TMI Blog2000 (5) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Velepharma, Bahoor - Rs. 4,000.00 3. M/s. Fragrance India, Pondy - Rs. 2,90,000.00 4. M/s. Chinni Cosmetics, Pondy - Rs. 4,000.00 5. M/s. Zoom Cosmetics, Cuddalore - Rs. 40,000.00 6. M/s. Bute Cosmetics, Cuddalore - Rs. 1,00,000.00 2. These were confirmed for (a) clandestine removal of Shampoo falling under Erstwhile Tariff Item 14F under brand name Velvette (b) due to undervaluation. The period of dispute is from 1-4-1982 to 31-3-1985 and the show cause notice was dated 3-7-1988 . The charge of fragmentation to fraudulently avail SSI concession was dropped. 3. Heard Shri A.P. Datar, ld. Advocate for appellants and Shri S. Kannan, ld. DR. 4. Ld. advocate submits as follows :- (i) The main evidence relied upon is certain code number in private books in respect of which statement of Shri Ambikapathy was recorded. He submits that though there was no immediate retraction, the inculpatory statement was denied in cross-examination and that the second set of statements were extracted by coercion. There is also doctor's certificate of beating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, for the purpose of demand all the clearances have been taken. 5. On undervaluation ld. Advocate submits as under :- (1) The ultimate selling price of marketing units has been adopted without any justification. The ex-factory price for the relevant period was Rs. 3.60 for regular shampoo and Rs. 4.20 for egg shampoo. The marketing company purchases the same and sells it to other dealers at Rs. 7.20 and 8.40 respectively. (2) Some of the dealers when they purchase the goods from the factory, they pay the factory gate price but when they purchase from the marketing companies they pay the higher price. This is the basis for sustaining the charge of undervaluation. It is alleged that there is no justification why the same dealers should pay 100% more when purchasing from marketing companies. The reason for paying more when purchases are made from the marketing companies are : - (a) The marketing companies keep stock of all brands as they purchase in bulk. They maintain huge inventory. (b) The marketing companies give door deliveries to the respective dealers. No time is spent on waiting for supply of specified quantities. (c) The marketing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be invoked. (ii) The allegation of clandestine removal is not sustainable for reasons mentioned above. (iii) The impugned order does not specify what has been suppressed which is liable to be disclosed under any statutory provision. (iv) Except coded statement of an employee of marketing company, there is no evidence throughout the detailed proceedings which in any manner establishes clandestine removal or under-valuation as against the assessee. Therefore, there is no ground to involve larger period. 7. Ld. DR takes us through the order impugned. He submits as follows : - (1) As per evidence on record, during the period 1982-83, the six units effected clearance of a total of Rs. 4.3 lakh dozens of Velvette Shampoos (both regular and egg) valued at Rs. 32.43 lakhs whereas as per the coded accounts seized, clearances showed that the total quantity cleared is Rs. 3.9 lakh dozens valued at Rs. 33.54 lakhs. (In the absence of break-up between the regular and egg variety, the value of illicit clearances has been calculated at Rs. 8.60 per dozen per egg). Similarly, during the period 1983-84, these six units have effected recorded clearances of Rs. 9.8 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Velvette Shampoo he paid cash to Shri Sargunam and got it without bills; that he had gone to Cuddalore once, met Dr. Rajkumar discussed about the shampoo business and paid cash. Shri V. Rajasekhar of Madras has stated that against the advertisements made on behalf of the M/s. Valepharma, payment against of the shampoo delivered without bills . These are a few instances which have corroborative value to the clandestine removal/sales of Valepharma Group of Industries. (7) Unaccounted Velvette shampoo had been intercepted by Sales Tax authorities. Shri D. Ravichandran of M/s. Udayam Enterprises, Madras, a distributor of velvette shampoo was confronted on 8-10-1985 with the Invoice No. 42, dated 26-10-1983 where an endorsement 1200 dozens received excess but not billed was made. It was stated that the consignment in Van TMQ 6799 was checked by the Sales Tax authorities and found to be in excess over and above the invoiced quantity of 10,000/- dozens. This fact was not retracted and he also did not turn-up for cross-examination. (8) If the transactions are straight forward why such coded typewritten statements have been maintained in the residence of Shri Ambikapath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 4.20 but it was Rs. 5.49/Rs. 6.41 which was invariably adopted for the purposes of computing the aggregate value of clearances of Rs. 5 lakhs available under Notification No. 140/83, dated 5-5-1983. No charge of extra-commercial consideration was set out in the show cause notice with regard to the transactions between M/s. Voltas Ltd. and the manufacturing unit. Therefore, the price adopted with regard to clearances to Voltas Ltd. was for Rs. 5.49 and Rs. 6.41. It requires mention here that the whole period of demand is divided between clearances to Voltas and clearances to Marketing companies/dealers. M/s. Voltas Limited entered the scene in January, 1984. Therefore, the cut-off period was January, 1984. (15) In view of the reasonings given in OIO in para 48.8, the price adopted for M/s. Voltas Ltd. clearances was Rs. 5.49 and Rs. 6.41 and the price for clearances to marketing companies was Rs. 7.20 and Rs. 8.60. 8. At this point ld. Advocate rebutts the submission of ld. DR regarding check by Sales Tax authorities. He submits that it was allegedly conducted on 8-10-1985, whereas period of dispute is only upto 31-3-1985. Hence this evidence is not proper and cannot be us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) The coded document relates to clandestine removals because it is supported for certain periods with collaborative evidence available; (b) The witnesses questioned with respect to these codes, had accepted them to be so and had not immediately and effectively resiled or retracated from these statements; and (c) The recipient dealers (of tainted non-duty paid goods) had also admitted so, their retraction in a much later cross-examination being of doubtful value, as discussed above. 15. Therefore, there is a preponderance of probability established by Department that goods were clandestinely removed. However, when we proceed further to consider the quantum thereof, we find that there are serious lacuna in this aspect in the order impugned as follows : - (i) Firstly, ld. Advocate s submission that codes cannot be applied to clearances relating to Fragrance (India) as at best those were to Andhra Pradesh while the codes are only for clearances in Tamil Nadu is left unanswered by the order impugned as well as ld. DR. (ii) Secondly, the methodology of estimating the illicit clearances and then apportioning them unit-wise is not logical. The ld. Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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