TMI Blog2014 (8) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the meaning of ‘R’ as relatable to clandestine clearance. The statement of Captain Sunil Braria is also important indicating that when the goods were not found to be as per invoice, the same were sent back and unloaded and the word ‘R’ was written on the loading slips. The goods were then cleared subsequently. - Majority of demand set aside - for the remaining demand matter remanded back for verification. Undervaluation of goods - Held that:- in respect of the period prior to 01.07.2000 what has to be examined is as to whether in respect of the goods on which the differential duty has been demanded, the normal price had been declared - for the period w.e.f. 01.07.2000 since the assessable value was the transaction value i.e. the assessable value would be the price actually charged by the assessee including price charged in cash over and above the invoice price. - matter remanded back. Denial of CENVAT Credit - short receipt of inputs - Held that:- notwithstanding the issue of Credit Notes by the suppliers, just on account of difference in the weighment done by the suppliers and the weighment done by the recipient it cannot be alleged that the recipient had short receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Zinc Ltd. or is imported. Since the manufacturing process carried out by the Appellant Company involves cutting, slitting and trimming of the H.R. Coils and also subjecting the same to the processing of pickling, skin pass, cold rolling into sheets of various thickness, and galvanizing, if required, there is waste to the extent of 7 to 8% including 1% process loss. The waste in form of trimmings, cut pieces of H.R. Sheets/C.R. Sheets and the zinc waste in form of zinc ash and zinc dross is also sold on payment of duty. During the period of dispute from 1.10.1996 to 31.12.2000, they were selling the goods directly from the factory as well as through their depots located at 11 stations viz. Dera Basi, Chandigarh, Varanasi, Delhi, Parwanu, Ludhiana, Kanpur, Kolkata, Guwahati, Bombay and Jaipur. 1.2 On receipt of an intelligence that BSSL are evading central excise duty on large scale by either clearing their finished products clandestinely or under declaring the value of the goods in the invoices and recovering the balance amount over and above the invoice price in cash from their customers, the factory premises of BSSL were searched on 21.09.2000 by the officers of Director Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se details of despatches of the excisable goods from the factory. The document marked A-12 appeared to be containing the details of under invoiced clearances from the BSSL during the period 1.8.2000 to 21.09.2000 to their dealers. The document marked A-13 appeared to be containing sales to M/s. Amit Ram Rakhyani of Jodhpur. The document marked A-14 contained details of transactions with M/s. Aksar Trading Company, Veeramgaon including the amounts to be collected over and above the invoice price. The document A-15 and A-27 were the credit note registers maintained by Shri Arun Gupta, AGM, BSSL, containing details of the credit notes issued by BSSL on account of quantity discount, cash discount, etc. and in respect of some of such credit notes, there were remarks adjusted in R Account and on comparison with the statutory records, it was found that no discount had been passed on to the customers in the statutory records, while the same had been considered in the reconciliation of the accounts in the private records. From this, it appeared that R Account is the account of cash collection, in respect of under-invoiced goods or the goods cleared without invoice and without payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers, and that the cash recoveries were being monitored by the Management through the Accounts Section. Accordingly in respect of various transactions recorded in the documents, A-1 to A-41 seized from the Accounts Section, the investigating officers determined that the central excise duty amounting to ₹ 14,29,69,371/- has been short paid on the above counts during the period from 1.10.1996 to 21.09.2000. 1.5 Some of the seized documents were credit notes issued to the Appellant Company by their raw material suppliers in respect of short received quantity. Since in respect of the short received quantity Cenvat Credit amounting to ₹ 6,07,745/- had been taken, the investigating officers were of the view that the Appellant Company are not eligible for this credit. 1.6 During the period from 01.10.96 to 30.09.2000, in respect of the goods cleared from the factory to the Depots from where the same were to be sold, the duty was required to be paid during the period prior to 01.07.2000 on the normal price of the goods at the depot at the time of their removal from the factory and during the period w.e.f. 01.7.2000 on the transaction value at the Depot at the time of remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment which took place just before the issue of adjudication order on 9.3.2010. Shri Suresh Upreti, the then Dy. Manager (Accounts) is one of the key witnesses in this case, as it appeared that the documents A-1 to A-41 recovered from the Account Section of the Appellant Company had been prepared by Shri Suresh Upreti. But after recording of his statement dated 21.09.2000, wherein only a few questions had been put to him regarding some of the documents i.e. A-1 to A-41 recovered from his Section and wherein he had admitted only to writing in his own hand writing the documents marked A-I and A-2, he had stopped cooperating with the investigating officers. Though, initially, he was sick and was admitted in the hospital, but long after his discharge from the hospital, inspite of being summoned, he was not appearing before the investigating officers. However, on 21.01.2010, after about 9 years, he filed an affidavit claiming that though the documents A-1 to A-41 recovered from the Accounts Section had been written by him only, these documents do not represent the real transactions and have been fabricated by him, in connivance with one Shri J.K. Bansal, Proprietor of M/s. J.K. Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty demand of ₹ 12,47,27,529/- along with interest thereon under Section 11 AB. Besides this, he also confirmed the Cenvat Credit demand of ₹ 6,07,745/- holding that this amount of Cenvat Credit has been taken without actually receiving the goods. 1.8.3 As regards the total duty demand of ₹ 15,34,52,215/ (Rs.14,09,82,58/- +Rs.1,24,69, 624/-) raised on the ground of higher depot prices, the commissioner accepting the appellants contentions held that:- (a) the correct short payment on this count during the period from1.10.2000 to 31.12.2000 is ₹ 1,65,58,691/- against which differential duty of ₹ 1,26,38,283/- has already been paid by the appellant; and (b) For the period 1.7.2000 to 31.12.2000 the appellant would be eligible for deduction of freight expenses from the factory to the depot, as during this period, place of removal did not include depot and accordingly, the duty demand of ₹ 32,72,527/- is not sustainable; Accordingly he confirmed the duty demand of ₹ 6,47,926/-as against the total demand of ₹ 15,34,52, 215/- along with interest thereon under Section 11 AB and dropped the remaining duty demand. The Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 has been filed by the Revenue against the part of the Commissioners order dropping the duty demand of ₹ 15,28,04,289/-. 2. Heard both the sides. 3. Shri S. Ganesh, Senior Advocates and Shri Rajesh Chhibber, Advocate, appeared for all the Appellants, other than Shri Suresh Upreti and Sh. Bharat Sharma, Advocate, appeared for Sh. Upreti. The Department was represented by Shri A.K. Raha, Advocate, as special fee counsel. While Shri Rajesh Chhibber, giving an overall outline of the case against the appellant mainly pleaded in respect of the allegation of clandestine removal, Shri S. Ganesh, the learned Senior Counsel made submissions in respect of the allegation of under valuation. 3.1 Shri Rajesh Chhibber, Advocate, pleaded that out of the total duty/Cenvat Credit demand of ₹ 29,70,29,329/- made in the show cause notices against the Appellant Company, the duty demand of ₹ 14,29,69,371/- is on the basis of the allegation of clandestine removal and under valuation and is based on the documents marked A1 to A41 recovered from the Accounts Section of the Appellant Company, the demand of ₹ 6,07, 745/- is in respect of Cenvat Credit, which according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 7,83,39,361/- on the basis of allegation of clandestine removal, the duty demand of ₹ 2,37,92,847/- is on the basis of the records A-1, A-4, A-5, A-6 along with G-6, G-7, G-29 and F-4 and the duty demand of ₹ 5,45,46,514/- is based solely on the documents A-10 and A-40. When the entire duty demand based on the allegation of clandestine removal, is based solely on the documents fabricated by Shri Suresh Upreti and this fact has been confirmed by Shri Upretti in course of his cross examination and when the Commissioner opted not to re-examine him, the Commissioner could not draw a contrary conclusion; (ii) Out of total duty demand of ₹ 7,83,39,361/- based on the allegation of clandestine removal, the customers had been identified in respect of duty demand totalling ₹ 6,76,10,665/- and in respect of demand amounting to ₹ 1,07,28,696/- the customers have not been identified at all and accordingly the duty demand of ₹ 1,07,28,696/- is not sustainable on this basis only. Out of the identified customers, only certain customers had been contacted and inquiry had been made with them and the total duty demand in respect of sales to such customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts fabricated by Shri Upreti, which do not represent any real transaction. The alleged manufacture and clandestine removal of 17,990 M.T. of finished products on which the above-mentioned duty has been demanded would require huge quantity of raw materials namely HR Coils and Zinc. While HR Coils are purchased from Steel Authority of India Ltd., TISCO, Essar Steels and Jindal Steels or are imported, Zinc Ingots are purchased from Hindustan Zinc Ltd. or are imported. Neither unaccounted purchase of HR Coils and Zinc Ingots from SAIL, M/s TISCO, Essar Steels, Jindal Steels or Hindustan Zinc Ltd. is possible nor any such evidence has been unearthed by the department. No documents showing unaccounted purchase of the HR Coils and Zinc have been found and similarly no discrepancy in the stock of these items has been detected while the purchase of such a huge quantity of raw material and movement of final product would involve movement of over 4000 trucks, but there is no evidence to such effect. Moreover, production of 17,990 M.T. of GP/GC Sheets would result in generation of about 1400 M.T. of scrap, while there is no case of the department regarding clandestine removal of the scrap, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced by the appellant in their defence. (viii) Duty demand of ₹ 5,56,12,785/- is based on the allegation of under valuation which in turn is primarily based on the records marked A-1, A-4, A-5, A-6, A-14, A-39, A-40 and A-41 seized from the Accounts Section which had been prepared by Shri Upreti. For making the allegation of under valuation, the information found in other records - A-30, A-42 and E-2/E-6, which are the regular records of the Appellant Company, have been wrongly interpreted. The allegation of under valuation has been made mainly in respect of non-standard items like Arising and Zinc Ash/Dross. The department has interpreted the L-3 , L-5 and L-10 as the transactions where an amount @ ₹ 3,000/- per M.T., ₹ 5,000/- per M.T. and ₹ 10,000/- per M.T. respectively had been collected from the buyers in cash over and above the invoice price. Here also, out of total duty demand of ₹ 5,56,12,785/- in respect of sales to 182 buyers, the demand of ₹ 1,39,93,358/- based on the document A-40, is in respect of sales to parties who have not been identified and, as such, in respect of which no inquiry was possible. The remaining demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice is for the period from October 1996 to September 2000. Therefore, this would amount to duplication of the demand. Moreover when the genuineness of the document A-2 and A-3 is itself in doubt as Shri Suresh Upreti has stated that these documents have been fabricated along with other documents to put the Appellant Company in trouble, no reliance can be placed on the same and, hence, this duty demand is also without any basis. 3.1.3 Shri Rajesh Chhibber, emphasized that the entire duty demand of ₹ 14,29,69,371/- in the show cause notice dt. 02.01.2011 based on the allegation of clandestine removal and under valuation is based on the department s interpretation of the code letters W , R , L-3 , L-5 and L-10 used by Shri Upretti in the records written by him. According to the department, the transactions marked with code W represent the sales without invoice and without payment of duty, the transactions marked with code letter R represent the transaction which are either without payment of duty or where part of the payment was to be received in cash and the transactions with code L-3, L-5 and L-10 represent the transactions where part of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order-in-original is correct. It is his contention that the Revenues prayer to adopt the price in the documents A-9 and A-37 is not acceptable at all. He also pleaded that the cash discounts and quantity discounts have been correctly allowed by the Commissioner as the same were known to the customers and had, indeed, been passed on and evidence in this regard had been produced before the Commissioner. It was, therefore, pleaded that there is no merit in the Revenue s appeal against the part of the Commissioner s order dropping the duty demand of ₹ 15,28,04,287/- 3.3 Shri S. Ganesh, the learned Senior Counsel, appearing for the Appellant Company pleaded that the allegation of under valuation is without any basis as the same has been alleged in respect of only a small fraction of transactions of certain goods mainly Trimming (Arising) while the department has raised no objection to the sale of the same goods at the same price to the other buyers. When certain goods were being sold to the buyers at certain price which had not been objected to by the department and, as such, in respect of those sales there is no allegation of under valuation, the department cannot all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the demand is the Cenvat Credit demand of ₹ 6,07,745/- which is based on certain documents recovered from the factory/office premises of the Appellant Company which show that the Appellant Company had received credit notes from the raw material suppliers in respect of short-receipt and still they had taken Cenvat Credit in respect of full quantity of raw-materials while they were not eligible for Cenvat Credit in respect of the quantity of raw materials which had not been received and in respect of which they had received compensation from the suppliers in form of credit notes, that the third component of the duty demand - ₹ 15,34,52,213/- is based on the allegation that while during the period of dispute, in respect of clearances of the finished products from the factory to the depots on stock transfer basis, the Appellant Company was required to pay duty at the time of clearance of the goods from the factory at the prevailing prices at the respective depots at the time of removal, the duty has been paid on the prices which are much lower than the prevailing prices of the same goods at the depot at the time of removal or at the time of closest to the time of removal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dducing the cogent evidence in this regard, that in this regard, he relies upon the judgment of Hon ble Allahabad High Court in case of Somani Iron Steels Ltd. Vs. CESTAT, reported in 2011 (270) ELT-189 (All.) and the judgment of Hon ble Himachal Pradesh High Court in case of CCE Vs. International Cylinders Ltd., reported in 2010 (255) ELT-68 (HP),that no evidence has been produced by the Appellant Company to prove that the contents of these documents are false, while on the contrary, the documents, in question, recovered from the Account Branch and on which duty demand of ₹ 12,47,25,529/- has been confirmed by the Commissioner are corroborated by the documents recovered from other branches of the Appellant Company s office, that in the documents marked A-1 to A-41, the transactions with code letter W represent the sales made without payment of duty and without issue of invoices, that this conclusion is inevitable in view of the fact that in respect of the transactions/sales marked W in the private records of the Appellant Company prepared by Shri Upreti, there are corroborative entries at gate register maintained by the security personnel of the Appellant Company while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-2 seized from the account branch of the Appellant Company, which had been admittedly written by Shri Upreti, showed the cash balance of ₹ 18,281/- in the account of M/s Aksar Trading Company; that this is a clinching evidence showing that transactions recorded by Shri Upretti in the record marked as A-1 to A-41 are real transactions and are not fabrication, that Shri Har Kishan Bhai Soneji in his statement dated 25.11.2000 has stated that the rate of the material to be purchased used to be finalized on phone with Shri Heera Singh Aswal, Shri Deepak Bansal and Shri B.K. Gupta of the Appellant Company and at the time of finalization of the deal, it used to be decided as to how much payment is to be made to the Appellant Company by cheque/draft and how much payment is to be made by cash; that this statement of Shri Soneji has not been retracted by him; that one of the dealers of the Appellant Company is M/s Shree Umiya Steel Corporation, Veeramgaon whose partner is Shri H.R.L Desai; that Shri Desai was confronted with a letter dated 30.9.2000 written by him to the Appellant Company, which had been recovered from the accounts branch of the Appellant Company and he stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany in his statement has taken a stand that the letter R refers to rebate, this statement is false, as, if the above mentioned transactions between the Appellant Company and M/s J.K. Bansal Industries which are marked R , the amount of ₹ 11,59,122/- is treated as rebate payable to Shri J.K. Bansal, there would have been no necessity for the Appellant Company going to the court for recovery of some outstanding amount from Shri J.K. Bansal. Shri Raha, therefore, pleaded that the code R refers to unaccounted transactions. Shri Raha, explained that the documents A-1 to A-41 recovered from the account department of the Appellant Company on which duty demand of ₹ 12,47,24,529/- is based, are the transaction which are real and not fabricated transactions as claimed by the appellants based on the deposition of Shri Upretti and his affidavit. He once again emphasized that while on one hand in terms of the provisions of Section 36A of the Central Excise Act, 1944, the contents of these documents recovered from the account branch of the Appellant Company and, which admittedly, have been written by Shri Upreti, an employee of the Appellant Company, have to be presumed to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order confirming duty demand of ₹ 12,47,24,529/-. 4.5 As regards the Cenvat Credit of ₹ 6,07,745/-, he pleaded that this demand is based on the credit notes recovered from the Appellant Company s premises. These credit note had been issued by the suppliers of raw material for some shortage reported in respect of the goods supplied by them to the Appellant Company, that certain quantity of goods was not received by them and in respect of which they had received refund from the supplier in the form of credit notes and that they cannot take Cenvat Credit in respect of the quantity which admittedly had not been received. He therefore pleaded that this demand has been correctly confirmed by the Commissioner. 4.6. Arguing on the Revenues appeal, in respect of demand of ₹ 15,34,52,213/- for the period from October 1996 to December, 2000 , out of which the Commissioner has confirmed the demand only of ₹ 6,47,926/- and has dropped the remaining demand, he pleaded that the duty demand of ₹ 15,34,52,213/- for the period from October 1996 to December, 2000 is based on hard evidence viz. ex-depot invoices of the dates closest to the dates of ex-factory clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of the condition of the exemption Notification, (b) C.C.E., Delhi vs. Hari Chand Shri Gopal reported in 2010 (260) ELT 3 (SC) wherein the Apex Court upheld the denial of duty exemption under Notification No.48/94 dated 1.3.94 to the assessee as he had not complied with the Chapter X procedure as per the condition of the exemption Notification and (c) C.C.E., Ahmedabad vs. Cadila Laboratories Pvt. Ltd. 2002 (142) ELT 279 (SC) wherein the Apex Court upheld the denial of duty exemption to the assessee under the Notification NO.144/65-CE dated 4.9.1965 on the ground that as per the condition of the Notification, Rule 56A procedure was not followed. Shri Raha pleaded that when discounts had not been declared in the marketing pattern declarations filed under Rule 173 C(3A) of Central Excise Rules, 1944, the same cannot be allowed to the assessee. He pleaded that throughout during the period of dispute, the Appellant Company was selling its finished products from Depots as per the private price lists circulated by the Headquarter among the Depots and whose copies were recovered in the files A-9 and A-37 seized from the Appellant s Company s premises, while duty was being paid on much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1 Before we proceed to decide the appeals on merits, we deem it fit to refer to the peculiar facts in the present case. As per the appellant, search of the appellant s company s factory by the officers of DGCEI was conducted on the basis of a complaint filed by Sh. J.K. Bansal of M/s. J.K. Industries, who used to buy final products of the appellant. The fact that Sh. J.K. Bansal was informer is not being disputed by the Revenue. It is also on record that Sh. J.K. Bansal has written number of letters to the Revenue, prior to the issuance of the impugned order by the Adjudicating Authority as also after passing of present Adjudication Order. In each and every letter he has made complaints against the appellant as also against the Commissioner who adjudicated the matter and has reiterated his claim of Reward. All such letters addressed by him to various authorities including the Chief Justice of India and a number of politicians have been produced by him before the Tribunal. It is also seen that Sh. J.K. Bansal filed an application to intervene in the matter which was rejected by the Devision Bench presided by the then Hon ble President. 5.2 During the course of hearing before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n typing the order inasmuch as Shri Bansal is not a party to the proceedings and his request for intervener has already been rejected by the Tribunal. When the informer was informed about the above development, Shri Bansal still insisted on the same. It is further seen that activity of Shri Bansal did not stop and on 24.12.2013, he tried to contact learned Member (Technical) Shri Rakesh Kumar and insisted on delivering a bundle of various representations filed by him before various persons including the Honble Chief Justice of India. When refused by learned Member (Technical), he approached the Registry to file the same. Inasmuch as he is neither the appellant nor representative of the Revenue, Registry refused to accept the above bundle of representations. Then same were sent to both the Members individually by name through courier. When the matter came up for argument today morning, the above development was brought to the notice of the assessee as also to Shri Raha, learned Senior Advocate engaged by the Revenue for representing the matters. Both the sides expressed their anguish on the activities of Shri Bansal and submitted to ignore the said developments. It was explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid fact was brought to the notice of both sides. Receipt of such repeated letters by the informer is quite disturbing and painful factor. Learned Senior advocate Shri Ganeshan appearing for the appellant has taken a strong objection to the sending of such letters by the informer and has submitted that the same amounts to interfering in the judicial process and attempting to influence the outcome of the proceedings. Shri Raha agrees with the same and fairly submits that the matter should be proceeded ahead and should be decided on the basis of evidence on record and arguments raised by both the sides. Shri Bansal is present in the Court and when questioned about the sending of such letters, he apologized and gave an undertaking not to send any type of letters/ documents/ representations in future and not to interfere in the proceedings, in any manner or to influence out coming of the proceedings in any way. Though, we feel strongly about writing of such letters by the informer Shri Bansal and are of the view that same amounts to pressurizing the Bench to arrive at the conclusion in a particular manner and are of the view that same amounts to contempt of Court, for which actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and he also briefly explained their contents. At that time he could not be questioned about other documents, as he requested for two to three days time which he was given. As per the appellant Sh. Suresh Upreti, has retracted his statement on 22.09.2000 under the postal receipt dt.22.09.2000. Thereafter, he has sent a representation on 05.12.2000 again reiterating his statement dt. 22.09.2000. Though there is no acknowledgement of the receipt of the earlier retraction letter dt. 22.09.2000, the Department is accepting the subsequent retraction on 05.12.2000, which also refers to earlier retraction dt. 22.09.10. As such it is the contention of the appellant is that as Sh. Upreti had retracted his statement made on 21.09.2000, the said statement cannot be relied upon by the Revenue. It is further pleaded that even during the recording of 1st Statement on dt. 21.09.2000, Sh. Upreti was shown records A-1 to A-4 only and no records from A-5 to A-41 were ever shown to him. Further Sh. Upreti was also cross-examined during the course of adjudication in terms of the permission granted by the Commissioner wherein he clarified that all the records were maintained by him in connivance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the person by whom it purports to have been so executed or attested; (b) admit the document on evidence, notwithstanding that it is not only stamped, if such documents is otherwise admissible in evidence. 6.3 Hon ble Allahabad High Court in case of Somani Iron Steel Ltd. Vs. CESTAT (Supra) has without referring Section 36A, held that when private records were founds in the factory of the Assessee and recovered from possession of their employees showing suppression of production, the burden is on the assessee to prove that the documents are wrong and do not pertain to them. SLP to Apex Court was dismissed vide judgment reported in 2012(277) ELT-A-26(SC) with the following observations:- Having regard to the facts and circumstances of the case, we do not find it to be a fit case for exercise of our jurisdiction under Article 136 of the Constitution of India. 6.4 Tribunal in case of CCE, Surat-I Vs. Umiya Chem Industries, reported in 2005(185) ELT-410 (Trib.) held that in view of the provisions of Section 36A, when incriminating documents were found in the presence of the Assessee, the truth of such documents can be presumed unless contrary is proved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of Section 4 of Central Excise Act, 1944, the assessable value of the goods was normal price , as defined in this section and while no objection has been raised and no duty demand has been raised in respect of a large number of sales of Arisings at normal price in respect of the sales recorded in the records prepared by Sh. Suresh Upreti i.e.A-1 to A-41, the same price (normal price) is not being accepted, which is not correct, as once a normal price for a particular class of buyers has been accepted as the assessable value, in all the sales to that class of buyers, that price has to be adopted as the assessable value, even if in some individual transactions the goods may have been sold at higher price as such higher prices in some isolated transactions, do not represent the normal price . Therefore, it is pleaded that even if the contents of the documents A-1 to A-41 are treated as true, the duty demand for period from 01.10.96 to 30.06.2000 based on the allegation of under valuation which, in turn, is based on the entries in their documents indicating collection of amounts in cash over and above the invoice price, is not sustainable. In respect of allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6.8 Thus, in respect of the duty demands based on the allegations of under valuation and clandestine removals which, in turn, are based on the entries on the accounts, maintained by Sh. Upreti, the points to be decided are:- (a) whether the entries in the documents A-1 to A-41 recovered from the Account Section of the Appellant Company and which admittedly have been written by Sh. Suresh Upreti, the then Dy. Manager (Accounts) of the Appellant Company represent real transaction; and (b) If the answer to question (a) is the affirmative whether the entries are sufficient to prove the allegation of undervaluation and clandestine clearances without payment of duty; of the same need some independent, positive and tangible evidence. 7. Duty demand based on the allegation of Clandestine Removal 7.1 The appellant have challenged the confirmation of demand of ₹ 7,83,39,361/- on the allegations and findings of clandestine removal of the goods during the period 01.10.96 to 30.09.2000. It is based on the documents A-1, A-4, A-5, A-6 A-10 A-40 recovered from Account Section. Duty Demand of ₹ 2,37,92,847/- is based on W entries in document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CR Coils, they would require about 20000 MT HR Coils. Further the transportation of the raw-material and final product alleged to have been clandestinely cleared would require around 4000 trucks. The Revenue has neither produced any evidence of procurement of raw-material nor has found any discrepancy in the stock of raw-material or finished goods during the course of search of their factory premises, depot or dealers premises etc. Further there is no evidence of any trucks being used for transportation. During the entire period of 5 Yrs., there was no interception of any truck carrying any goods without cover of proper documents. No cash recovery has been made by Revenue. Though the Revenue has, during the investigation, recorded the statement of various persons, they have chosen not to rely upon the statements which were in favour of the assessee and against the Revenue. Our attention has been drawn to the said statements procured subsequently by the appellant, under RTI Act. They further contended that out of 182 buyers, Revenue neither made investigation from 174 buyers nor from transporters or truck owners. On the contrary the appellant had filed affidavit of the buyers as als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence in favour of the assessee and to pick up the partial evidence which may be against the assessee. It is the appreciation of entire evidence which needs to be done for arriving at the final conclusion, which cannot be arrived on the basis of pick and choose method. 7.3 We may also refer to some of the precedent decision relied upon by the appellant as also by Revenue. Learned Advocate appearing for the appellant has drawn our attention to various decisions laying out that the charges for clandestine removal are required to be upheld by production of evidences, which inspire confidence in the Revenue s case. The same cannot be confirmed on the basis of assumptions and presumptions. 7.3.1 In the case of Radha Madhav Corporation Ltd., Dham Vs. CCE reported in 2012 (284) ELT-369 (Tri. Ahmd.) by majority decision, held that the charges of clandestine removal and under-valuation are to be established on the basis of evidences and the same cannot be merely upheld on the basis of presumptions and assumptions. Suspicions, however, grave cannot replace the proof and the link between documents, recovered in search and alleged activities of the appellant in their factory is requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made the sole basis for establishing clandestine removal in the absence of corroborative evidences like collective purchase for raw-material excess use of electricity etc. 7.3.5 In the case of Sanket Food Products Pvt. Ltd. Vs. CCE, Aurangabad reported in 2005(188)ELT-107 (Tri. Del.), the entire evidences on the record were considered and the charges of clandestine removal were dropped on the basis of lack of positive evidences. 7.3.5 In the case of Premium Packaging Pvt. Ltd. Vs. CCE, Kanpur reported in 2005 (184) ELT-165 (Tri. Del.). The evidentiary value of computer printout was examined and it was held that same cannot be used to prove clandestine removal even if there were statements of the Directors and Authorised Signatory regarding receipt of raw-material for manufacture and removal of finished goods there from in as much as the same cannot be held to be a conclusive evidence in the absence of any other material/tangible evidences. 7.3.6 In the case of Ghodavat Pan Masala Product Pvt. Ltd. Vs. CCE, Pune reported in 2004(175) ELT-182 (Tri. Mumbai) it was observed that conclusion based on consumption of some minor inputs without tangible, strict, positive, direct a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Supreme Court s decision in the case of T. Shankar Prasad reported in 2004(164) ELT-143 (S.C.). However, we find that the said decision is under the provision of Prevention of Corruption Act, 1988. 7.5 We find that in the case of allegation of clandestine removal and under valuation of goods, the evidence available in each and every case has to be evaluated on its own. However, as discussed in the precedent decisions, certain legal principle stands declared, which are required to be taken note, while evaluating the evidences. As per the declared law by various courts, it is necessary to ascertain whether in the peculiar facts of case, there is sufficient, cogent, relevant and credible material evidence so as to establish the case against the assessee applying the preponderance of probability test. Although we agree with the learned counsel appearing for the Revenue that every link of the clandestine process is not required to be prove beyond doubt but the Revenue also cannot be relieved all together from the burden of producing credible evidence in a particular case. 7.5.1 With the above criteria we proceed to decide the various issues in succeeding paragraph as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty to put forth their defence submissions supported by documentary evidences. 7.8 However, out of the said duty out of the said demand of ₹ 2,05,11,074/- confirmed by the Commissioner on the basis of the documents A-1, A-4, A-5, and A-6, duty demand of ₹ 32,90,482/- is in respect of high grade zinc weighing 239.519 MT held to have been cleared without payment of duty and without issue of invoice Admittedly zinc is not manufactured by the Appellant Company but is used as a raw material for galvanizing of CR/corrugated sheets and the same is either procured from M/s. Hindustan Zinc Ltd. or is imported and in respect of zinc so procured, Cenvat Credit of central excise duty/Additional custom duty is taken. The Appellants Companys plea is that the clearances of the high grade zinc, in question, had been made to their sister companies under job-work challans for alloying the same with Aluminium and return and hence there is no question of demand of duty in respect of the same. We agree with the appellant that in as much as Zinc is not being manufactured by the appellant, the duty in respect of the same on the findings of clandestine removal cannot be upheld, as there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents A-40, this duty demand based on allegation on clandestine removal is not sustainable. We accordingly set aside the same. 8. Duty demand based on the allegation of under valuation 8.1 The duty demand based on the allegation of under-valuation as made in the Show Cause Notice dt. 02.11.2001 is ₹ 5,56,12,785/- out of which the Commissioner has confirmed the duty demand of ₹ 4,79,69,116/- after giving cum duty benefit. This duty demand is based on the documents A-1, A-4, A-5, A-6, A-14, A-39, A-40 A-41, read with the records A-30, A-42 and E-2/E-6 which are regular records of the appellant company. The duty demand (gross) based on documents A-1, A-4, A-5 A-6 is ₹ 1,28,90,130/- out of which duty demand of ₹ 1,11,12,181/- has been confirming after giving cum duty benefit and duty demand of ₹ 1,81,19,498/- is based on R Collector Report from Calcutta, Guwahati, Chandigarh Ludhiana depots out of which demand of ₹ 1,56,20,257/- has been confirmed after giving cum duty benefit. Duty demand of ₹ 2,03,03,089/- is based on document A-40 out of which the demand of ₹ 1,75,02,662/- has been confirmed after giving cum duty benefit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Rule 173C of the Central Excise Rule. Once the normal price in respect of the goods sold from the factory gate or from depots for a particular class of buyers for some particular time period was declared and the same was accepted by the Departments, it is that normal price which was deemed to be the assessable value for clearances during that period to that class of buyers, irrespective of the fact that in some individual sales prices different from the normal price may have been charged. The normal price, as is clear from its definition in Section 4(1)(a) during period prior to 01.07.2000, was the representative price i.e. price at which the majority of transactions comprising of major quantum of sales to independent buyers without any consideration other than the price have takes place and the same was deemed to the assessable value. However, the situation changed w.e.f. 01.07.2000 and the basis of assessment became the transaction value which was the price actually paid or payable and this transaction value was to be determined for each transaction and as such could vary from transaction to transaction. 8.3 In the present case the duty has been demanded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of the allegation of under valuation has to be examined from this angle. However for the period w.e.f. 01.07.2000 since the assessable value was the transaction value i.e. the assessable value would be the price actually charged by the assessee including price charged in cash over and above the invoice price. Therefore the duty demand on the basis of the allegation of under valuation which, in turn, is based on the documents A-1, A-4, A-5, A-6, A-14, A-39, A-40 A-41, has to be determined on the above basis only for which this matter would have to be remanded. 8.4 Duty demand of ₹ 1,56,20,257/- out of total duty demand of ₹ 1,81,19,478/- based on Chart 1(D) of the Show Cause Notice dt. 02.11.01 is based on R collection report in respect of Calcutta, Guwahati, Chandigarh and Ludhiana depots for the period from 01.04.2000 to 31.08.2000 in documents A-30 seized from the Accounts Section. This R collection is alleged to be in respect of sale of GP/GC/CR sheets from the depots and is alleged to be amount collected in cash over and above the invoice price. Since this duty demand is in respect of depot sale of finished goods from certain depots, and the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether this amount pertains to clandestine clearances or represents the cash component of the sale proceedings of goods cleared by un-declaring value on the invoice and if so, in respect of which goods and from which parties. If this amount represent the amount recovered over and above the invoice price, the same need not necessarily translate in to a duty demand, as during the period prior to 01.07.2000 the assessable value was the normal price, not transaction value and so long as the declared normal price had been accepted by the Department and bulk of the sales had taken place at that normal price, differential duty could not be charged if in some individual transactions, the goods had been sold at higher price. There is no evidence to treat the opening balance of R Account as on 01.04.2000 as pertaining to clandestine removals without invoice. In view of this, the duty demand of ₹ 77,73,470/- based on Chart 1(E) is not sustainable. CENVAT CREDIT DEMAND 10. Coming to the allegation of wrong availment of Cenvat Credit of ₹ 6,47,926/- this allegation is based on the certain credit notes recovered from the factory which had been issued by the raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have paid duty at much lower price, the Commissioner has confirmed the duty demand of only ₹ 6,47,926/- and has dropped the remaining demand of ₹ 15,28,04,287/- and against this portion of the Commissioners order dropping the demand of ₹ 15,28,04,287, the Revenue is in appeal. 11.2 In this case, the Revenues allegation is that though the appellant for each depot had declared the depot price from time to time to the department, and had paid duty on that basis, the appellant had also circulated private price lists to their depots wherein the prices mentioned were much higher and the goods have actually been sold at those price. In this regard, the Revenue relies upon the private records A-9 and A-37 recovered from the Accounts Department, which contained depot wise price lists of the finished goods circulated by Appellant Company from time to time. In respect of this allegation, in the appeal filed by the Revenue and on the submissions made by Shri A.K. Raha, ld. Sr. Special Counsel for the Department, the following points have been raised:- (i) The adjudicating authority has failed to discuss the private records of the BSSL i.e. A-9 and A-37 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said deductions and finalize the assessments of subject goods covered by the period of demand (para 84.1.4 of the impugned order). This order of the Commissioner suffers from legal infirmity inasmuch as while he has directed the jurisdictional Assistant Commissioner to decide the issue of admissibility of the said deductions and finalize the assessments of the subject goods, he himself has decided this issue and dropped the demand. 11.3 The Appellant Company, on the other hand, has raised the following points:- (i) The Appellant Company during the period of dispute from 1.10.96 to 31.12.2000 has given the trade discounts like cash discounts, quantity discounts, etc. to its customers in respect of which the discount policy had been circulated among the depots from time to time and as such, these trade discounts were known prior to clearances of the goods and hence, the deduction of the same from the assessable value has to be allowed. The duty demand involved in respect of these discounts is ₹ 98,33,183/-. (ii) During the period w.e.f. 1.7.2000 to 31.12.2000, the definition of place of removal as given in Section 4(3)(c) of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and wherever such depot prices were higher they had themselves calculated the differential duty and had paid the same. The total duty paid in this manner is ₹ 1,26,38,234/-. (vii) Taking into account the above factors, the net duty payable by the appellant is ₹ 6,47,926/- and it is this calculation which is based on the above mentioned submissions which has been accepted by the Commissioner. 11.3 The Commissioner on the question as to whether the deduction of various trade discounts like quantity discounts, cash discounts, and other discounts, etc. if given by the Appellant Company to their customers in respect of depot sales would be admissible for deduction or not, has held that in view of the judgement of the Apex Court in case of Bombay Tyre International reported in 1983 ELT-1896, deduction of such discounts, if known prior to the clearances, and actually passed on to the buyers, would be admissible. The Commissioner in the impugned order has considered the evidence produced by the appellant in support of their plea that the discount policy had been circulated among depots and was known prior to clearance and that these discounts had actually bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 (12) SC- 379 in case of conflict between the provision of an Act passed by the Parliament and the Provisions of the Rules made under the delegated, legislative power, it is the former which would prevail. 11.6 During the period w.e.f. 01.07.2000, in terms of Section 4 of Central Excise Act, 1944, as the same stood during this period, the assessable value of the goods was transaction value of the goods sold by the assessee for delivery at the time and place of removal where the assessee and buyers are not related and the price is the sole consideration for sale. The transaction value is defined in Section 4(3)(d). This transaction value is to be determined for each transaction and could be different for different transactions so far as it satisfies the parameters for the same mentioned in clause (a) of Section 4(1) and conforms to its definition as given in Section 4(3)(d). However, during the period prior to 01.07.2000, in terms of Section 4, as it stood during that period, the assessable value of the goods was deemed to be the normal price , that is to say, the price at which such goods are ordinarily sold by the assessee to a buyers in course of wholesale trade fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 1.7.2000, the assessable value of the goods cleared to depot would be the normal price of the goods at the respective depots at the time of removal from the factory and this normal price would be that which had been declared by the assessee to the department under Rule 173C of the Central Excise Rules, 1944 and had been accepted by the Department. In respect of this period, the department s allegation is that though the Appellant Company had declared in respect of clearances to depots, the depot wise normal price from time to time and had paid duty on the clearance to depots on that basis, the actual sale prices of the goods from depots were much higher and as per the private lists circulated among the depots from time to time, the copies of which were found in the documents A-9 and A-37, recovered from the Accounts Section and accordingly the department s allegation is that the Appellant Company, with intent to evade the duty, has misdeclared the normal price and that the assessment of duty should be done on the prices at which the goods were actually sold from the Depots. However, the defence of the Appellant Company is that the prices mentioned in the price lists cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the identical goods are not sold by the assessee from depot on the date of removal from the factory, the nearest date on which such goods were sold or would be sold shall be taken into account. * By way of illustration, if an assessee transfers a consignment of paper to his depot from Delhi to Agra on 05.07.2000, and that variety and quality of paper is normally being sold at the Agra depot on 05.07.2000 at transaction value of ₹ 15000/- per Ton to unrelated buyers, where price is the sole consideration for sale, the consignment cleared from the factory at Delhi on 05.07.2000 shall be assessed to duty on the basis of ₹ 15000/- per Ton as the assessable value. If assuming that on 05.07.2000 there were no sales of that variety from Agra depot but sales were effected on 01.07.2000, then the normal transaction value on 01.07.2000 from Agra depot to unrelated buyers, where price is the normal consideration shall be the basis of assessment. 11.7.3 After observing so, he observed that as the assessee, at the time of clearance of goods from the factory could not determine the actual prevailing price at a given depot, they have opted for clearance of provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon them. If in de-novo proceedings, the allegation of under valuation or part clandestine removal are upheld, the commissioner would decide the penalty accordingly. The quantum of penalty under section 11AC shall be determined by the Commissioner after determining the quantum of duty demand. 13. As regards interest, on duty under section 11 AB, as the matter in respect of part demand on clandestine removal as also the entire demand on under valuation is being remanded, the Commissioner would decide the interest issue accordingly based upon the outcome of re-adjudication. 14. As regards penalty under Rule 209A of Central Excise Rules, 1944, the same has been imposed on three categories of persons as mentioned below on:- (i) Managing Director of the Appellant Company (Shri Neeraj Singhal) who was the person overall in charge of running day to day affairs of the company starting from raw-material procurement to production and marketing. (ii) Various employee of the Appellant Company from Vice President to Assistant Manager/Marketing Executives; and (iii) Certain dealers who are alleged to have purchased under valued goods cleared by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posable on the salaried employees of the Appellant Company who were acting only as per the decisions taken by the Board of Directors and the same has to be set aside. 15. In view of the above discussions, we pass the following order: 15.1 (1) The demand of ₹ 6,47,926/- which was confirmed by denying the Cenvat Credit in respect of their received inputs stands set aside along with setting aside the penalty. (2) The duty demand on the basis of findings of clandestine removal, based on the seized documents A-1, A-4, A-5, A-6 A-10 A-40 is set aside along with setting aside of penalty except for the part of duty demand of ₹ 1,72,20,592/- based on the documents A-1, A-4, A-5 A-6, which is remanded for re-adjudication as per our direction in this order. (3) The duty demand relatable to under valuation based on the seized documents A-1, A-4, A-5, A-6, A-14, A-39, A-40 A-41 is set aside and the matter is remanded for re-adjudication in term of our directions in this order. (4) The duty demand of ₹ 77,73,470/-, based on opening balance of R Accounts in seized documents A-2/A-3 is set aside along with setting aside of penalty on the said account. (5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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