2014 PLP 1034 (PTD)

JAWAID MASOOD TAHIR BHATTI, JUDICIAL MEMBER.

Through this appeal the impugned Order-in-Original No. 03/2005 dated 4-6-2005 has been objected by the appellant on the following grounds and prayers:-- "

6. That the calculation of consumption of Gypsum as per statement submitted by the learned senior Intelligence Officer as Annex-II to comments, copy attached and marked Annex-VI, has been based on the annual average formula declared by the appellants for different types of cements for the years 1998, 1999, 2000-2001 cannot be applied, for picked up Six quarters, on quarterly basis production of cement because it varies in each quarter on actual consumption of gypsum. The respondent has wrongly applied the consumption formula for the year 1998-99 against the production of cement relating to quarter ending March 1998 (1997-98). This clearly goes to prove that the learned respondent has been misled by formula not related to the period under reference. That as regards the allegation of less production of clinker in relation to slurry consumption (1.70 MT = MT) is concerned, it is at the outset submitted that the learned respondent has made the basis a raw material for calculation of production of clinker, record of which is not prescribed under S.R.O. 499(I)193 dated 14-6-1993. Copy of S.R.O. attached and marked Annex-VII. The assumption of production clinker is not maintainable. We are strengthened in our view by the Judgment of the Hon'ble Supreme Court of Pakistan in case of "Government of Pakistan v. Shahi Bottlers, reported as 1987 SCMR 571, wherein their lordship observed that: "

An analysis of Sub-Rule (2) of Rule 226 of Central Excise Rules, 1994, show that there must be a rule prescribing maintenance of accounts regarding manufacture, storage or disposal of exciseable goods. In case of raw materials, there must be a rule prescribing the maintenance of accounts of receipts of raw materials, its storage, its utilization or its disposal. The existence of a rule requiring the maintenance of accounts in the manner indicated in first part of Rule 226 is a sine qua for invoking Sub-Rule (2) or its proviso. Secondly, before invoking Sub-Rule (2) or its proviso, it must be held as a fact in each case that the rule prescribing the maintenance of accounts has been violated. It is only when these two preconditions are satisfied that the officer concerned can exercise his authority to demand from the manufacturer on the basis of raw material such excise duty as it is in his judgment payable by him on goods." Copy of the Judgment attached and marked Annex-VIII. In the light of tae above landmark judgment, the Order-in-Original impugned in this appeal renders a nullity in the eyes of law.

8. That the allegation of clandestine removal of such a huge quantity of cement, as presumed to have been manufactured and cleared without payment Excise duty and Sales Tax appears to be ridiculous in presence of Central Excise Staff posted in factory round the clock. Furthermore, the staff of the Directorate of Intelligence, Customs, Excise and Sales Tax, who are supposed to be vigilant on such removals, could not see such removals. As a matter of fact the allegation is mischievous and baseless, purported to harass the appellants and nothing else. No tangible evidence is available nor presented at the hearing to prove any extra production or clearance as alleged in the Show-Cause Notice. The alleged clearance of 16528.250 M.T of cement and evasion of Central Excise Duty amounting to Rs.2,49,81,455 and Sales Tax Rs.1,02,377 is the brain held of the departmental functionaries Additional Duty Rs.1,03,42,575 and Additional Sales Tax Rs.4,095 is neither payable nor recoverable PRAYER

9. That in the light of what have been submitted in the foregoing paras, it is prayed on behalf of the appellants that the Honourable Tribunal may graciously be pleased to set aside the impugned order on hearing. The appellant may also be allowed to urge and raise any other point at the time of hearing."

2. The appellant in this case is a public Ltd. company engaged in Manufacturing of cement having factory located at Hyderabad. It is argued by the learned counsel of the appellant that the Order-in-Original is not sustainable as the show-cause notice is time barred in terms of Rule 10(1) or 10(2) or Central Excise Rules and in terms of section 33(3) of Central Excise Act and the show-cause notice dated 5-7-2001 is vague, illegal and without jurisdiction. On facts it is submitted that the show-cause notice is in-correct as only 5 quarters out of 13 quarters of audit period have been taken, the show-cause notice suffers from grave errors as incorrect opening and closing stocks have been taken and that there are serious errors in the contravention report of SIO that leads to the show-cause notice. It is argued that the show-cause notice and the order-in-original under appeal are not sustainable both on facts and in law and liable to be annulled/cancelled. The learned counsel for the appellant has contended that the facts of the case are that the allegation as contained in contravention report was that: "the manager of the unit has already declared in his statement, the formula of the raw mix (slurry consumption 1.7 = Clinker and RT 3/RG-2) register have established the fact that Messrs Zeal Pak Cement Factory Ltd, Hyderabad have issued and used a quantity of 6,12,920 MT as raw mix against which 3,44,800 MT clinker was produced/manufactured, but as per given formula specification, it should be 3,60,541.176 MT which resulted in lesser production of 15,741.176 MT" The learned AR has contended that based on this and for the reasons that in the opinion of Senior Intelligence Officer of Directorate of Intelligence and Investigation, Central Excise Department (SIO) excess quantity i.e. 15.741.176 M.T. of Gypsum was used. A contravention report was made out of evasion. The Excise Books/ Records was impounded by the Directorate of Intelligence and Investigation, Central Excise Department. He has contended that the show-cause notice was issued on 5-7-2001 by the Collector based on report of Senior Investigation Officer (SIO) that Messrs Zeal Pak Cement Factory has allegedly done contravention during audit period of January 1998 to March, 2001. This SCN was based on contravention report of SIO dated 2-6-2001. He has argued that instead of taking the entire period of audit i.e. from January 1998 to March, 2001 i.e. THIRTEEN quarters, the SIO based his report on only FIVE quarters viz: 1. 30-6-1998 2. 31-12-1998 3. 31-12-1999 4. 30-6-2000 5. 31-12-2000 According to learned AR, the SIO made serious error in calculation by taking incorrect opening and closing stocks in each of the quarters and other errors of facts. On legal plain, he has argued that the show-cause notice dated 5-7-2001 was vague, illegal and without jurisdiction as it did not specify under which Sub-Rule of Rule 10 of Central Excise Rules 1944 the same was issued, [Rule 10(1) or 10(2)], thus the very foundation of proceeding according to learned Counsel were illegal and void ab initio. The reliance in this respect has been placed on following decisions:-- (i) Collector Sales Tax v. Pattoki Sugar Mills 2005 PTD 1378 (at pages 1382, 1384). (ii) Atlas Tyre v. Assistant Collector 2003 PTD 1593 (at Page 1595-1597 E and 1599 G) (iii) Zamindar Paper and Board v. Collector 2003 PTD 1257 (at pages 1560B and 1563H) The learned counsel has contended that the show-cause notice was based on presumptions and misreading of facts of the case and the same was illegal and void ab initio, hence the entire proceedings and superstructuros built on illegal notice falls. Reliance in this respect is placed on the ratio of decision in the case of Assistant Collector Customs v. Khyber Lamps reported as 2001 SCMR 838 (at page 842). It is argued that if there is illegality at initial stage, the entire super structure falls. Reliance in this respect is placed on the decisions of the Hon'ble High Court reported as 64 Tax 230 (SHC) and 1991 PTD 658 It is argued that as per subsection (3) of Central Excise Act, 1944 (which is pari materia with proviso to section 36 of Sales Tax Act, 1990) a Collector has been mandated to decide a case within 45 days from the date of issuance of show-cause notice. The said section 33(3) as it existed at the relevant time is reproduced below:-- 33(3) "A Collector an additional collector and a Deputy Collector shall decide the case within forty-five days of the issuance of show-cause notice or within such extended period for which reasons shall be recorded in writing, provided that such extended period shall in no case exceed ninety days" (underlining/bold provided for emphasis) In this case, Show-Cause notice is issued on 5-7-2001 and order-in-original has been passed on 4-6-2005. Hence the Order in Original has been passed about 3 years and 11 months (1429 days) after issuance of show-cause notice and is clearly time barred and hence illegal and void ab initio. Reliance in this respect is placed on a number of case-laws, where it has been held that time limit placed in a statute for creating a tax liability is mandatory and any order passed beyond the prescribed time limit creating a tax liability is illegal, void ab-initio and time barred. Reliance in this regard has been placed on the following case laws:-- (1) Federation of Pakistan v. Ibrahim Textile Mills Ltd. 1992 SCMR 1898 (at page 1901) Where law prescribes period of time for recovery of money after lapse of such prescribed period recovery is not enforceable. (2) Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax 2008 PTD 60 LHC (at pages 64/65) Provision of law prescribed time limit for revenue to create liability is mandatory (3) Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762 (at pages 764,765) Proviso to Section 36(3) of Sales Tax Act is mandatory and any order passed beyond the time limit is illegal and void ab initio. (4) Hanif Straw Board v. Additional Collector 2008 PTD 578 (at page 581) Order passed beyond prescribed limit is time barred: (5) Messrs Abbasi Enterprises v. Collector, Sales Tax, Peshawar 2008 PTD 2025 Isl. H.C. (at page 2031). Section 36(3) is mandatory and not directory and order passed beyond limit is illegal. (6) S.T.A. No. 339/KB/2009 dated 30-9-2010. On facts, the learned counsel argued that the factory worked under supervised clearance during the entire period and full time Central Excise Inspector was posed at the factory. The contravention report of SIO and show-cause notice is replete with errors. He has argued that the SIO has based his report on period January 1998 to March 2001 i.e. 13 quarters and this was the audit period but in sheer mala fide and contrary to law he has chosen/picked up figures/results of 5 (FIVE) quarters only being quarter period ending: i. 30-6-1998 ii. 31-12-1998. iii. 31-12-1999 iv. 30-6-2000 v. 31-12-2000 According to learned AR this action of the SIO of selecting only FIVE quarters out of THIRTEEN quarters of audit period to work out alleged contravention in respect of short production of Clinker of 15,741.176 M.T is replete with accounting and factual errors and illegal and nor proper nor correct. It is submitted that this action of the SIO is clear demonstration of his mala fide and incompetence. According to Learned AR SIO while working the alleged short production of 15,741.176 (MT) of CLINKER has made a serious error by ignoring and taking incorrect Opening Stock/Closing Stock quantity of each quarters without which correct figures of production, supply/stock cannot be worked out. As per standard accepted formula to arrive at quantity of clinker produced, raw mix (slurry) i.e. dividend by 1.7. There is no dispute on this formula. The learned counsel has filed detailed chart reproduced below to show the absurdities in alleged calculation of contravention by SIO and to demonstrate through actual facts that there is no difference and figures duly stand reconciled MESSRS ZEAL PAK CEMENT FACTORY LTD., HYDERABAD STATEMENT SHOWING QUARTER WISE SLURRY POSTION AND CLINKER PRODUCTION A-PERIOD WHICH WAS NOT TAKEN IN WORKING SHEET PERIOD OPENING STOCK SLURRY PRODUCED SLURRY CONSUMED CLOSING STOCK CLINKER PRODUCED 1 2 3 4 5 JAN-98 TO MAR-98 6449 61300 62135 5614 36550 APR-98 TO. JUN-98' JUL-98 TO SEP-98 6385 35380 36159 5606 21270 OCT-98 TO DEC-98 JAN-99 TO MAR-99 15890 176220 181543 10567 106790 APR-99 TO JUN-99 10567 162000 163608 8959 96240 JUL-99 TO SEP-99 8959 206820 212840 2939 125200 OCT-99 TO DEC-99 JAN-2000 TO MAR-2000 14395 47350 51289 10456 30170 APR-2000 TO JUN-2000 JUL-2000 TO SEP-2000 14391 74490 76364 12517 44920 OCT-2000 TO DEC-2000 JAN-2001 TO MAR-2001 12831 79900 85544 7187 50320 TOTAL 843460 869482 511465 B-PERIOD WHICH WAS TAKEN IN WORKING SHEET BY SIO PERIOD OPENING STOCK SLURRY PRODUCED SLURRY CONSUMED CLOSING STOCK CLINKER PRODUCED 1 2 3 4 5 JAN-98 TO MAR-98 APR-98 TO JUN-98 5614 175140 174369 6385 102570 JUL-98 TO SEP-98 OCT-98 TO DEC-98 5606 106130 95846 15890 56380 JAN-99 TO MAR-99 APR-99 TO JUN-99 JUL-99 TO SEP 99 OCT-99 TO DEC-99 2939 102100 90644 14395 53320 JAN-2000 TO MAR-2000 APR-2000 TO JUN-2000 10456 117750 113815 14391 66950 JUL-2000 TO SEP-2000 OCT-2000 TO DEC-2000 12517 111800 111486 12831 65580 JAN-2001 TO MAR-2001 TOTAL 612920 586160 344800 SUMMARY ABSTRACT OPENING STOCK 6,449 SULLRY PRODUCTION (A2+B2) 1456380 TOTAL SLURRY 1,462 829 SLURRY CONSUMED (A3+B3) 1,455,642 CLOSING STOCK 7,187 The learned counsel has explained the absurdities in SIO's contravention report and the fact that the Collector (Adjudication) has not taken cognizance of the same. In this regard he has submitted that the SIO has not taken the entire audit period of 13 quarters but illegally chosen to take only 5 quarters. If date of the entire period of 13 is taken the production results stand duly reconciled and there is absolutely no discrepancy. In this regard he has submitted following calculation: (result in MT) Opening Stock 6449 Slurry Production 1,456,380 Total Slurry 1,462,829 Slurry consumed 1,455,642/1.7= 8,56,260 MT Clinker Produced. Closing stock 7,187 According to him this is exactly result shown in books and declared. He has argued that this choosing of 5 quarters only by the SIO has lead to serious accounting absurdities, as he has forgotten to account for correct opening and closing stocks and has chosen and accounted for opening and closing stocks of wrong quarters. As an example he has submitted that the absurdity in the working done by SIO and show-cause notice can be demonstrated that in Quarter ending December 1998 the closing stock is shown as 15890 MT. But in the next quarter he has selected (period ending December 99) the opening stock has been taken at 2939 MT. These serious errors according to learned AR are there in his entire calculation of Slurry consumption and Clinker production. Learned AR has submitted that as is clear from the chart, even if each of the Five quarters taken by the SIO are independently taken and analyzed and reconciled, there is absolutely no discrepancy as is clear from chart given above. Even if entire period of 13 quarters are taken the same stand duly reconciled. The chart given and re-produced above confirms this. He has pointed out that the SIO in this contravention report (para II on page 3) has committed another serious and grave error as he has taken the figure of total of Raw Mix (Slurry) produced at 6,12,920 MT in the five quarters and divided this by 1.7 to arrive at the presumed clinker production of 3,60,541 MT, instead of taking total of Raw Mix (slurry) consumed in the five quarter; and dividing the same by 1.7 to arrive at actual production of Clinker of 3,44,800 MT of these Five Quarters. This 3,44,800 is actual production of clinker declared in the books and furnished before the Central Excise authorities. According to learned AR the grave error made by the SIO is that he should have considered Raw Mix (Slurry) consumed of 586,160 MT and divided this by 1.7 to arrive at 3,44,800 MT which is exactly the quantity of clinker produced and declared. This clearly shows not only mala fide of the SIO but also his incompetence. As to the allegation regarding excess of 1533.667 MT of gypsum, the learned AR argued that once again SIO has seriously erred as has taken different quarters (he has taken SIX quarters) than those taken for working out alleged short production of Clinker. According to learned AR the SIO has assumed that there should be uniform consumption of 3%. He has contended that the department officer in the reconciliation have conceded and admitted that the Gypsum quantity used by the appellant during the period was within the accepted range of cement industry which ranges between 3% to 5% as this is due to impurities in raw Gypsum that come from mines. The past history is that gypsum consumption is between 3% to 5% depending on purity of gypsum and this has always been accepted by the department. The Gypsum used by appellant in these 5 quarters comes to 3.9%. According to learned AR the SIO has seriously erred in alleging that 1533.667 MT of Gypsum in excess was issued. It is to be noted that gypsum from mines comes in different purities which ranges from 80% to 95% and each truck on sampling basis is tested in factory lab for purity. Laboratory testing register has been placed before this bench by learned AR which shows the truck numbers and test results of each truck. Even in the quarters not taken by SIO the % of gypsum, usage varies from 3% to 5%. He has contended that the figures taken by the SIO are incorrect and are purely based on assumptions, presumptions and incorrect calculations. It is submitted that this allegation of the SIO is incorrect, false and without any basis. The learned AR has argued that on the direction of the Tribunal a Joint Reconciliation was done between the Excise Department represented by Senior Intelligence Officer Mr. Abdul Qayyum Qureshi who was representing the Excise Department before this Tribunal and the appellant. That reconciliation showed that there is no contravention. (Copy of statement has been placed before this bench). He has submitted that again at the direction of the Tribunal a Joint Reconciliation was done by a Committee of Four officers of the Directorate of Intelligence and two representatives of the appellant. The said reconciliation statement in which two of the representatives of the factory were also signatory comes to following conclusion: "In view of the above, it is most respectfully stated that as per record provided by the department and the appellant for reconciliation of 'Clinker' production from 'Slurry' is tallied and no difference is noted". The said joint reconciliation is reproduced hereunder:? "JOINT RECONCILIATION OF 16,528.250 MT ON CEMENT SHORT DECLARED BY M/S ZEAL PAK CEMENT FACTORY LIMITED, HYDERABAD, FOR THE PERIOD FROM JANUARY, 1998 TO MARCH, 2001 (1) In compliance of the honourable appellate Tribunal (Customs, Sales Tax and Federal Excise) Karachi Bench-II, Karachi's order on 14-5-2009, a detailed reconciliation of consumption/ production of Clinker for the period relevant to the appeal by joint committee comprising of members of Appellate (Messrs Zeal Pak Cement Company Limited) and the respondent (The Directorate General of Intelligence and Investigation, FBR, Karachi) is submitted as under:-- (2) Mr. Abdul Qayyum Qureshi, S.I.O., provided a statement prepared on the basis of record of the case available with the department. The statement contains information regarding opening stock, quantity produced, total quantity available, quantity issued for consumption, closing stock, production out of quantity issued. The statement contains information of all three stages of cement manufacturing i.e. "Slurry", "Clinker" and Cement. Mr. Abdul Qayyum Qureshi, under the direction of honourable Appellate Tribunal, has already carried out reconciliation of information provided in the above said statement with the record of the cement factory and found to tally. A report (reconciliation statement) in this regard has already been submitted before the honourable Appellate Tribunal. However, on request of the department, the Honourable Appellate Tribunal has allowed re-examination of the record and to submit a fresh reconciliation report before the Honourable Appellate Tribunal on 11-6-2009 positively. (3) As directed by the Honourable Appellate Tribunal and note sheet order on file vide para No.169/N dated 14-5-2009, the following members attended this office for reconciliation of stocks involved in the appeal case on 18-5-2009, 4-6-2009 and finally on 9-6-2009. Mr. Rafiquzzaman Khan Senior Auditor Mr. Khan Ali Araslan Senior Intelligence Officer Syed Aftab Hussain Senior Intelligence Officer Mr. Abdul Qayyum Qureshi Senior Intelligence Officer Mr. Muhammad Asghar Khan Company Secretary Mr. Mehmood Ghani Khan ZPCF Ltd. Manager Sales and Dispatch, ZPCF Ltd. (4) The above named representatives of the cement factory provided the same statement as a ready provided by Mr. Abdul Qayyum Qureshi. In support of information provided by both, the representatives of the department and the cement company, they provided copies of RT3s and Stock Summary Statements. No other record has been provided from both, the department and the appellants. (5) On the basis of record/information provided by the appellant and the department, a fresh reconciliation has been made and found that the case detecting officer considered the quantity of "Slurry Produced" while calculated the production of "Clinker" whereas, the quantity of "Slurry Issued for consumption" should be considered at this stage. This situation created a difference of 15,741.00 MT in production of "Clinker" from "Slurry". (6) In addition the case detecting officer calculated short consumption of "Gypsum" in accordance with formula for its consumption declared by the cement factory. According to formula the "Gypsum" should be consumed @ 5% of the total production, whereas, the cement factory consumed "Gypsum" within the range of 3% to 5% of the total production of cement. The consumption of "Gypsum" changes according to the quality of Lime Stone and Clay procured by the cement factory and ranges from 3% to 5%. This rate of consumption is accepted by the Cement Industry throughout Pakistan. The case is based on very weak assumption, which in this case is ignorable. (7) In view of above, it is most respectfully stated that as per record provided by the department and the appellants for reconciliation of "Clinker' production from "Slurry" is tallied and no difference is noted. The contention of the officer of Sukkur Range of this office before the Honourable Appellate Tribunal is true and correct. The Honourable Appellate Tribunal may kindly be informed in this regard. Sd/-" The Tribunal then called the Collectorate of Sales Tax/Excise Hyderabad who were not even a party to the case to file reconciliation. The committee constituted averred in their report that as "Original Excise record pertaining to the instant case is not available and annexures I, II, III of the contravention report are missing, hence genuineness of data/figures mentioned therein cannot be verified/ authenticated". The learned AR has submitted that it should be noted that it is clear from record that the appellants were not made party to this committee, violating principles of natural justice and therefore taxpayer/ appellant cannot be made to suffer if the original Excise record that was assumed by the Directorate of Intelligence to be lost/misplaced by the Directorate of Intelligence through negligence or in mala fide is not made available. The learned counsel has submitted that Director Intelligence and Investigation Central Excise had appeared before the bench of this Tribunal and submitted that the contravention report is correct. His statement was without any basis and contrary to the facts of the case and he did not bring any evidence on record to support his statement.

3. On the other hand, the learned DR is supporting the impugned orders of the officers below. He has defended the impugned order of the Collector (Adjudication) and the contravention report. He argued that the case is not time-barred as per Article 254 of the Constitution of Pakistan. He has, however, failed to dispute any of the facts argued by the learned AR nor the obvious accounting errors.

4. We have heard the learned representatives from both the sides and have also perused the impugned orders, the relevant available record of the case, the case-laws submitted by both the sides and relevant provisions of law. We have also carefully considered the arguments advanced by both sides and the facts of the case. We have noted that the show-cause notice was issued on 5-7-2001. As per provisions of section 33(3) of Central Excise Act, 1944, as relevant, on the date the order was mandated to be finalized with 45 days of the issuance of show-cause notice within such extended period for which reasons were to be recorded in writing and such extended period which was not to exceed ninety days in total. In this case no extension was granted as is clear from the order-in-original and the record. In this case order-in-original has been passed after 3 years and 11 months (i.e. 1429 days) after issuance of show-cause notice. Clearly the order is miserably time-barred. The Honourable Supreme Court of Pakistan in case of Ibrahim Textile Mills Limited reported as 1992 SCMR 1898 (at page 1901) held that where law prescribes period of time for recovery of money after lapse of such prescribed period recovery is not enforceable. Reliance can also be placed on cases reported as Super Asia Muhammad Din Sons (Pvt.) Limited v. Collector of Tax Gujranwala, Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others, Hanif Straw Board v. Additional Collector, Messrs Abbasi. Enterprises v. Collector of Sales Tax, Peshawar and S.T.A. No.339/KB/2009 dated 30-9-2010 which has been discussed in the above paras of this order. In all of the above cases, it has been held that order passed beyond prescribed limit is illegal and void ab initio and the provisions of law prescribing time limit for revenue to create liability is mandatory. We are of the view that the reliance of learned DR on Article 254 of the Constitution of Pakistan has no applicability when ordinary laws are being examined. This argument stands already rejected by the Honourable High Court in a case reported as 2008 PTD 2025 in para

14. We are of the view that Article 254 of the Constitution only relates to "any act or things required by Constitution to be done within a particular time period " Hence this Article 254 is applicable only to act or things required to be done by the Constitution of Pakistan and does not apply to ordinary laws. Keeping in view the above facts and the clear provisions of law and the case-law cited above, we hold that the order in original dated 4-6-2005 is time-barred and not sustainable in law and is, therefore, cancelled. We find force in the arguments of the learned AR on the facts of the case. The contravention report of SIO is replete with errors and Collector (Adjudication) did not take due cognizance of the same. The SIO conducted audit of 13 quarters that is of period from January, 1998 to March, 2001 and through what appears to be in mala fide chose five quarters to work out contravention of alleged evasion of short production of Clinker. The five quarters chosen by SIO were period ending: 30-6-1998, 31-12-1998, 31-12-1999, 30-6-2000 and 31-12-2000 We are of the view that the SIO has made elementary mistake of accounting by not treating quantity in closing stock of one quarter as opening stock of the next quarter. This leads to absurd results for which the appellant has been accused. The chart submitted by the appellant clearly shows the absurdities. To cite an example, in the quarter ending 31st December, 1998 selected, closing stock was 15890 MT. But in next quarter selected i.e. 31st December, 1999, the opening stock was taken at 2939 MT. The learned AR has submitted individual reconciliation of each of the five quarters and collectively of 13 quarters to demonstrate that there was no evasion or suppression at all. The alleged use of gypsum calculated at 3% is purely on presumption, whereas depending on purity, gypsum usage has always been between 3% to 5% as this fact has been conceded by the department. We have noted that the SIO has taken the figure of Raw Mix (Slurry) produced at 6,12,920 MT and divided this by 1.7 to arrive at the presumed Clinker production of 3,60,541 MT instead of taking Raw Mix (Slurry) consumed and dividing the same by 1.7 to arrive at actual production of Clinker of 3,44,800 MT of these Five Quarters. As pointed out by the learned AR of the appellant, this 3,44,800 MT is actual production of Clinker declared in the books and to Excise authorities. The grave error made by the SIO is that he should have considered Raw Mix (Slurry) consumed at 568,160 MT and divided this by 1.7 to arrive at 3,44,800 MT which is exactly the quantity of Clinker produced and declared by the appellant. We are of the view that the report of SIO and the entire case has evidently been made in mala fide and on the basis of wrong calculations. We have further noted that the reconciliation carried out on the directions of the Tribunal by the SIO Abdul Qayyum Qureshi and representative of the appellant showed that there was no suppression and figures were duly reconciled. Again, we have noted that another joint reconciliation was carried out by four representatives of the department and two representatives of the company on the directions of the Tribunal and it was reported that "as per record provided by the department and the appellants for reconciliation of Clinker production from Slurry is tallied and no difference is noted. The contention of the officer of Sukkur Range of this office before Honourable Appellate Tribunal is true and correct". Hence even the officers of the department confirmed that there is no evasion, suppression and figures duly reconciled. The subsequent report from the department that as the record is misplaced by them hence genuineness of figures cannot be verified is absolutely of no value as the appellant should not to suffer if the department has misplaced the record of the appellant which they had impounded. The statement of the Director that he supports the contravention report is contrary to the clear facts of the case and even the reconciliation carried out by four of his staff members. Hence on the facts of the case also, we are convinced that there is no evasion of Clinker and figures duly reconciled and proper production of Clinker has been declared by the appellant. Considering all these facts and circumstances of the case, we are of the view that the absurdities, errors, accounting mistakes in the contravention report are crystal clear and obvious. There is no suppression/evasion of Clinker production as alleged. The production figures stand duly reconciled. Hence on the facts of the case also, we hold that there is no suppression/evasion in Clinker production as alleged. Hence on these clear facts of the case, we are of the view that the addition made is not warranted and is, therefore, deleted. The appeal is allowed. CMA/11/Tax(Trib.) Appeal accepted.