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2019 (11) TMI 121 - AT - Central ExciseValuation/undervaluation - Plywood, Veneer etc. manufacture and cleared by the appellants - confirmation of demand only on the basis of records recovered from the Dealers of the Appellant in Bangalore viz., ‘The Veneers’ and ‘Space System & Agencies’ - genesis of the case is in the investigation conducted by the officers of DGCEI against these companies subsequent to such searches conducted at various premises on 30/03/2005. The Department presents evidence in the form of diaries, registers, note books, private records/slips recovered from the premises of M/s. The Veneers Bangalore and M/s. Space Systems and Agencies both belonging to Shri G. Suryanarayana and the statement of several other persons recorded - Preponderance of probability. HELD THAT:- The evidence made available by the Department in the form of record registers, diaries which are explained by the person from who possession the same have been recovered. Ongoing through the various records and the statements of the different persons, though retracted at a later stage, we find that the fact that there is under-valuation in the trade of the impugned products - We find that on the one hand, the Department tries to put down the pieces of evidence as an impregnable concrete defence to substantiate the allegation of under-valuation, defence attempts to wash it of saying it’s a third-party evidence and as such, it cannot be relied upon and on the one hand, Sh. T.P. Haneefa, looking after the affairs of the company has denied any knowledge of payments over and above and on the other hand, the so-called confirmatory statements were retracted during the cross-examination - We find that DGCEI has made a series of cases against manufacturers of Veneers and Plywood across South India. Some cases have travelled up to the Tribunal on adjudication. Understandably, we are dealing with a case of tax-evasion and not a criminal case wherein the degree and standard of evidence is much higher and more precise. As far as the tax-evasion cases are concerned, we find that the principle of pre-ponderance of probability has precedence over proof beyond doubt. It is widely accepted that 'Preponderance of probability' is met when a proposition is more likely to be understood by people of reasonable intelligence to be true than to be not true. Effectively, the standard is satisfied if at least there is 50% or more chance that the given proposition is believable by a reasonably prudent to be true. Acceptance of the principle of preponderance cannot be a Licence to demand duty on the basis of assumptions/presumptions/ vague imputations. Therefore, while accepting the fact that there was under-valuation resorted to by these companies, we find that the methodology adopted to quantify the duty evaded should be sustainable on the evidence available and quantum thereof, needs to be arrived in a logical; rational and legally appropriate manner. The quantification of the duty liability requires to be arrived strictly on transaction to transaction basis. The show cause notice proposes to recover additional duties on the basis of a percentage of under valuation arrived at. Learned Commissioner has correctly denied an approach of quantifying the duty liability on an approximation basis as is proposed in annexure-D to the SCN in respect of Prime Veneers and Others.
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