Page 131 - ELT_15th June 2020_VOL 372_Part 6th

2020 ] SUKH SAGAR METALS (P) LTD. v. UNION OF INDIA 809

“20.1 From the perusal of these reports, we find that wide varia-
tions in the consumption of electricity have been reported for the
manufacture of one MT of steel ingots. This renders the norm of
1046 units adopted by the Revenue as arbitrary. Why not adopt the norm
of 1800 KWH/T or 1427 KWH/T or 650 to 820 units/MT or 851
units/MT as per various reports referred to above or why not adopt
some figure between 555 to 1046 units as norm as per Dr. Batra’s
report?
20.2 We note that no experiments have been conducted in the factories. of
the appellants for devising the consumption norms of electricity for pro-
ducing one MT of steel ingots. It is the basic philosophy in the taxation
matters that no tax can be levied on the basis of estimation. In this case,
there is added problem. Estimation of production fluctuates widly
depending upon the fact as to which report is adopted. Tax is on
manufacture and it is to be proved beyond doubt that the goods
have been actually manufactured, which are leviable to excise duty.
Unfortunately, no positive evidence is coming on record to that ef-
fect. Article 265 of the Constitution of India says that no tax shall be
levied or collected except by authority of law. Unless the manufac-
ture of the steel ingots is proved to the hilt by authentic, reliable and
credible evidence, duty cannot be demanded on the basis of hypothesis and
theoretical calculations, without taking into consideration the ground real-
ities of the functioning of the factories. High consumption of electricity
by itself cannot be the ground to infer that the factories were en-
gaged in suppression of production of steel ingots. The reasons for
high consumption of electricity in the case of the appellants’ facto-
ries have not at all been studied and analysed by the Revenue inde-
pendently. Instead, the norm of 1046 units fixed as per Dr. Batra’s
report has been blindly applied to the appellants’ cases to work out
the excess production. This approach is flawed and does not have
sanctity.
21. The law is well-settled that the electricity consumption cannot be
the only factor or basis for determining the duty liability that too on imag-
inary basis especially when Rule 173E mandatorily requires the Commis-
sioner to prescribe/fix norm for electricity consumption first and notify the
same to the manufacturers and thereafter ascertain the reasons for devia-
tions, if any, taking also into account the consumption of various inputs,
requirements of labour, material, power supply and the conditions for
running the plant together with the attendant facts and circumstances.
Therefore, there can be no generalization nor any uniform norm of
1046 units as sought to be adopted by the Revenue especially when
there is no norm fixed under Rule 173E till date by the Revenue and noti-
fied by it. The electricity consumption varies from one unit to another and
from one date to another and even from one heat to another within the
same date. There is, therefore, no universal and uniformly acceptable
standard of electricity consumption, which can be adopted for de-
termining the excise duty liability that too on the basis of imaginary
production assumed by the Revenue with no other supporting record, evi-
dence or document to justify its allegations. In the following case laws, it
has been held that the consumption of the electricity alone is not sufficient
to determine the production :
(i) Pure Enterprises (P) Ltd. v. CCE, Rajkot - 1999 (111) E.L.T. 407
(Tri.)
EXCISE LAW TIMES  15th June 2020  131