9911796707
TMI Blog2000 (5) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... . 40,000.00 6. M/s. Bute Cosmetics, Cuddalore - Rs. 1,00,000.00 2. These were confirmed for (a) clandestine removal of Shampoo falling under Erstwhile Tariff Item 14F under brand name "Velvette" (b) due to undervaluation. The period of dispute is from 1-4-1982 to 31-3-1985 and the show cause notice was dated 3-7-1988 . The charge of fragmentation to fraudulently avail SSI concession was dropped. 3. Heard Shri A.P. Datar, ld. Advocate for appellants and Shri S. Kannan, ld. DR. 4. Ld. advocate submits as follows :- (i) The main evidence relied upon is certain code number in private books in respect of which statement of Shri Ambikapathy was recorded. He submits that though there was no immediate retraction, the inculpatory statement was denied in cross-examination and that the second set of statements were extracted by coercion. There is also doctor's certificate of beating to extract the statement. (ii) That Ambikapathi was involved in Marketing Operations (not manufacture) and that too only initially for Mano Enterprises and later for Mak Traders. Therefore, he was not a relevant witness. Also, his statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been adopted without any justification. The ex-factory price for the relevant period was Rs. 3.60 for regular shampoo and Rs. 4.20 for egg shampoo. The marketing company purchases the same and sells it to other dealers at Rs. 7.20 and 8.40 respectively. (2) Some of the dealers when they purchase the goods from the factory, they pay the factory gate price but when they purchase from the marketing companies they pay the higher price. This is the basis for sustaining the charge of undervaluation. It is alleged that there is no justification why the same dealers should pay 100% more when purchasing from marketing companies. The reason for paying more when purchases are made from the marketing companies are : - (a) The marketing companies keep stock of all brands as they purchase in bulk. They maintain huge inventory. (b) The marketing companies give door deliveries to the respective dealers. No time is spent on waiting for supply of specified quantities. (c) The marketing companies purchase the entire or substantial part of the stock from the manufacturers. (d) The dealer has to come to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; The allegation of clandestine removal is not sustainable for reasons mentioned above. (iii) The impugned order does not specify what has been suppressed which is liable to be disclosed under any statutory provision. (iv) Except coded statement of an employee of marketing company, there is no evidence throughout the detailed proceedings which in any manner establishes clandestine removal or under-valuation as against the assessee. Therefore, there is no ground to involve larger period. 7. Ld. DR takes us through the order impugned. He submits as follows : - (1) As per evidence on record, during the period 1982-83, the six units effected clearance of a total of Rs. 4.3 lakh dozens of Velvette Shampoos (both regular and egg) valued at Rs. 32.43 lakhs whereas as per the coded accounts seized, clearances showed that the total quantity cleared is Rs. 3.9 lakh dozens valued at Rs. 33.54 lakhs. (In the absence of break-up between the regular and egg variety, the value of illicit clearances has been calculated at Rs. 8.60 per dozen per egg). Similarly, during the period 1983-84, these six units have ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hampoo purchased with bills and without bills for the amount." "Shri V. Radhakrishnomoorthy of Madras has stated that when he purchased Velvette Shampoo he paid cash to Shri Sargunam and got it without bills; that he had gone to Cuddalore once, met Dr. Rajkumar discussed about the shampoo business and paid cash." "Shri V. Rajasekhar of Madras has stated that against the advertisements made on behalf of the M/s. Valepharma, payment against of the shampoo delivered without bills". These are a few instances which have corroborative value to the clandestine removal/sales of Valepharma Group of Industries. (7) Unaccounted Velvette shampoo had been intercepted by Sales Tax authorities. Shri D. Ravichandran of M/s. Udayam Enterprises, Madras, a distributor of velvette shampoo was confronted on 8-10-1985 with the Invoice No. 42, dated 26-10-1983 where an endorsement "1200 dozens received excess but not billed" was made. It was stated that the consignment in Van TMQ 6799 was checked by the Sales Tax authorities and found to be in excess over and above the invoiced quantity of 10,000/- dozens. This fact was not retracted and he also did not turn-up for cross-exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the clearing unit was under exemption or not. Even- though the manufacturing units adopted different clearance values - one at the rate of Rs. 5.49 and Rs. 6.41 during exemption and Rs. 3.60 and Rs. 4.20 on clearance with payment of duty, it was not Rs. 3.60/Rs. 4.20 but it was Rs. 5.49/Rs. 6.41 which was invariably adopted for the purposes of computing the aggregate value of clearances of Rs. 5 lakhs available under Notification No. 140/83, dated 5-5-1983. No charge of extra-commercial consideration was set out in the show cause notice with regard to the transactions between M/s. Voltas Ltd. and the manufacturing unit. Therefore, the price adopted with regard to clearances to Voltas Ltd. was for Rs. 5.49 and Rs. 6.41. It requires mention here that the whole period of demand is divided between clearances to Voltas and clearances to Marketing companies/dealers. M/s. Voltas Limited entered the scene in January, 1984. Therefore, the cut-off period was January, 1984. (15) In view of the reasonings given in OIO in para 48.8, the price adopted for M/s. Voltas Ltd. clearances was Rs. 5.49 and Rs. 6.41 and the price for clearances to marketing companies was Rs. 7.20 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of raw-materials purchased normally through cash payments. Therefore, absence of any evidence alone on this count, ipso facto, cannot rule out clandestine removal. Instead, the totality of the picture which emerges is to be clearly analysed. 14. The total picture which emerges before us is that : - (a) The coded document relates to clandestine removals because it is supported for certain periods with collaborative evidence available; (b) The witnesses questioned with respect to these codes, had accepted them to be so and had not immediately and effectively resiled or retracated from these statements; and (c) The recipient dealers (of tainted non-duty paid goods) had also admitted so, their retraction in a much later cross-examination being of doubtful value, as discussed above. 15. Therefore, there is a preponderance of probability established by Department that goods were clandestinely removed. However, when we proceed further to consider the quantum thereof, we find that there are serious lacuna in this aspect in the order impugned as follows : - (i) Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different sale prices, the order impugned has chosen to adopt only the higher value of egg shampoos for the entire demand. This is unsupported by either logic or any objective basis and is unfairly loaded against the appellants. We cannot accede to this arbitrary computation. (ii) There is no clear discussion on what abatements have been given from the cum-duty price adopted in the order impugned to arrive at a fair whole-sale price at factory gate. Appellants submit that Sales Tax & octroi have certainly not been excluded. This is also involving as a matter of facts and the Tribunal cannot go into such original work of computation. All taxes & octroi need to be deducted and clearly shown as deducted. 17. In view of the aforesaid findings and analysis, we find that the order impugned suffers from violating principles of natural justice as well as non-application of mind in an objective and logical manner. Therefore, we have no other alternative but to set aside the order impugned and remand the matter to the jurisdictional Commissioner for a de novo consideration of the matter, after considering the present appellant's submissions including those that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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