1. In both these appeals, common questions of law and facts are involved, hence they are decided by this common judgment.

2. By way of these appeals, the appellant has challenged the judgment and order of the tribunal whereby the tribunal has partly allowed the appeals of the assessee.

3. While admitting the appeals, this Court framed the following substantial question of law:-

In D.B. Central/excise Appeal No. 26/2017 (i) Whether in the facts, circumstances and in law the ld. CESTAT, New Delhi has erred in brushing aside the vital evidences in the form of voluntary statements of the Director of the assessee respondent Company which was corroborated by the reports of the test samples and in turn setting aside the order of the Adjudicating Authority?

In D.B. Central/excise Appeal No. 27/2017

(i) Whether in the facts, circumstances and in law the ld. CESTAT, New Delhi has erred in deleting the penalty levied upon the assessee respondent under Rule 26 of the Central Excise Rules, 2002?"

4. For convenience of the Court, the facts of the case are taken from Appeal No. 26/2017 according to which M/s. Mittal Pigment Pvt. Ltd. Kota (Rajasthan) (hereinafter called as the 'assessee') is inter-alia engaged in the manufacture of zinc oxide. During the course of investigation carried out by the Anti-Evasion team of the Central Excise Commissionerate, Jaipur at the factory premises of the assessee respondent, the Director of the assessee respondent Unit, Shri Ramesh Agarwal stated in his statements that yield of zinc oxide from zinc is @ 120% and that minimum content of the zinc in various forms imported by them was 70%. As per Test reports of two samples of raw material also, the zinc content was 81.50% and 96.40%. Thus, it was logically inferred that minimum output should have been 84% (i.e. 120% of 70%) of the inputs used in manufacture of zinc oxide. However, based on above averments of the Director and from comparison of records of inputs and output, it was found by the Anti-Evasion team that the assessee had suppressed the production of 1,545.047 MT of zinc oxide valued at Rs. 14,12,68,835/- during financial years 2003-04 to 2006-07 and thus evaded central excise duty amounting to Rs. 2,30,39,602/-.

3.3. During the course of investigation carried out by the Anti-Evasion team of the Central Excise Commissionerate, Jaipur at the premises of the assessee respondent it was also noticed that inputs involving Cenvat Credit amounting to Rs. 1,31,898/- were also found short. On the basis of above-said investigation, a show cause notice was accordingly issued to the assessee respondent on 11.02.2008 demanding the duty evaded and interest thereon, proposing penalty and appropriation of the cenvat credit reversed by the assessee respondent on inputs found short.

3.5 Counsel for the appellant has taken us to the show cause notice wherein it has been stated as under:

"4. That the assessee is manufacturing zinc content finished goods zinc oxide, zinc ingots, zinc alloys from raw materials-zinc dross, zinc scrap, zinc ingots etc. Raw material is being imported by the assessee and also purchased from local market. The imported raw material viz. zinc dross/zinc scrap used in the manufacture of zinc oxide etc. is being described in Bill of entry as zinc dross/scrap in various names as 'Seal' or 'Scribe' or Scrub'. These codes are also given along with zinc contents in description provided in ISRI (Institute of Scrap Recycling Industries) which are reproduced below:

Code: ITEM

Scribe: zinc scrap contain a maximum 5% un-meltables such as free iron, copper, aluminium and other metals.

Scrub: Zinc dross in slab form with a minimum zinc content of 92%.

Seal: Zinc Top dross with a minimum zinc content of 90%.

Shelf: Zinc dross content minimum of 85%

The test results from the CRCL, New Delhi of the samples of raw material i.e. zinc dross drawn from