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2010 (12) TMI 1015 - AT - Central ExciseUndervaluation - Demand - Search and seizure - Rule 11 of Central Excise Valuation Rules, 2000 - principles of preponderance of probability - Held that:- Statements recorded from Shri L.S. Navin cannot be relied on unless it is established by the Revenue that his statement had not been obtained under duress. There is no evidence of coercion adduced by Shri L.S. Navin. Moreover, his initial statement was incriminating since he had paid excess amount towards purchase of plywood which had not suffered duty. He had thus abetted evasion by the BA group of firms. This deposition found corroboration in the slips recovered. Shri Manoj Kumar Amin and Shri J.M. Ashraf are not third parties. They are employees of the assessee. If they were forced to give incriminating statements against the assessee, they should have retracted the same without delay. In the absence of any retraction within a reasonable period of giving the statements, their retraction is not acceptable. Statements rendered under Section 14 are valid evidence and cannot be doubted in the normal course. It would appear that in respect of the invoices covered by the slips which were recovered, evasion to the extent of 67% as found by the Adjudicating Authority is sustainable. Original Authority rightly (relied on the decision of the Larger Bench of the Tribunal in the case of Nizam Sugar Factory (1999 (10) TMI 123 - CEGAT, NEW DELHI) to hold that five year period is available from the relevant date for the Department to raise demand through a show-cause notice. The date of knowledge by the Department did not curtail this period. The Hon’ble High Court of Gujarat interpreted the provisions of Section 11A vide its judgment in the case of CCE v. Neminath Fabrics Pvt. Ltd. [2010 (4) TMI 631 - GUJARAT HIGH COURT]. Therefore find that the demand is not barred by limitation. The ld. Counsel for the Revenue had argued that the case of evasion of the Revenue is established by the fact that in the case of direct sales of goods to Tata Coffee Ltd., the assessee had raised invoices for the following three varieties of plywood at much higher prices compared to prices invoiced for such goods when sold to others. As regards applying the finding of evasion in respect of clearances other than those covered by the documents recovered, the ld. Counsel for the Revenue sought to apply the principles of preponderance of probability. If we were to apply the above principle, we have to hold that the assessee had evaded duty to the extent of 63.18% in respect of all the clearances during the material period. Even if we were to hold that the assessee had willfully short paid duty on all clearances, the probability of the assessee short paying duty to the extent of 70% or 30% or any other amount in respect of any of these clearances cannot be ruled out. We are not in a position to confirm demand against any assessee ignoring such a probability. By following the preponderance of probability in the manner suggested by the Revenue, we would be passing orders which would contain a definite element of arbitrariness - set aside the impugned order and remand the dispute regarding duty liability of the assessee and its penal liability for a fresh decision by the Original Authority. The penal liability of the individuals shall also be decided in de novo proceedings following principles of natural justice
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