{"id":7865,"date":"2026-02-04T16:30:10","date_gmt":"2026-02-04T11:00:10","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=7865"},"modified":"2026-02-04T16:30:10","modified_gmt":"2026-02-04T11:00:10","slug":"no-duty-demand-based-only-on-input-output-ratio-cestat","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/no-duty-demand-based-only-on-input-output-ratio-cestat","title":{"rendered":"No Duty Demand Based Only on Input\u2013Output Ratio | CESTAT"},"content":{"rendered":"<pre><strong>Case Details: <a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/excise-service-tax\/101010000000415702\/no-duty-demand-merely-on-basis-of-inputoutput-ratio-without-considering-other-manufacturing-parameters-cestat\">Viraj Steel and Energy Ltd. vs. Commissioner of Central Excise, Customs and Service Tax, Rourkela (2026) 38 Centax 290 (Tri.-Cal)<\/a><\/strong><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>S\/Shri Ashok Jindal<\/strong>, Member (J) &amp; <strong>K. Anpazhakan<\/strong>, Member (T)<\/li>\n<li><strong>Shri Kartik Kurmy<\/strong>, Adv., for the Appellant.<\/li>\n<li><strong>Shri B.K. Singh<\/strong>, Authorized Representative, for the Respondent.<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>The assessee was engaged in the manufacture of sponge iron, and the Department alleged under-statement of production and clandestine manufacture and removal. For the purpose of quantifying alleged suppressed production, the Department applied a theoretical input\u2013output ratio of 1.67:1 as against the ratio of 1.85:1 claimed by the assessee, based on expert opinion. On this basis alone, estimated production was worked out, and duty demand was proposed. The adjudicating authority confirmed the demand along with interest and imposed an equal penalty. The matter was accordingly placed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).<\/p>\n<h2><em>CESTAT Held<\/em><\/h2>\n<p>The CESTAT held that no duty demand can be sustained merely on the basis of estimated production derived from theoretical input\u2013output ratios. It was observed that manufacturing output depends on several parameters, such as the quality of raw materials, kiln condition, and other technical and operational factors, which were not examined. The tribunal held that clandestine manufacture and removal is a serious charge and must be proved through tangible, cogent, and affirmative evidence, which was completely absent in the present case. Since the allegation was founded solely on assumptions and estimations without corroborative evidence of actual production or clearance, the demand was legally unsustainable. Accordingly, the demand was set aside, and consequential interest and penalty were held not to arise, and the appeal was allowed in favour of the assessee.<\/p>\n<h2><em>List of Cases Cited<\/em><\/h2>\n<ul>\n<li>Aryan Ispat and Power Pvt. Ltd. v. Commissioner \u2014 2023 (11) TMI 677 &#8211; CESTAT, Kolkata \u2014 Referred [Para 7.1]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=(2025)%2026%20Centax%20141%20(Tri.%20-Cal.)&amp;itemType=AP\">Commissioner v. Argasen Sponge Pvt. Ltd.<\/a> \u2014 (2025) 26 Centax 141 (Tri. -Cal.)] \u2014 Relied on [Para 7, 7.1, 10]<\/li>\n<li>Phil Ispat Pvt. Ltd. v. Commissioner \u2014 2018 (11) TMI 912 &#8211; CESTAT, New Delhi \u2014 Referred [Para 7.5]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=(2025)%2028%20Centax%20368%20(Tri.-Cal)&amp;itemType=AP\">Shri Mahavir Ferro Alloys Pvt. Ltd. v. Commissioner<\/a> \u2014 (2025) 28 Centax 368 (Tri.-Cal) \u2014 Relied on [Para 7, 7.1, 10.1]<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: Viraj Steel and Energy Ltd. vs. Commissioner of Central Excise,&hellip;<\/p>\n","protected":false},"author":19,"featured_media":7875,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,51,63],"tags":[],"class_list":["post-7865","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-excise-service-tax","category-news-excise-service-tax","category-est-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>No Duty Demand Based Only on Input\u2013Output Ratio | CESTAT<\/title>\n<meta name=\"description\" content=\"CESTAT ruled that the excise duty demand cannot be sustained merely on theoretical 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