2009 (4) TMI 755 - AT - Central Excise

Demand - Undervaluation - Evidence - Confiscation - redemption fine - penalty - Section 11A of the Central Excise Act 1944

Issues Involved:
1. Confiscation of goods and imposition of penalties.
2. Allegation of undervaluation of goods.
3. Determination of duty liability and penalties for different periods.
4. Admissibility and reliability of evidence.
5. Application of the concept of "normal price" and "transaction value."

Issue-wise Detailed Analysis:

1. Confiscation of Goods and Imposition of Penalties:
The Commissioner held that goods seized from M/s. Neelkamal Laminates and M/s. Bhandari Doors & Plywood were liable for confiscation. Redemption fines and penalties were imposed on these parties. The Tribunal upheld the penalties and redemption fines, confirming the Commissioner's findings based on the overwhelming evidence of undervaluation.

2. Allegation of Undervaluation of Goods:
The main allegation was that the assessee paid duty on only one-third of the actual value of goods, with the balance received in cash without duty payment. Investigations revealed that the assessee had been undervaluing goods cleared by them. Evidence included pricelists, statements from employees and dealers, and data retrieved from a computer hard disk. The Tribunal found overwhelming evidence supporting the charge of undervaluation.

3. Determination of Duty Liability and Penalties for Different Periods:
The period involved was from 1-10-1999 to 17-10-2002. The Commissioner restricted the duty demand to dealings with five dealers who admitted to undervaluation, confirming Rs. 13,07,455/- instead of the proposed Rs. 1,92,95,946/-. The Tribunal directed a re-quantification of duty liability for two periods:
- Before 1-7-2000: The concept of "normal price" should be applied. The Commissioner was instructed to determine the normal price based on available evidence and compute the differential duty accordingly.
- After 1-7-2000: The "transaction value" concept should be applied. The differential duty should be confined to the available evidence of each transaction.

4. Admissibility and Reliability of Evidence:
Evidence included data retrieved from a computer, corroborated by statements from employees and dealers. The Tribunal noted that the statements were not retracted immediately and were corroborated by other evidence. The Tribunal rejected the argument that the demand was based on assumptions and found the evidence to be substantial and corroborative.

5. Application of the Concept of "Normal Price" and "Transaction Value":
- Normal Price (Before 1-7-2000): The Tribunal agreed that the normal price should be adopted but should be determined based on evidence, not merely the invoice price.
- Transaction Value (After 1-7-2000): The Tribunal emphasized that each transaction's actual value should be considered, and the differential duty should be based on evidence of each transaction.

Separate Judgments:
The Tribunal remanded the matter to the Commissioner for re-quantification of duty and determination of penalties based on their findings. The appeals were disposed of as follows:
1. E/1008/2006: Remanded for re-quantification of duty and determination of penalty.
2. E/1009/2006: Remanded for deciding the penalty based on duty liability.
3. E/1002/2006 & E/1003/2006: Appeals rejected, confirming penalties and redemption fines.
4. E/340/2006 (Revenue's appeal): Partially allowed in terms of remand directions.

Conclusion:
The Tribunal provided a detailed analysis and directed the Commissioner to re-quantify the duty liability for different periods based on the concepts of normal price and transaction value. The penalties and confiscations were upheld, and the appeals were disposed of with specific directions for re-assessment.

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