9911796707
TMI Blog2009 (6) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... re evading Central Excise duty by resorting to gross undervaluation, adopting the modus of selling a major portion of their products to their dummy firms created by them, and also by resorting to clandestine clearance of the goods, the officers conducted search operations at various premises connected with the business of the appellant No. 1. During the search in office premises and other related/connected establishments, several documents were recovered. Detailed investigation were conducted and based upon the documents recovered, a Show Cause Notice was issued to the appellant for demand of duty amounting to Rs.35,82,832/- along with interest under Section 11AB of the Act; and equal penalty to the duty demanded was also sought to be imposed. The Show Cause Notice also directed to three individuals to show cause as to why penalty should not be imposed on them under Rule 209A of the erstwhile Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules 2001/2002. The appellants contested the show cause notice before the Adjudicating authority and the Adjudicating authority after considering the submissions made by the appellants before him set aside the proceedings initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the present case and addressed the contentions advanced by the appellant to decide the issue, but repeatedly relied on the findings given in the adjudication order which was impugned by the appellant before the first appellate authority, without independently applying his mind or bestowing serious consideration to the issues raised by the appellant. (iii) The copies of invoices showing sales to unrelated persons from the factory gate during the period in this appeal, were submitted to the first appellate authority despite which the same have not been taken cognizance of and the reasoning for discarding the same is that such invoices were not produced before the adjudicating authority and that same could not be entertained at this stage. (iv) The impugned order is opposed to the decisions of the Supreme Court in the case of Travancore Rayons v. U.O.I. [1978 (2) E.L.T. J378 (S.C.)] and Siemens Engg. & Mfg. Co. Ltd. v. U.O.I. & Anr [AIR 1976 SC 1785].The Supreme Court in Siemens' case supra, has held that every quasi-judicial order should be supported by reasons, which is cardinal to the principles of natural justice and this must inform every quasi-judicial process and the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d could have been fastened on them on bald unsubstantiated allegations, merely on the basis of an averment that the firms and the appellant were related and that the proprietors of the firms had admitted the same. The appellant submits that the impugned order fails to take cognizance of the fact that an admission on the part of the assessee would not absolve the department of proving mutuality of interest between the appellant and the firms alleged to be related. The orders of the lower authorities are contrary to Section 4 and amount to rewriting the code of valuation relating to related persons and hence, worthy of being negated. (ix) The first appellate authority has not appreciated that the adjudicator had on the basis of unsubstantiated allegations confirmed the demand of differential duty without putting the appellant to notice as to the manner of computing the said demand or making available to the appellant the mathematical models purportedly adopted to arrive at the purported demand. The appellant submits that the fact that the adjudicator had summarily brushed aside the machinery provided for valuation of excisable goods under the provisions of Section 4 of the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) E.L.T. 225 (S.C.)]. It is the submission that both the lower authorities have not given any findings on the issue that the value which has been taken for discharge of duty liability for clearance of the goods to the related persons was the same as was for other customers of wholesale dealers. He also submitted that the decision of the Tribunal in the case of CCE v. Excel Thread Industries [2005 (186) E.L.T. 219 (Tri.-Bang.)] will also cover the issue. (xv) As regards the financial flow-back from the appellant No. 1 to other units on the advertisement and other charges, he relied on the decision of this Bench in the case of Murkumbi Manufacturing v. CCE, Belgaum [2005 (184) E.L.T. 312 (Tri.-Bang.)] 4. The learned Departmental Representative on the other hand submitted that the appellant No. 1 arranged his business in such a way and cleared almost 65% of the goods through related persons. It is the submission that the appellant No. 1 had created dummy units by name, M/s. SDE and A.K. in the name of their wives with a view to transfer excisable goods at lower prices and on payment of lower excise duty. None of the so called proprietors of these firms were aware of the business ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of section 4 of the Act. For confirming duty under rule 11, it was necessary on the part of the adjudicating authority to discuss in detail the 'related' concept and that need not be construed as confirmation was made under section 4(4)(c)A The adjudicating authority consistent with the principles and general provisions of the rules has rightly confirmed the differential duty payable on sales to related buyers vide the order in original. The invoices said to have been handed over by the appellant have not made available for verification and comments. These were never submitted before the original authority for consideration. Normal price under section 4(1)(a) was effective only upto 30-6-2000. After that period sales to both related and unrelated has not relevance and normal price is not applicable. Transaction value is rightly arrived at by the original authority as discussed in para above. The case law cited are irrelevant being it covers periods prior to the introduction of transaction value. Order-in-Original discusses the relationship between the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he confirmation of demands and imposition of penalties. I also find that Dr. J. Hareendran Nair, Managing Director of M/s. PHIL and Shri J. Mahendran Nair, Chairman of M/s. PHIL are squarely responsible for the conduct of day to day affairs of the company" From the above reproduced findings we find that the Adjudicating authority as well as the Commissioner (Appeals) has in no way addressed the appellant's submission that the value of the goods sold to sister concerns/firms was not the same as was done to the independent buyers. The main contention of the learned Counsel before us is that there is no mutuality of interest. He submitted that the assessable value of the goods when sold to the independent buyers remains same as assessable value of the goods given to the M/s. SDE and A.K. We find that such contention of the appellant has not been addressed anywhere in the impugned order. The entire thrust of lower authority was on the fact that the partners/proprietors of M/s. SDE and A.K. are either wives of the Directors or otherwise relatives of the Directors. We find that the Hon'ble Supreme Court in the case of Atic Industries Ltd. (supra) had clearly laid down the law as regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dispute that 2% of the goods were sold by the assessee to independent buyers at the same price. Hence there cannot be any reason to believe that the said transaction in these cases is tainted. 6. As regard the submission made by the learned Departmental Representative on flow back of profit earned by the so called related persons to the appellant No. 1 on advertisement expenses and promotional expenses, we find that the decision of this Bench in the case of Murkumbi Manufacturing v. CCE (supra) clearly covers issue in favour of the appellant. We reproduce the relevant finding portion in Paragraph 3 of the above said decision :- "3. On a careful consideration of all the materials including the show cause notice, we are of the considered opinion that the cost of the advertisement expenses and promotional expenses are not required to be added in the assessable value as the appellant and M/s. MBAPL are clearly held not to be related persons. Furthermore, it is the contention of the assessee that such expenses were not incurred by M/s. MBAPL on behalf of the assessee, being independent units. Therefore, that expenses cannot be added to the assessable value. We find that in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
