Ms Jagadamba Ingo Tech Steel P LTD Through Its Director Shri Ashok Kumar Agarwal vs. The Commissioner Of Central Excise And Service Tax

Facts

The petitioner, M/s Jagadamba Ingo-Tech Steel (P) Ltd., challenged an Order-in-Original dated 26.02.2015 passed by the Commissioner, Central Excise & Service Tax, Jamshedpur. The order was based on a Show Cause Notice dated 07.11.2013, which alleged clandestine removal of M.S. Ingots during the period October 2008 to March 2013. The petitioner argued that the notice and order were based on presumptions and assumptions, and crucial documents were not supplied. An appeal to CESTAT, Kolkata, and a subsequent Tax Appeal before the High Court were dismissed or withdrawn. The petitioner then filed the present writ petition.

Held

The Court held that the Order-in-Original was based on mere presumptions and possibilities, with nothing proven by the respondents regarding unaccounted manufacturing and clandestine removal of M.S. Ingots. The Court found that the electricity consumption pattern relied upon by the department was arbitrary, as there was a wide variation in reports from different institutions regarding electricity consumption per ton of M.S. Ingots. The department failed to conduct an experiment at the petitioner's premises to establish a reliable consumption pattern. The Court noted that the petitioner's electricity consumption was in consonance with the report by the Joint Plant Committee, Ministry of Steel, Government of India. The Court quashed and set aside the Order-in-Original dated 26.02.2015 and remanded the matter to the Commissioner for fresh adjudication of the show cause notice. The adjudication should consider the principles discussed, and if relying on Dr. N.K. Batra's report, an experiment must be conducted at the petitioner's premises to understand the electricity consumption pattern. The Court also directed collection of other relevant evidence.

Key Issues

1. Whether the Show Cause Notice and the subsequent Order-in-Original were passed in violation of the principles of natural justice due to non-supply of relied-upon documents, specifically the Nucleus Group Report, Dr. N.K. Batra Report, and the Report of All India Induction Furnace Association? (Question of law) 2. Whether the allegations of unaccounted manufacturing and clandestine removal of M.S. Ingots, based on electricity consumption patterns, were substantiated by the revenue, or were they based on presumptions and surmises? (Question of mixed law and fact) Petitioner's Arguments: - Gross violation of natural justice due to non-supply of documents. - Show Cause Notice and Order-in-Original based on presumptions, not proof. - Electricity consumption patterns cited are baseless and not scientifically surveyed. - Relied on the report of the Joint Plant Committee, Ministry of Steel, Government of India, showing consumption in consonance with the petitioner's usage. - Dr. N.K. Batra's report is unreliable, and electricity consumption per se cannot prove clandestine removal, citing multiple High Court and Supreme Court judgments, including R.A. Castings (Private) Ltd. Vs. CCE. - Department failed to conduct experiments at the factory premises to establish consumption norms. - Relied on similarly situated cases where show cause notices were dropped. Revenue's Arguments: - The judgment records no specific arguments presented by the revenue.