2025-VIL-271-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Clandestine Production, Input-Output Ratio - Revenue alleged appellant clandestinely produced and removed Sponge Iron without payment of duty, based on the application of an input-output ratio - Whether the demand for duty on alleged clandestine production of Sponge Iron can be sustained based on the application of the theoretical input-output ratio of 1:1.67 MT - HELD - The demand on the basis of the theoretical input-output ratio of 1:1.67 MT cannot be sustained. The appellant had furnished detailed data on the actual input-output ratio prevailing in its unit, which ranged from 1:1.92 to 1:1.87 during the relevant period - The output is dependent on several factors beyond just the input of iron ore, such as the quality of coal, dolomite, and the capacity of the kiln. Relying solely on the opinion of technical experts without any corroborative evidence was not sufficient to establish the clandestine production - The Tribunal followed the principles laid down in earlier decisions, where it was held that mere approximation or theoretical calculations are not enough, and the Revenue must bring on record tangible evidence to prove clandestine manufacture and clearance - The demand for duty on the alleged clandestine production of Sponge Iron is set aside - Whether the demand for duty on account of under-valuation of Sponge Iron cleared to the appellant's own unit can be sustained - HELD - The demand for duty on account of undervaluation cannot be sustained as the Revenue failed to bring any evidence to show how this would have resulted in any commercial benefit to the appellant. Since the appellant's units share a common balance sheet, and the Excise Duty paid by the appellant's Sponge Iron unit is available as eligible Cenvat Credit at the end of the receiving unit, the situation is revenue neutral - The Tribunal set aside the demand for duty on account of undervaluation of Sponge Iron - Whether the entire demand is hit by the time limitation under Section 11A of the Central Excise Act - HELD - The confirmed demand is hit by the time limitation as the appellant had filed all the relevant returns, including the ER-1, ER-4, and ER-5 returns, disclosing the production and consumption details. The Tribunal observed that the Revenue had not brought any evidence to show that the appellant had indulged in any suppression with the intent to evade duty. Therefore, the extended period of limitation could not be invoked.
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