The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the excise duty cannot be demanded on the estimated production or based on the theoretical calculation.
Aryan Ispat and Power Pvt. Ltd, the appellant assessee was a manufacturer of Sponge Iron, and the manufacture of 1 MT of Sponge Iron requires 1.67 MT to 2 MT of Iron Ore, 2 MT of Coal, and 100 kg of dolomite.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand on undeclared manufactured sponge iron clandestine clearance without payment of Excise Duty to the extent of Rs.2,59,58,417/-.
K. Kurmy and D. Dutta, the counsels for the assessee contended that the quantification of the alleged clandestine manufacture had arrived at an “estimated production basis” and a formula of this estimated production, they had adopted the formula that was not any recognized formula under the Central Excise Act,1944 or any other law.
P. K. Ghosh, the counsel for the department contended that the Central Excise officials visited their unit seized several documents, and recorded the statements by various officials to corroborate that clandestine manufacture and clandestine removal had taken place.
The Bench observed that in the case of Mittal Pigment Pvt. Ltd. Vs. CCE, the court held that the entire quantification was based on the assumptions and presumptions and the calculation attached to arrive at the estimated production which was legally not sustainable.
The two-member bench comprising R Muralidhar (Judicial) and K Anpazhakan (Technical) held that no excise duty can be demanded on “Estimated Production” but can be made only on “Actual production” while allowing the appeal filed by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
