS AS N OTIFIED UNDER SUB-S. (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANN ER PROVIDED IN S. 144. SEC. 145 GIVES THE POWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CONSIDERIN G THE FOLLOWING ASPECTS: 29 ITA NO.1636 & 1637, 1589 &1590/PN/2012 (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A M ETHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDU CED FROM THE METHOD EMPLOYED? (C) WHETHER THE ACCOUNTS MAINTAINED ARE CORRECT AND COMPLETE? 35. WITHOUT PREJUDICE TO ABOVE, WE FIND THAT HAVING REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FOR A LL THE YEARS UNDER CONSIDERATION, THE AO DEVISED A STATIST ICAL FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION THA T WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PROD UCTION AND RESULTANT CONCEALED INCOME FOR EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST EL ECTRICITY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREAT ED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MUL TIPLYING THE PRODUCTION IN THE BOOKS BY THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE MONTH IN WHICH ELEC TRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING TH E SO- CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN AB SENCE OF SOUND BASIS FOR SAME. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTOR S LIKE QUALITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE O F THE SUPPLY, POWER INTERRUPTIONS, MECHANICAL AND ELECTRICAL BREA KDOWNS AND THE CHEMICAL COMPOSITION OF THE LIQUID METAL WH ICH HAS TO BE FINALLY CAST INTO INGOTS/BILLETS. THE AO FAILED TO APPRECIATE THESE FACTS AND DID NOT ATTEMPT TO ESTABLISH A DIRE CT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUMED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED AT A CONC LUSION THAT THERE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING IN SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSE E COMPANY HAS INDULGED IN UNACCOUNTED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS T O THE ASST. YRS. 2000-01 TO 2005-06. IT IS AN ACCEPTED FA CT THAT EACH YEAR OF THE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. YR. 2006-07 CANNOT HAVE AN ADVERS E IMPACT ON THE ASSESSMENTS OF THE ASSESSEE COMPANY FROM THE ASST. YRS. 2000-01 TO 2005-06. THEREFORE, REJECTION OF BO OKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEE N DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND AP PLICATION OF S. 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIO NS HAVE RIGHTLY BEEN DELETED IN ASST. YRS. 2000-01 TO 2005-06 IN BO TH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO CHARGE THE ASSESSEE THAT THE ASSES SEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOU NTED 30 ITA NO.1636 & 1637, 1589 &1590/PN/2012 PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENG ED BY THE DEPARTMENT BEFORE THE HON'BLE HIGH COURT OF BOMBAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S. 260A OF THE IN COME-TAX ACT, BEING TAX APPEAL NO. 30 OF 2011. THE REVENUES APP EAL WAS DISMISSED VIDE COMMON JUDGMENT DATED 10-02-2014, IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES BY THE HON'BLE HIGH COURT AND THERE ARE CATEGORICAL OBSERVATIONS OF THEIR LOR DSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSUMPTI ON OF THE ELECTRICITY WHICH ARE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMIS SIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT T HE SEARCH WAS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSI NESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, TH E RETURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 H AD ALREADY BEEN FILED U/S. 139(1) OF THE ACT, ACCOMPANIES BY A LL REQUISITE DOCUMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS C OMPLETED. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATER IAL WAS FOUND RELATING TO THE SAID YEARS, WHICH COULD HAVE BEEN A DDED IN THE PROCEEDINGS U/S. 153A. THE DETAILS REGARDING THE C ONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS PLACED BEFORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BEEN DISPUTE D BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINS THE UN IT PRODUCTION OF EACH YEAR, WHICH WAS ACCEPTED YEAR AFTER YEAR AL ONG WITH RETURNS AND NO QUERY WAS RAISED BY THE REVENUE. TH E FINDING OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE IN COME TAX APPELLATE TRIBUNAL REFERS TO A DETAILED CHART. THE MATTER OF FLUCTUATING ELECTRICITY, THEREFORE, WAS HELD TO BE ONE, AND SINCE DETAILS WERE MADE AVAILABLE TO THE DEPARTMENT, WHIC H COULD HAVE BEEN RAISED DURING THE COURSE OF REGULAR ASSESSMENT AND NOT U/S. 153A OF THE ACT. THE FINDING IS THAT NOTHING INCRI MINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO THESE ASS ESSMENT YEARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MATERIAL DURING THE COURSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NORMAL COURSE, ARE DISCLOSING THE PARTI CULARS. THEY WERE ALREADY ON RECORD. THE RETURNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL, AS ALSO, THE COMMISSIO NER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAKEN INTO CONSIDERATION A ND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE ALLEGED PRODUCTI ON CALCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION. REJECTION OF BOOKS FOR THESE YEARS ONLY ON THE GROUND THAT THERE HAS BEEN DIVERG ENCE IN THE CONSUMPTION OF ELECTRICITY, THEREFORE, WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAI D OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSM ENT FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATI ON. WE ARE NOT INCLINED TO ACCEPT THE ARGUMENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS THAT NOTHING WAS FOUND DURIN G THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOUND IN T HE RESIDENCE OF THE DIRECTOR TO MAKE OUT A CASE AGAINS T THE ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION OR S ALES. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT IN A.YS. 200 7-08 AND 2008-09, NO INVESTIGATION HAS BEEN DONE BY THE REVE NUE WHICH ARE IMMEDIATE NEXT ASSESSMENT YEARS AFTER THE SEARCH AND SEIZURE OPERATION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION ABOVE FINDINGS AND OBSERVATIO N OF THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT ARE ALSO IMPORTANT 31 ITA NO.1636 & 1637, 1589 &1590/PN/2012 TO DECIDE THE PRESENT APPEALS MORE PARTICULARLY ON THE ADDITIONS BASED ON CONSUMPTION OF ELECTRICITY. 37. THE TRIBUNAL VIDE PARA 24 TOOK NOTE OF THE FACT THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09, NO INVESTIGAT ION WAS DONE BY THE REVENUE AFTER THE SEARCH AND SEIZURE OPERATI ONS IN THE IMMEDIATELY PRECEDING YEAR, WHEREIN DURING THE COUR SE OF SEARCH, CERTAIN LOOSE SHEETS WERE FOUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESSEE FOR ALLEGED SUPP RESSION OF PRODUCTION / SALES. THE TRIBUNAL WHILE DECIDING TH E APPEAL IN M/S. SRJ PEETY STEELS PVT. LTD, IN TURN, RELYING ON THE RATIO LAID DOWN BY COORDINATE BENCH OF THE TRIBUNAL, DELETED THE ADDIT ION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION / SALE S IN ENTIRETY. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: - 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. ( SUPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUP PRESSION OF PRODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERI AL RELYING ON INFORMATION RECEIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MATTER REACHED BEFORE THE TRIBUNAL AND IT IS HELD A S UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE OR DER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELHI (SUPRA). THE COPY OF THE ORDER OF THE CUSTOMS , EXCISE & SERVICE TAX APPELLATE TRIBUNAL IS PLACED ON RECOR D BY THE LEARNED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL AFTER CONSIDERING TH E FACTUAL ASPECTS OF THE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICITY OBSERVED THAT THERE IS N OTHING ON RECORD TO SHOW THAT HIGH POWER CONNECTION SUPPORTED BY EVIDENCE WAS MADE ON A PARTICULAR DATE AND THAT RES ULTED IN HIGHER AMOUNT OF PRODUCTION. IT WAS FURTHER OBSERVE D BY THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL VI DE PARA 4.2 THAT SO FAR AS THE PRODUCTION QUANTUM IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO S HOW THAT THE AUTHORITIES INTERVENED LAWFULLY RECORDING THE O UTPUT IN THE PRESENCE OF WITNESS. THE CUSTOMS, EXCISE & SERV ICE TAX APPELLATE TRIBUNAL HELD THAT THEREFORE, A HYPOT HETICAL CASE APPEARS TO HAVE BEEN MADE BY REVENUE IN EXCESS IVE EXERCISE OF ITS JURISDICTION TO THE DETRIMENT OF JU STICE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL FU RTHER CONSIDERED THE RETRACTION STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY AND VIDE PARA 6 HELD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF R EVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN T O LAW AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO P ROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECORD TO SHOW EITHER SUPPRESSION OF PURCHASE OF IN PUT OR CLANDESTINE REMOVAL OF GOODS IN FOOL PROOF MANNER K NOWN TO LAW FOR WHICH, IT CAN BE PAINFULLY SAID THAT THE AD JUDICATION HAS NO LEGS TO STAND. BOTH THE APPEALS ARE THEREFOR E, ALLOWED WITH CONSEQUENTIAL RELIEF, IF ANY.' 11. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRI BUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD NOT BE CRITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R. A. CASTINGS, WHERE THE APPEAL OF THE REVENUE WAS DISMI SSED BY THE HON'BLE APEX COURT AS REPORTED IN 2011 (269) ELT A-108 (SC). THE BASIS FOR THE ADDITION IN THE PRESE NT CASE 32 ITA NO.1636 & 1637, 1589 &1590/PN/2012 WAS THE INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTMENT AND THE SUPPRESSION IN PRODUCTION CALCUL ATED BY THE SAID INVESTIGATING TEAM. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDI TION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF THE INVESTIGATING TEAM. THE CUST OMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL (SUPRA) IN THE APPEAL FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CATEGORICALLY HELD THAT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HAS BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PURCH ASE OF INPUT OR REMOVAL OF GOODS. IN VIEW OF THE AFORESAID FINDINGS OF THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIB UNAL IN ASSESSEE'S OWN CASE THERE IS NO MERIT IN ANY ADDITI ON BEING MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AND ALSO ALLEGED INVESTMENT IN PURCHASE OF RAW MATERIAL. IN VIEW THE REOF, WE HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE S ALE OF UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNEXPLAINED INVESTMENT MERITS TO BE MADE IN THE HANDS OF THE AS SESSEE. WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF C IT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF ITS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUNT. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NO S.1 AND 2 RAISED BY THE REVENUE. 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPR A) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSU MPTION TO PRODUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGING DIRECTOR OF THE SAID COM PANY BEFORE THE CENTRAL EXCISE AUTHORITIES. THE LD. CIT (A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLEN GED THE ORDER OF LD. CIT(A) BEFORE THE TRIBUNAL. IT WAS HE LD THAT THERE WAS NO JUSTIFICATION TO SUPPORT THE SAID ADDITION A ND THE REVENUES APPEAL WAS DISMISSED. IN THE LIGHT OF OU R ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITION S MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) I N BOTH THE ASSESSMENT YEARS BASED ON THE ORDER PASSED BY THE C CE, AURANGABAD AS WELL AS ON THE BASIS OF CONSUMPTION O F THE ELECTRICITY USED IN MANUFACTURING OF INGOTS/BILLETS ARE NOT SUSTAINABLE. WE, ACCORDINGLY, DELETE THE ADDITIONS MADE TOWARDS THE ALLEGED SUPPRESSION OF PRODUCTION AND S ALES AT ENTIRETY AND ALLOW THE GROUND NOS. 3, 4, 5, 6 & 8 I N THE A.Y. 2007-08 AND GROUND NOS. 2,3,4 & 6 IN THE A.Y. 2008- 09. 38. THE TRIBUNAL THEREAFTER, HELD THAT THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF GR OSS PROFIT TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALSO GAVE A FINDING THAT SINCE THE ADDITIONS MADE I N THE HANDS OF THE ASSESSEE HAVE BEEN DELETED, THERE WAS NO MERIT IN A NY ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 TO 29 HELD AS UNDER:- 33 ITA NO.1636 & 1637, 1589 &1590/PN/2012 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF AC COUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONLY REASON FOR REJECTION OF THE BOOKS OF ACCOUNT W AS THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AND WHICH WAS DETER MINED ON THE BASIS OF THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTRICITY USED IN THE MANUFACTURING OF THE INGOTS/BILLETS RELYING ON THE TECHNICAL OPIN ION OF DR. BATRA, IIT, KANPUR. NO OTHER REASONS ARE GIVEN BY THE ASSE SSING OFFICER. WE HAVE ALREADY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION/SALES. WE, THEREFORE, HOLD THAT THE REJ ECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT BE UPHELD. WE, ACCORDINGLY, ALLOW GROUND NO. 7 IN THE A.Y. 2007-08 AND GROUND NO. 5 IN THE A.Y. 2008-09. 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS P ROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESS ED SALES AND SAID ISSUE ARISES FROM GROUND NO. 9 IN THE A.Y. 200 7-08 AND GROUND NO. 7 IN THE A.Y. 2008-09 ARE ON. AS THE AS SESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIRE ADDITIONS M ADE BY THE ASSESSING OFFICER ARE DELETED, THE GROUND NO. 9 IN THE A.Y. 2007- 08 AND GROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFR UCTUOUS. 29. IN GROUND NO. 10, THE ASSESSEE HAS RAISED THE OBJECTION FOR MAKING THE ADDITION OF RS.37,69,582/- . THE SAID ADDITION IS MADE BY THE LD. CIT(A). HE HAS OBSERVE D THAT THERE IS AN ELEMENT OF THE UNDISCLOSED INVESTMENT I N RESPECT OF THE UNDISCLOSED TURNOVER WHICH IS ESTIMATED AS A N AVERAGE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARL IER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSERVED THAT THE UNDISCLOSED SALE FOR THE EARLIEST YEAR UNDER APPEAL ARE OF RS.39,20,36,546/- AND THE SAID INVESTMENT REQUIRED FOR PRODUCTION OUT OF BOOKS, THEREFORE, WORKED OUT RS.3 7,69,582/- . IN FACT, THE SAID ADDITION IS MADE BY THE LD. CI T(A) AS HE HAS CONFIRMED THE ALLEGED SUPPRESSION OF PRODUCTION /SALES AS HELD BY THE ASSESSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENT IRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALES , HENCE, THIS ADDITION DOES NOT SURVIVE AND SAID ADDITION IS ALSO DELETED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY THE ASSESSEE. 39. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE R EVENUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A ) OBSERVING AS UNDER:- 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT( A). WE HAVE ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSES SEE ON THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES. A S THE ASSESSEE HAS SUCCEEDED ON THE BASIC ADDITIONS, THE GROUNDS TAKEN BY THE REVENUE DO NOT SURVIVE AS THE ENTIRE A DDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWIN G THE GROUNDS TAKEN BY THE ASSESSEE. ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISMISSED. 40. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE BEFORE US WAS THAT THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE RATIO LAID DOWN IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). IT WAS FURTHER POINTED OUT BY H IM THAT IN THE CASE 34 ITA NO.1636 & 1637, 1589 &1590/PN/2012 OF BHAGYALAXMI STEEL ALLOYS PVT. LTD., THERE WAS NO INVESTIGATION BY THE DGCEI AND FURTHER THERE WAS NO ORDER OF SETTLEM ENT COMMISSION. HOWEVER, THE CCE, AURANGABAD HAD PASSE D AN ORDER AGAINST THE ASSESSEE, BUT THERE WAS NO CASE OF CLAN DESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY AGAINST THE ASSESSEE. THE LD. SPECIAL AR ADMITTED THAT THERE WAS NO EVIDE NCE WITH THE EXCISE DEPARTMENT OR THE INCOME-TAX DEPARTMENT REGA RDING CLANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY. HOWEVER, BECAUSE OF HUGE FLUCTUATION IN ELECTRICITY CONSUMPTION AND PRODUCTION OF INGOTS / BILLETS, ADDITION WAS MADE I N THE HANDS OF THE ASSESSEE. HOWEVER, IN OMSAIRAM STEEL & ALLOYS PVT. LTD., IT WAS FAIRLY ADMITTED BY THE LEARNED AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE THAT THERE WAS INVESTIGATION BY THE DGCEI AND IN ASSESSMENT YEARS 2006-07 AND 2007-08, THE ASSESSEE HAD FILED THE PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH WA S ACCEPTED. HOWEVER, IN ASSESSMENT YEARS 2005-06 AND 2008-09, T HERE WAS NO SUCH PETITION FILED BEFORE THE SETTLEMENT COMMISSIO N. 41. WE FIND THAT THE ASSESSING OFFICER IN THE PRESE NT CASE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CONS UMPTION OF ELECTRICITY BASED ON THE REPORT OF DR. BATRA. THE ADDITION IN THE HANDS OF SISTER CONCERN M/S. SRJ PEETY STEELS PVT. LTD. WAS MADE ON THE BASIS OF THE REPORT OF ONE DR. BATRA WITH RE GARD TO ELECTRIC CONSUMPTION AND THE THIRD MEMBER OF CESTAT HAD DELE TED THE AFORESAID ADDITION MADE UNDER THE EXCISE LAW. SIM ILARLY, IN THE CASE OF ASSESSEE BEFORE US, THERE IS ORDER OF CCE, AURANGABAD AND OF CESTAT AND THE ASSESSING OFFICER WORKED OUT THE ADDITION ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY AS DETERMINED BY CCE, AURANGABAD. FOLLOWING THE SAME LINE OF REASONING A S IN THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND NO MERIT IN THE ADDITION MADE IN THE HANDS OF THE ASSESSEE ON SURMI SES. BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND LD. SPECIAL AR HAS RAISED IDENTICAL ARGUMENTS AS IN M/S. SRJ PE ETY STEELS PVT. LTD. (SUPRA) AND SINCE THE TRIBUNAL HAS ALREADY DEC IDED THE ISSUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), THE RATIO OF THE SAID DECISION IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. HOWEVER, ADDITIONAL PRODUCTION RELATING TO THE DECLARATION M ADE BEFORE THE SETTLEMENT COMMISSION IS TO BE ADDED IN THE HANDS O F THE ASSESSEE, AS ADMITTED BY THE LEARNED AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE. 42. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR BEFORE US DURING THE COURSE OF HEARING OF THE BUNCH OF APPEAL S WAS THAT IT HAD MOVED MISCELLANEOUS APPLICATION AGAINST THE ORDER O F TRIBUNAL DATED 16.01.2015 AND THE HEARING OF THE PRESENT APP EALS BE KEPT IN ABEYANCE. AFTER HEARING THE APPEALS IN THE PRESENT BUNCH OF APPEALS, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) WAS ALSO FIXED F OR HEARING AND THE SAME WAS HEARD ON 19.06.2015. WE HAVE BY AN OR DER OF EVEN DATE DISMISSED THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CO NSIDERING THE SUBMISSIONS OF BOTH THE AUTHORIZED REPRESENTATIVES. WE HAVE BY AN ORDER OF EVEN DATE HELD THAT THERE IS NO MERIT I N THE SAID MISCELLANEOUS APPLICATION FILED BY THE REVENUE AND NO REMEDY IS AVAILABLE TO THE REVENUE UNDER SECTION 254(2) OF TH E ACT. IN VIEW THEREOF, THE NEXT OBJECTION OF THE LD. SPECIAL AR F OR NOT RELYING ON THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA ) ALSO STANDS DISMISSED. 35 ITA NO.1636 & 1637, 1589 &1590/PN/2012 43. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION, RAISED BEFORE US IS THAT WHERE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE R EMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, THE ADDITI ON COULD BE UPHELD IN THE HANDS OF THE ASSESSEE BY EXTRAPOLATIN G THE SALES FOR PERIOD OF 300 DAYS. THE LD. SPECIAL AR FOR THE SAI D PROPOSITION RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE RELATING TO ASSESSMENT YEAR 2006-07. THE CASE OF T HE REVENUE BEFORE US WAS THAT WHERE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMISSION FOR PART OF THE PERIOD, THEN IN VIEW OF THE ORDER OF THE SETTLEMENT COMMISSION AND ALSO SINCE T HE ASSESSEE HAD ADMITTED TO ADDITIONAL INCOME ON SUCH ACCOUNT B EFORE THE ASSESSING OFFICER, THE SALES FOR THE ENTIRE YEAR SH OULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDES TINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS ON ACCO UNT OF SEARCH AND SEIZURE PROCEEDINGS CONDUCTED BY DGCEI ON CERTA IN BROKERS AND SUB-BROKERS. CONSEQUENT THERETO, SHRI SRJ PEET Y, MANAGING DIRECTOR OF M/S. SRJ PEETY STEELS PVT. LTD. ADMITTE D TO THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND APPROACHED THE SETTLEMENT COMMISSION FOR PAYMENT OF EXCISE DUTY ON THE SAID AMOUNT. THE SETTLEMENT COMMISSION ACCE PTED THE PETITION OF THE ASSESSEE, BUT ALSO LEVIED PENALTY. THE ASSESSEE BEFORE THE ASSESSING OFFICER ADMITTED THAT THE ADDI TIONAL INCOME IN RESPECT OF THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, IS TO BE ADDED IN THE HANDS OF THE ASSESSEE. ALL THIS INFORMATION WAS AVAILABLE BEFORE THE ASSESSING OFFI CER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT NO OTHER INVE STIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER WHILE COM PLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE ASSES SING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THAT THE ASSESSE E HAD NOT CORRECTLY DISCLOSED THE PRODUCTION OF INGOTS / BILL ETS. THE BASIS FOR SUCH ASSUMPTION WAS THE ELECTRICITY CONSUMPTION, FO R WHICH THE ASSESSING OFFICER PLACED RELIANCE ON THE REPORT OF DR. BATRA AND ORDER OF CCE, AURANGABAD. THE ASSESSING OFFICER AP PLYING THE FORMULA WORKED OUT THE SUPPRESSED PRODUCTION AND SA LES IN THE HANDS OF THE ASSESSEE. WE IN THE PARAS HEREINABOVE HAVE ALREADY ADJUDICATED THE ISSUE THAT NO ADDITION ON ACCOUNT O F SUPPRESSED PRODUCTION / SALES ON SUCH ACCOUNT COULD BE MADE IN THE HANDS OF THE ASSESSEE. THE LD. SPECIAL AR ON THE OTHER HAND , STRESSED THAT WHERE THE ASSESSING OFFICER HAD THE INFORMATION OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFOR E THE ASSESSING OFFICER, THE SALES FOR THE PERIOD OF 300 DAYS SHOULD BE EXTRAPOLATED IN THE HANDS OF THE ASSESSEE. HE STRE SSED THAT EVEN WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERI AL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF INCOME WA S FOUND FOR THE PART OF THE YEAR, THEN THE ASSESSING OFFICER CA N ESTIMATE THE ADDITIONAL INCOME FOR WHOLE OF THE YEAR. MERELY BE CAUSE THE ASSESSING OFFICER HAD ADOPTED ANOTHER METHODOLOGY O F SUPPRESSION, THE ADDITION IN THE HANDS OF THE ASSES SEE COULD BE SUSTAINED ON THE BASIS OF EXTRAPOLATION OF SALES FO R 300 DAYS, IN VIEW OF THE ADMISSION OF THE ASSESSEE OF CLANDESTINE REM OVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRESSION OF I NCOME. 36 ITA NO.1636 & 1637, 1589 &1590/PN/2012 44. THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS DETECTED BY THE EXCISE A UTHORITIES DURING THE COURSE OF SEARCH AND SEIZURE OPERATION O N CERTAIN BROKERS, HOWEVER, NO SEARCH AND SEIZURE OPERATION W AS CARRIED OUT AGAINST THE ASSESSEE. IN ORDER TO BUY PEACE OF MIN D, THE ASSESSEE DECLARED THE SAID AMOUNT VIDE PETITION BEFORE THE S ETTLEMENT COMMISSION, WHICH HAS BEEN ACCEPTED BY THE SETTLEME NT COMMISSION IN TOTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE THAT DECLARATION WAS TO BUY PEACE OF MIND, BUT WE FIND NO MERIT IN THE SAME, SINCE THE OBJECT OF MOVING PETIT ION BEFORE THE SETTLEMENT COMMISSION IS TO SETTLE THE DISPUTE. IN CASES WHERE ANY SETTLEMENT PETITION IS MOVED BY THE CLAIMANTS, THE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFER MADE BY THE CLAIMAN T AND WHERE ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MA KING THE OFFER, THEN THE FIGURES OF SETTLEMENT CAN BE INCREASED. H OWEVER, IN THE CASE OF THE ASSESSEE, OFFER OF THE ASSESSEE HAS BEE N ACCEPTED FOR THE FINANCIAL YEAR AND THE SAME CANNOT BE SAID TO B E RESTRICTED TO THE NUMBER OF DAYS FOR WHICH IT WAS OFFERED. THE B ASIS OF ANY SETTLEMENT IS THE OFFER MADE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST THE PERSON OFFERING THE SETTLEMENT AN D WHERE THE EVIDENCE HAS BEEN FOUND FOR PART OF THE YEAR, SUCH SETTLEMENT BEING ACCEPTED IS RELATABLE TO THE YEAR UNDER CONSIDERATI ON. IN CASES WHERE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE BY THE SETTLEMENT COMMISSION, THEN NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED CLANDES TINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY OR SUPPRESS ED SALES FOR THE BALANCE PERIOD, IN THE ABSENCE OF ANY EVIDENCE FOUN D AGAINST THE ASSESSEE FOR THE BALANCE PERIOD. 45. ANOTHER ASPECT OF THE ISSUE IS THAT THOUGH THE FACTUM OF THE ASSESSEE FILING THE PETITION BEFORE THE SETTLEMENT COMMISSION, WAS BEFORE THE ASSESSING OFFICER, EVEN ADDITIONAL INCOM E ON SUCH OFFER OF SETTLEMENT WAS OFFERED BY THE ASSESSEE BEFORE TH E ASSESSING OFFICER, HOWEVER, NO FURTHER INQUIRY, INVESTIGATION OR ACTION WAS TAKEN BY ASSESSING OFFICER IN THIS REGARD. IN THE ABSENCE OF THE SAME, THE ISSUE RAISED IN THE PRESENT APPEAL IS WHE THER ANY EXTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIED OR NOT. THE ANSWER, IN OUR OPINION, HAS TO BE IN NEGATIVE. 46. THE LD. SPECIAL AR VEHEMENTLY RELIED ON THE RAT IO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 137 TTJ (PUNE) 627, WHICH IN TURN HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT. IT MAY BE POINTED OUT THAT THE FACTS OF THE CASE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 ARE AT VARIANCE . THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON THE BASIS OF SEARCH AND SEIZURE ACTION CARRIED OUT BY THE INCOME-TAX DEPART MENT AND THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH, WHICH WERE ADMITTED BY THE ASSESSEE TO REFLECT SUPPRESSION OF SALES. O N THE BASIS OF AFORESAID DOCUMENTS, THE INCOME FOR THE YEAR WAS EX TRAPOLATED, WHICH ORDER OF THE TRIBUNAL WAS APPROVED BY THE HON BLE BOMBAY HIGH COURT. HOWEVER, FOR THE YEAR UNDER CONSIDERAT ION, THERE WAS NO SEARCH AND SEIZURE OPERATION CARRIED OUT BY THE INCOME-TAX DEPARTMENT AGAINST THE ASSESSEE AND ALSO NO INVESTI GATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER, AS STATE D EARLIER. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST THE ASSES SEE, MERELY BECAUSE THE ADDITION WAS MADE IN THE HANDS OF THE A SSESSEE IN A PRECEDING YEAR, WE FIND NO MERIT IN THE SUBMISSIONS OF THE ASSESSEE 37 ITA NO.1636 & 1637, 1589 &1590/PN/2012 THAT FOLLOWING THE SAME RATIO, EXTRAPOLATION OF SAL ES FOR THE ASSESSMENT YEAR 2007-08 SHOULD BE MADE IN THE HANDS OF THE ASSESSEE, IN VIEW OF THE SETTLEMENT PETITION BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. THE PERUSAL OF THE ASSE SSMENT ORDER AND THE ORDER OF CIT(A) REFLECTS NO SUCH BASIS WAS ADOPTED FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. THE SOLE BASIS ON WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE MADE WAS ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. UND OUBTEDLY, BOTH THE ASPECTS I.E. THE PETITION MADE BY THE ASSESSEE BEFO RE THE SETTLEMENT COMMISSION PURSUANT TO SEARCH CONDUCTED BY THE DGCEI AND ALSO THE OTHER BASIS I.E. ERRATIC CONSUMP TION OF ELECTRICITY, WERE BEFORE THE ASSESSING OFFICER. HO WEVER, THE ASSESSING OFFICER ADOPTED THE SECOND ISSUE IN THE H ANDS OF THE ASSESSEE AND MADE THE AFORESAID ADDITION, WHICH WE IN THE PARAS HEREINABOVE HAD ALREADY DELETED. THE LD. SPECIAL A R POINTED OUT THAT THE SAID ACTION OF THE ASSESSING OFFICER WAS O NE OF THE METHODOLOGIES FOR WORKING OUT THE ADDITIONAL INCOME OF THE ASSESSEE. WE FIND NO MERIT IN THE STAND OF THE LD. SPECIAL AR SINCE NO INVESTIGATION OR INQUIRY WAS CARRIED OUT BY THE ASSESSING OFFICER AND MERELY ON THE BASIS OF PETITION FILED BEFORE TH E SETTLEMENT COMMISSION, WHICH IN TURN HAS BEEN ACCEPTED, NO FUR THER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN THE ABS ENCE OF ANY INCRIMINATING MATERIAL FOUND FOR THE BALANCE PERIOD . 47. RELIANCE IN THIS REGARD IS PLACED UPON THE RATI O LAID DOWN IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). I N THE FACTS OF THE SAID CASE, CERTAIN DOCUMENTS WERE FOUND BY THE INCOME-TAX DEPARTMENT PURSUANT TO SEARCH AND SEIZURE ACTION, W HICH INDICATED CLEARANCE IN SALES, ON THE BASIS OF WHICH THE ADDIT IONAL INCOME WAS ADDED IN THE HANDS OF THE ASSESSEE. THE SAID INFOR MATION WAS FORWARDED TO THE CENTRAL EXCISE DEPARTMENT PURSUANT TO WHICH, ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PASSED BY THE EXCISE COMMISSIONER. HOWEVER, THE TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE GROUND THAT THERE WAS NO CORROBORATIVE EVIDE NCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND FROM THE POSSESSION OF THE ASSESSEE BY THE EX CISE AUTHORITIES. 48. FOLLOWING THE SAME ANALOGY OF REASONING, WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN FOUND BY THE EXCISE DEPARTMENT , IN RESPECT OF SALE OF GOODS FOR A PARTICULAR QUANTITY AND FOR A P ARTICULAR PERIOD, THE SAME COULD NOT BE RELIED UPON AS EVIDENCE, WHILE EX TRAPOLATING THE SALES AND THE ADDITIONAL INCOME THEREON IN THE HAND S OF THE ASSESSEE DURING THE INCOME-TAX PROCEEDINGS. THE AS SESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SUPPRESSED P RODUCTION AND EVEN AFTER THE ORDER OF SETTLEMENT COMMISSION, THE ASSESSING OFFICER HAD NOT INVESTIGATED OR BROUGHT ANY MATERIA L ON RECORD ESTABLISHING SUPPRESSED PRODUCTION AND / OR ITS SAL E OUTSIDE THE BOOKS OF ACCOUNT. 49. THE LD. SPECIAL AR TIME AND AGAIN STRESSED THAT THE ASSESSEE HAD MADE ADMISSION BEFORE THE ASSESSING OF FICER AND THIS WAS THE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. THE ALLEGED ADMISSION BEFORE THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, WHIC H WAS RELATABLE TO THE CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYM ENT OF EXCISE DUTY ADMITTED BEFORE THE DGCEI AND OFFERED BY WAY O F PETITION 38 ITA NO.1636 & 1637, 1589 &1590/PN/2012 BEFORE THE SETTLEMENT COMMISSION. NO STATEMENT OF DIRECTORS OF THE ASSESSEE COMPANY WAS RECORDED EITHER BY ASSESSING O FFICER OR CIT(A) DURING THE COURSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN THIS REGARD. THE ADDITION AT BEST IS TO BE RESTRIC TED TO THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE. 50. IN OUR CONSIDERED OPINION, THE ISSUE IN HAND IS TO BE DECIDED ON THE BASIS OF FINDINGS OF THE ASSESSING OFFICER A ND CIT(A) AND THE TRIBUNAL CANNOT TRAVERSE BEYOND THE ORDERS OF ASSES SING OFFICER AND CIT(A). ADMITTEDLY, THE PARTIES CAN RAISE AN ADDIT IONAL PLEA BEFORE THE TRIBUNAL JUSTIFYING THE ADDITION. HOWEVER, THE SAID PLEA HAS TO BE DECIDED KEEPING IN MIND THE FACTS OF THE CASE. THO UGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT MADE THE ADDIT ION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PETITION FILE D BEFORE THE SETTLEMENT COMMISSION, BUT HAD ADOPTED THE ERRATIC CONSUMPTION OF ELECTRICITY AS BASIS TO MAKE THE ADDITION, WE HAVE ADJUDICATED THE ALTERNATE PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AND DISMISSED THE SAME. 51. NOW, WE COME TO THE RELIANCE PLACED UPON BY BOT H THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITION VIS- -VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF S ALES FOR THE PERIOD OF 300 DAYS. 52. THE LD. SPECIAL AR FURTHER RELIED ON SERIES OF DECISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CONFESSIONAL STATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPOR TANT PIECE OF EVIDENCE. WE ARE IN AGREEMENT WITH THE SAID PROPOS ITION LAID DOWN BY THE HONBLE SUPREME COURT IN PULLANGODE RUBBER P RODUCE CO. LTD. VS. STATE OF KERALA AND ANOTHER (SUPRA), BUT T HE STATEMENT MADE BEFORE ANY OF THE AUTHORITIES IS LIMITED TO TH E AMOUNTS SURRENDERED VIDE THE SAID SETTLEMENT AND NO INFEREN CE COULD BE DRAWN AGAINST THE ASSESSEE FOR EXTRAPOLATING THE SA ME FOR FULL YEAR AND FOR THE BALANCE YEAR AND IN OTHER YEARS, OTHER THAN THE YEAR IN WHICH THE SAID SETTLEMENT WAS OFFERED. IN THIS REG ARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE BANGALORE B ENCH OF TRIBUNAL IN ANJANEYA BRICK WORKS VS. CIT (SUPRA), WHEREIN IT HAS BEEN HELD THAT MERE EXISTENCE OF EVIDENCE OF CONCEALMENT IN T HE NEXT ASSESSMENT YEAR COULD NOT BE THE BASIS FOR ESTIMATI NG INCOME IN ANY OTHER ASSESSMENT YEARS. 53. FURTHER, BEFORE THE HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA), THE ISSUE WAS IN RELATION TO THE EVIDENCE FOUND OF UNACCOUNTED SALES FOR PART OF THE PERIOD DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER ON THE SAID BASIS ASSUMED UNACCOUNTED SALES DURING THE ENTIRE Y EAR, WHICH WAS DELETED BY THE CIT(A) AND THE TRIBUNAL. THE HONBL E DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESSING OFFICER MAY HAVE PERHAPS BEEN VALID IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTING YEAR AND THE BOOKS OF ACCOUNT HAD BROUGH T SOME DISCREPANCY. 54. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE H ONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUP RA). 39 ITA NO.1636 & 1637, 1589 &1590/PN/2012 55. FURTHER, THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION AVAILABLE WITH THE CENTRAL EXCISE DEPAR TMENT, WHEREIN UNACCOUNTED SALES WAS ESTIMATED FOR 56 DAYS AND THE ASSESSING OFFICER ESTIMATED THE SALES FOR THE REMAINING PERIO D. THE ADDITION WAS DELETED IN THE HANDS OF THE ASSESSEE AND WAS RE STRICTED TO THE INCOME DECLARED BY THE ASSESSEE ON THE BASIS OF PAP ERS SEIZED, FOR WHICH THE ASSESSEE HAD FILED A PETITION BEFORE THE SETTLEMENT COMMISSION AND INCOME ON THAT ACCOUNT WAS DECLARED BY THE ASSESSEE. THE TRIBUNAL HELD THAT NO FURTHER ADDITI ON COULD BE MADE IN THE HANDS OF THE ASSESSEE FOR THE BALANCE PERIOD . THE TRIBUNAL FURTHER HELD THAT HYPOTHETICAL CALCULATION OF TURNO VER AND ESTIMATION OF GROSS PROFIT MERELY ON GUESS WORK AND PRESUMPTIO N WAS NOT SUSTAINABLE IN LAW. NO DETAILS WERE AVAILABLE TO T HE ASSESSING OFFICER TO ARRIVE AT SUCH FIGURE OR HAD THERE BEEN ANY CONCEALED SALES FOR 9 MONTHS, IT COULD HAVE BEEN DETECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERATIONS. T HEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER IS PURELY BA SED ON GUESS WORK, PRESUMPTION AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N CARRIED OUT BY THE CENTRAL EXCISE AUTHORITIES. SUCH ADDITION BASE D ON HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GP ON PRE SUMPTION AND SURMISES WERE NOT SUSTAINABLE. THE TRIBUNAL DISTIN GUISHED THE RATIO LAID DOWN IN CST VS. H.M. ESUFALI H.M. ABDULALI (SU PRA). THE LD. SPECIAL AR RELIED ON THE SAID DECISION AND IN VIEW OF THE DECISION OF COORDINATE BENCH ON SIMILAR ISSUE AS BEFORE US, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR. 56. THE LD. SPECIAL AR DURING THE COURSE OF ARGUMEN TS BEFORE THE TRIBUNAL IN MISCELLANEOUS APPLICATION FILED IN M/S. SRJ PEETY STEELS PVT. LTD. VIDE MA NO.17/PN/2015 HAD RAISED T HE ISSUE OF EXTRAPOLATION OF SALES FOR 300 DAYS IN VIEW OF THE ASSESSEE HAVING ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THEREAFTER, FILING A PETITION BEFOR E THE SETTLEMENT COMMISSION. 57. THE PLEA OF THE REVENUE RAISED IN THE MISCELLAN EOUS APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMENT DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCELLANE OUS APPLICATION. HOWEVER, IN THE INTEREST OF JUSTICE, THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATED BY THE TRIBUNAL BY OBSERVING AS UNDER:- 41. BEFORE CLOSING THE ISSUE, IN THE INTEREST OF J USTICE, WE WOULD LIKE TO ADJUDICATE THE ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE. ADMITTEDLY, DURING THE COURSE OF SEA RCH AND SEIZURE OPERATION ON CERTAIN BROKERS, EVIDENCES OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS FOUND AGAINST THE ASSESSEE. HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE A SSESSEE, BUT THE ASSESSEE CLAIMS THAT IN ORDER TO BUY PEACE OF MIND, IT HAD DECLARED THE SAID AMOUNT BY WAY OF PETITION BEF ORE THE SETTLEMENT COMMISSION. THE SAID OFFER MADE BY THE ASSESSEE WAS ACCEPTED IN TOTO. IT MAY BE NOTED THA T THE EXCISE AUTHORITIES HAVE THE POWER TO RE-VISIT THE O FFER MADE BY THE ASSESSEE, IN CASE, ANY ADVERSE MATERIAL IS A VAILABLE 40 ITA NO.1636 & 1637, 1589 &1590/PN/2012 AGAINST THE PERSON MAKING THE OFFER. IT MAY ALSO B E NOTED THAT THE SETTLEMENT ACCEPTED IN THE HANDS OF THE AS SESSEE IS FOR THE FINANCIAL YEAR AND IS NOT RESTRICTED TO THE NUMBER OF DAYS FOR WHICH IT HAS OFFERED. IN OTHER WORDS, ONC E A PERSON MAKES A SETTLEMENT PETITION FOR A PARTICULAR YEAR O N ACCOUNT OF THE EVIDENCE FOUND FOR PART OF THE PERIOD AND ON CE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE, NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDEST INE REMOVAL OF GOODS OR SUPPRESSED SALES, IN THE ABSENC E OF EVIDENCE FOR THE BALANCE PERIOD. THE ABOVE SAID RA TIOS HAVE BEEN LAID DOWN IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA), HONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH & CO. (SUPRA), HONBLE DELHI HIGH COURT IN CIT VS. AN AND KUMAR DEEPAK KUMAR (SUPRA). THE LD. SPECIAL AR HAD PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY H IGH COURT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGU ING THE ISSUE NO.2 I.E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS- PLACED. THE HONBLE BOMBAY HIGH COURT IN THE SAID DECISION CONSIDERED THE SCOPE OF ASSESSMENT UNDER CHAPTER XI V-B AND HELD THAT WHAT IS TO BE ASSESSED UNDER THE SAID CHAPTER IS UNDISCLOSED INCOME OF THE BLOCK PERIOD AND NOT T HE TOTAL INCOME OR LOSS OF THE PREVIOUS YEAR REQUIRED TO BE ASSESSED UNDER REGULAR ASSESSMENT UNDER SECTION 143(3) OF TH E ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH REGULA R ASSESSMENT STANDS ON A DIFFERENT FOOTING IN CONTRAS T TO THE EXERCISE UNDERTAKEN BY THE ASSESSING OFFICER UNDER CHAPTER XIV-B, WHERE THE ASSESSING OFFICER HAD TO ASSESS ON LY THE UNDISCLOSED INCOME. HOWEVER, THE HONBLE BOMBAY HI GH COURT FURTHER HELD THAT UNDER CHAPTER XIV-B, THE AS SESSING OFFICER CANNOT ESTIMATE THE UNDISCLOSED INCOME ON A N ARBITRARY BASIS. WE FIND NO MERIT IN THE PLEA RAIS ED BY THE LD. SPECIAL AR IN THIS REGARD AS THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. 42. EVEN ON MERITS, THE REVENUE HAS NO CASE AGAINST THE ASSESSEE. THE RELIANCE PLACED UPON BY THE LD. SPEC IAL AR ON THE RATIO LAID DOWN IN ASSESSEES OWN CASE RELAT ING TO ASSESSMENT YEAR 2006-07 IS MISPLACED AS THE ADDITIO N IN THE HANDS OF THE ASSESSEE IN THAT YEAR WAS MADE ON ACCO UNT OF SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE IN COME-TAX DEPARTMENT, WHEREIN SALES OUTSIDE BOOKS WERE FOUND FOR FEW DAYS. HOWEVER, NO INDEPENDENT INVESTIGATION / INQU IRY BY THE INCOME-TAX DEPARTMENT HAS BEEN MADE BEFORE COMPLETI NG ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. ANOTH ER ASPECT OF THE ISSUE IS THAT THE PETITION BEFORE THE SETTLEMENT COMMISSION HAS BEEN MADE BY THE ASSESSEE IN ASSESSM ENT YEAR 2007-08 ONLY AND NO SUCH PETITION FOR CLANDEST INE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN MADE FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME ON ACCOUNT OF SUCH CL ANDESTINE REMOVAL OF GOODS BEFORE THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2007-08 AND THE SAME WAS THE REASON FOR REOPENING THE ASSESSMENT UNDER SECTION 148 OF THE A CT. ONCE A PARTICULAR FACT WAS AVAILABLE WITH THE ASSES SING OFFICER, WHICH WAS TAKEN NOTE OF AND CONSIDERED BY HIM DURING THE ASSESSMENT PROCEEDINGS, BUT THE ADDITION HAVING BEEN MADE ON ONLY ON THE ISSUE OF ERRATIC CONSUMPTI ON OF ELECTRICITY, WHICH IS THE BASIS OF ORDER PASSED BY CCE, 41 ITA NO.1636 & 1637, 1589 &1590/PN/2012 AURANGABAD, WHO WAS ALSO IN KNOWLEDGE OF THE CLANDE STINE REMOVAL OF MATERIAL AND THE INVESTIGATION CARRIED O UT BY THE DGCEI AND THE PETITION BEFORE THE SETTLEMENT COMMIS SION, EVEN THE THIRD MEMBER OF CESTAT WAS AWARE OF ALL TH ESE PROCEEDINGS, BUT SINCE THE SETTLEMENT PETITION FILE D BY THE ASSESSEE HAD BEEN ACCEPTED IN TOTO BY THE SETTLEMEN T COMMISSION, NO FURTHER ADDITION COULD BE MADE IN TH E HANDS OF THE ASSESSEE ON THIS GROUND, IN THE ABSENCE OF A NY INQUIRY OR INVESTIGATION BY THE ASSESSING OFFICER. ACCORDI NGLY, THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN ASSES SEES OWN CASE REPORTED IN 137 TTJ 627 [PUNE] IS MIS-PLAC ED AND THERE IS NO MERIT IN THE ARGUMENTS OF THE LD. SPECI AL AR IN THIS REGARD. 58. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS T HAT INCOME COULD BE ESTIMATED/ TAXED ON THE THEORY OF PREPONDE RANCE, IN TURN RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN SUMATI DAYAL VS. CIT (SUPRA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL (SUPRA), WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND T HE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING THE COURSE OF HEARING, THE LD. SPECIAL AR RELIED ON SERIES OF OTHER DECISIONS, BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT MAY BE PUT ON RECORD THAT ALL THESE DECISIONS WERE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SAME HAVE ALREAD Y BEEN CONSIDERED. 59. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES, WE HOLD THAT NO EXTRAPOLATION OF SALES FOR 300 DAYS CA N BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE FOUND FOR CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAYS, WHICH IN TURN, HAS BEEN ADMITTED BY THE A SSESSEE BY WAY OF FILING PETITION BEFORE THE SETTLEMENT COMMISSION , WHICH IN TURN, HAS ALSO BEEN ACCEPTED BY THE SETTLEMENT COMMISSION . MERELY BECAUSE THE SETTLEMENT COMMISSION ACCEPTED THE CLAI M OF THE ASSESSEE OF ADDITIONAL EXCISE DUTY PAYABLE ON THE S AID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF THE REVENUE THAT THE SAID FIG URES OF ADDITIONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAPOLATING THE SALES IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTEDLY, T HE ASSESSEE HAD OFFERED ADDITIONAL INCOME ON THE SAID CLANDESTINE R EMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS T O BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THA T IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTIN G THE INCOME IN THE HANDS OF THE ASSESSEE FOR THE RESPECTIVE YEA RS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECT IVE ASSESSEE IN RESPECTIVE YEARS. ACCORDINGLY, WE DIRECT THE ASSES SING OFFICER TO VERIFY FROM THE RECORDS FOR THE RESPECTIVE YEARS AN D INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUCH ADMITTED CLAND ESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EITHER BEFORE THE SETTLEMENT COMMISSION OR BEFORE THE EXCI SE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPEALS AND IN SOME YEARS, THERE IS NO ADMISSION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOS E YEARS IN THE ABSENCE OF ANY EVIDENCE AND / OR ANY INVESTIGATION OR INQUIRY MADE BY THE ASSESSING OFFICER AND WHERE THE ASSESSING OF FICER HAS FAILED 42 ITA NO.1636 & 1637, 1589 &1590/PN/2012 TO COLLECT ADDITIONAL EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, BY WAY OF EXTRAPOLATION OF SALES F OR 300 DAYS ON ACCOUNT OF ANY EVIDENCE FOUND IN ANY PRECEDING OR S UCCEEDING YEARS. FURTHER, NO ADDITION CAN BE MADE IN THE HAN DS OF THE ASSESSEE, WHERE NO PETITION HAS BEEN FILED BY THE A SSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEARS OR BEFORE THE EXCISE AUTHORITIES. IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD., THERE IS NO INVESTIGATION BY DGCEI AND HENCE, NO ADDITION ON ACCOUNT OF EXTRAPOLATION CAN BE MADE, IN THE ABSENC E OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE. 60. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF E RRATIC CONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR OF CLANDEST INE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, NEXT ADDIT ION MADE IN THE HANDS OF THE ASSESSEE I.E. ALLEGED INVESTMENT IN TH E PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDEST INELY REMOVED, IS NOT SUSTAINABLE. ACCORDINGLY, WE HOLD THAT NO A DDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALL EGED INVESTMENT IN PURCHASES UNDER SECTION 69C OF THE AC T. 61. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON IS SUE OF NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SE CTION 148 OF THE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION/SALES, THE SAID ISSUE IS DISM ISSED AS ACADEMIC. 62. IN VIEW OF OUR DELETING THE ADDITION IN THE HAN DS OF THE ASSESSEE THE GROUNDS OF APPEAL RAISED BY THE REVENU E I.E. AGAINST APPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES AR E ALSO DISMISSED. 13. THE LD. SPECIAL AR FOR THE REVENUE BEFORE US PO INTED OUT THAT ANOTHER ASPECT OF THE ADDITION IS EXTRAPOLATIO N OF SALES TO BE MADE IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YE AR ON THE BASIS INFORMATION RECEIVED FOR PART OF THE YEAR. IT MAY BE PUT ON RECORD THAT IN ASSESSMENT YEAR 2009-10 IN THE HANDS OF VAR IOUS FURNACE COMPANIES NO SUCH INVESTIGATION WAS MADE BY DGCEI. IN THE ABSENCE OF ANY INFORMATION GATHERED BY THE EXCISE A UTHORITY OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXC ISE DUTY, AND IN THE ABSENCE OF THE ASSESSEE DECLARING ANY ADDITIONA L INCOME IN ITS HAND, NO SUCH ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. HOWEVER, IN CASE ANY OF THE ASSESSEE HAVE ADMITTED TO CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY, TH EN ADDITIONAL INCOME RELATABLE TO SUCH TURNOVER IS TO BE ADDED IN THE HANDS OF THE SAID ASSESSEE. WE HAVE ALREADY DEALT WITH THIS ISS UE IN DETAIL BY ORDER OF EVEN DATE IN THE BUNCH OF APPEALS AS REFER RED EARLIER. 14. FOLLOWING THE SAME PARITY OF REASONING AS PER O UR ORDER OF EVEN DATE IN THE CASE OF BHAGYALAXMI STEEL ALLOYS P VT. LTD. & OTHERS RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 AND IN VIEW OF THE PHYSICAL VERIFICATION CARRIED OUT BY THE AUTHORITIE S AS REFERRED TO BY US IN THE PARAS HEREINABOVE AND THE CONSEQUENT ORDE R OF DIVISION BENCH OF CESTAT IN THE CASE OF PRESENT ASSESSEES B EFORE US RELATING TO ASSESSMENT YEAR 2009-10, WE FIND NO MER IT IN THE ORDERS OF AUTHORITIES BELOW AND WE REVERSE THE ORDER OF CI T(A). WE FIND NO 43 ITA NO.1636 & 1637, 1589 &1590/PN/2012 MERIT IN THE ADDITION MADE IN THE HANDS OF THE ASSE SSEE ON ACCOUNT OF SUPPRESSED PRODUCTION CONSEQUENT TO ERRATIC CONS UMPTION OF ELECTRICITY. 15. THE APPEALS OF THE REVENUE AGAINST THE ADOPTION OF GP RATE OF 4% AND THE DELETION OF WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUPPRESSED PRODUCTION IS ALSO DELETED BY US BY FOLL OWING ORDER IN THE CASE OF ASSESSEE AND OTHERS IN EARLIER YEARS AND FO LLOWING THE SAME PARITY OF REASONING, WE DISMISS THE GROUNDS OF APPE AL RAISED BY THE REVENUE. 8. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO T HE FACTS OF THE CASE DECIDED BY THE TRIBUNAL, THEREFORE, FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CITED (SUPRA) AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE THE GROU NDS RAISED BY THE REVENUE ARE DISMISSED AND THE ADDITION SUSTAINED BY THE CIT(A) IS DELETED. 9. SO FAR AS OTHER LEGAL GROUNDS IN THE APPEAL FILED BY THE ASSESSEE ARE CONCERNED, SINCE THE LD. COUNSEL FOR THE A SSESSEE DID NOT PRESS FOR THE SAME THESE GROUNDS ARE DISMISSED AS NOT PRESSED. ITA NO.1636/PN/2012 (BY REVENUE) (A.Y. 2004-05) : ITA NO.1589/PN/2012 (BY ASSESSEE) (A.Y. 2004-05) : 10. GROUNDS RAISED BY THE REVENUE AS WELL AS THE ASSES SEE ARE AS UNDER : GROUNDS BY REVENUE : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CLANDE STINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAXES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUF ACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODU CTION SHOWN IN THE BOOKS OF ACCOUNTS? 44 ITA NO.1636 & 1637, 1589 &1590/PN/2012 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT THE W ORKING CAPITAL IS REQUIRED FOR PURCHASE OF RAW MATERIAL AND DAY TO DAY ACTIVITIES FOR PRODUCTION OF GOODS EVERY YEAR. 4. THE ORDER OF THE AO BE RESTORED AND THAT OF THE C IT(A) BE VACATED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. GROUNDS BY ASSESSEE : 1. THE REASSESSMENT ORDER PASSED U/S 143(3) RWS 147 IS BAD IN LAW AND THE SAME MAY PLEASE BE CANCELLED. 2. THE LEARNED CIT(A) ERRED IN NOT QUASHING NOTICE I SSUED U/S 148 OF INCOME TAX ACT. IT MAY PLEASE BE HELD THAT NOTICE U/S 148 AND CONSEQUENTLY ASSESSMENT ORDER PASSED U/S. 143(3) RWS 147 IS BAD IN LAW AND THE SAME MAY PLEASE BE QUASHED. 3. WITHOUT PREJUDICE TO ABOVE GROUNDS, DIRECTIONS ISSU ED U/S. 144A BY JOINT COMMISSIONER OF INCOME TAX RANGE 1 ARE BAD I N LAW AS NO OPPORTUNITY OF BEING HEARD WAS GIVEN TO ASSESSEE BEFORE ISSUING DIRECTIONS AND ENTIRE ASSESSMENT ORDER BASED ON SUCH DIREC TIONS MAY PLEASE BE QUASHED. 4. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LOWER AUT HORITIES WERE NOT JUSTIFIED IN REJECTING BOOKS OF ACCOUNTS AND IT IS PRAYED THAT PROFIT ARRIVED FROM AUDITED BOOKS OF ACCOUNTS MAY PLEASE BE ACCEPTED. 5. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LOWER AUT HORITIES WERE NOT JUSTIFIED IN HOLDING THAT THERE IS SUPPRESSED PROD UCTION AND THEY HAVE ERRED IN ESTIMATING SUPPRESSED PRODUCTION BASED ON ELECTRICITY UNITS CONSUMPTION BASIS. 6. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING ASSESSING OFFICER'S ESTIMATE OR ALLEGED SUPPRESSED PRODUCTION WITHOUT ASSESSING OFFICER GRANTING THE COPIES MATERIAL RELIED BY ASSESSING OFFICE R AND OPPORTUNITY TO EXAMINE THE PARTIES. 7. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LEARNED C IT(A) ERRED IN CONFIRMING ADDITION OF RS 72,47,933/- UNDER THE HEAD GROSS PROFIT ON SUPPRESSED SALES AND THE SAME ADDITION MAY PLEASE BE DELET ED. 8. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LEARNED C IT(A) WAS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS 17,42,291/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT FOR SUPPRESSED SALES AND THE SAME ADD ITION MAY PLEASE BE DELETED. 9. ASSESSEE DENIES ITS LIABILITY OF INTEREST U/S. 234 ABC OF INCOME TAX ACT AND THE SAME MAY PLEASE BE DELETED. 10. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , MODIFY AND/OR WITHDRAW ANY OF THE GROUND/S DURING THE COURSE OF HEA RING AS OCCASION MAY DEMAND. 45 ITA NO.1636 & 1637, 1589 &1590/PN/2012 11. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 11. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUNDS RAIS ED BY THE REVENUE AND ASSESSEE ARE IDENTICAL TO THE GROUNDS RAISED BY THE REVENUE AND ASSESSEE IN A.Y. 2009-10. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN PARTLY ALLOWED. FOLLOWING THE SAME REASONING, THE GROUNDS RAISED B Y THE REVENUE ARE DISMISSED AND THE GROUNDS RAISED BY THE AS SESSEE ARE PARTLY ALLOWED. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND BOTH THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30-11-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED : 30 TH NOVEMBER, 2015. LRH'K ' (!* + / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT ( A ) CENTRAL, PUNE 4. 5. 6. CIT CENTRAL, PUNE ' *, *, IQ.KS / DR, ITAT, A PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE