TMI Blog2007 (9) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation were carried out wherein office and residential premises of the factory, branch office and depots and its officers were carried out and records were seized from various premises and statements recorded. Scrutiny of the invoices and private documents seized revealed that the appellants was realizing cash payment over and above ex-factory prices declared both in respect of sales made directly from the factory to dealers and also in respect of sales made through branches and consignment agents. Investigation revealed that only a small fraction of goods were sold at factory gate price but same goods were sold by the depots, branches and consignment agents at a price much higher than the price at which it were sold at the factory gate. Over and above the price at which the goods were sold from depots and consignment agents cash realization were also made. Evidence to this effect was in the form of documents seized and found in possession of one Shri J.K. Jhawar, employee of M/s. Wood Panel Agencies (WPA) who is agent for managing the Calcutta branch/depot. Documents seized comprised of a register/diary complete for the period 1994-95 which showed a cash receipt of Rs. 2,40,62, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above grades. 5. In view of above a show cause notice was issued seeking to demand differential Central Excise duty amounting to Rs. 4,72,47,604.88 and seeking to impose penalty on the company, its officers, consignment agents etc. which was confirmed by the Commissioner and penalties of varying amounts have been imposed. All of them are in appeal before us. 6. Learned Advocate for the appellant submitted that demand relates to the period August 1992 to 27-9-1996 i.e. prior to insertion of depot and consignment agent as place of removal in Section 4(4)(b). During the relevant period assessable value was the normal price i.e. the price at which such goods were ordinarily sold by the assessee to the buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not related person and price is the sole consideration for the sale. Therefore as per Supreme Court judgment in the case of Indian Oxygen Ltd. v. C.C.E. - 1988 (36) E.L.T. 723 (S.C.) where ex-factory sale price is available there such sales should form the basis for valuing all goods removed from the factory even though the price from the depot may be higher from the factory gate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated in the show cause notice in respect of factory gate sales where extra cash was realised at Calcutta, 10 instances pertain to Maitry Bhandar, Guwahati who is a consignment agent to whom no ex-factory gate sales were made. The department s contention that these were also direct sales from factory gate to Maitry Bhandar is incorrect as invoices issued by the factory clearly show that no sales tax has been charged which is not the case in respect of other instances of factory gate sales where sales tax has been charged and therefore sale to Maitry Bhandar was as a consignment agent only for subsequent sale by him. In the remaining 13 instances also the customers have categorically denied on affidavit that they have given any amount in cash over and above the factory gate price. Even otherwise the percentage is too low being 0, 0.28%, 2.7%, 0.73%, 1.11% for the years 1992-93, 1993-94, 1994-95, 1995-96 and 1996-97 respectively. Such small percentages cannot constitute ordinarily sold in the course of wholesale trade . However, the learned Advocate fairly admitted that in respect of all the factory gate sales to Calcutta region extra cash realization were made and that there were o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27-9-1996 and therefore imposition of penalty and interest is illegal. As regards penalties imposed on Shri K.K. Kela-Chairman M.D. of the appellant company, Shri Sudeep Chitlangia-Director, Shri Manish Periwal-Director, Arun Goenka, Sr. Sales Manager, Shri A.K. Maheshwari Purchase Manager, Shri R.G. Sikchi Partner of M/s. Wood Panel Agencies, Shri J.K. Jhawar employee of M/s Wood Panel Agencies, Shri O.P. Kothari employee of M/s Wood Panel Agencies and M/s. Wood Panel Agencies, it was submitted that no penalty is imposable on individuals under Rule 209A as confiscation of goods or at least a finding that the goods are liable to confiscation is a must to impose penalty under Rule 209A. Neither any goods have been confiscated nor have any goods been held liable to confiscation. In fact, there is a positive finding in para 73 of the impugned order to the effect that the goods are not liable to confiscation. In view of this no penalty is warranted. Further Modvat rules were substituted by Cenvat Rules in 2000 and saving clause contained in Section 38A of the Central Excise Act, 1944 inserted by Finance Act, 2001 with retrospective effect hat to be invoked to continue the present pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire cash collection was found to be pertaining to the sales made at the factory gate and sales made through Calcutta branch. The details of cash collection are based on the seized records i.e. hand written register and subsidiary register maintained by Shri Jhawar, Manager of M/s. Wood Panel Agencies, Calcutta. Therefore the entire amount was liable to be considered for demanding differential duty. He submitted that even cash which has been collected not on account of M/s. VVIL but on the directions of M/s. VVIL i.e. the timber merchant was in relation to the goods cleared from the Nagpur factory as is evident from the statement of Shri Jhawar dated 2-12-1996, wherein he has clearly stated that the cash was collected under instructions from either Mr. A.K. Maheshwari or Mr. Arun Goenka of M/s. VVIL, Nagpur. Further Shri A.K. Maheshwari, Sr. Purchase Manager of M/s. VVIL in his statement dated 8-11-1996 inter alia stated that the amount paid in cash for purchase of veneer may have been generated out of sale of plywood, timber and timber waste which clearly indicated that the cash receipt were out of sale of plywood only as realization from sale of timber and timber waste cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,68,829/- which was received by the appellants during the period 11-11-1995 to 12-9-1996 as is reflected from the loose sheets (parallel invoices) recovered and seized from Shri Jhawar. Shri Sridharan however did not accept the same on the ground that this amount was never a part of the proceedings and cannot therefore be taken into account. 18. As regards penalty it was submitted by Shri Mondal that even though the Commissioner has imposed the penalty under Section 11AC of the Central Excise Act, 1944 which was not there in the statute book during the relevant period, Commissioner was competent to impose penalty under Rule 173Q(l) of the erstwhile Central Excise Rules, 1944 and merely quoting a wrong rule will not vitiate the penalty as long as it is found that the penalty could be imposed under some other rule and referred to the decision of the Hon ble Tribunal in the case of Alfa Ceramics (cited supra). So far as penalty on individuals is concerned, it was submitted that the order in para 68(c) brings out how each individual had knowingly participated in the activity of duty evasion and therefore it cannot be said that they were not aware that the impugned goods were liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was a normal trade practice to provide a discount of 20% and accordingly it was held that if in some cases the discount offered was less, the assessee will nevertheless be entitled to discount at the rate of 20%. However, in the present case it is very apparent from the facts, that the trade practice was there to charge a different price in respect of buyers of the Calcutta region as there are admittedly 10 instances where the goods were supplied from the factory directly at a price much lower but in all such cases cash amount was received over and above the factory gate price. It has also been admitted by the learned Advocate for the appellants that these were only the factory gate sales for Calcutta region and the balance sales were through depot/branch office/consignment agent. This would mean that in respect of all factory gate sales in Calcutta region extra cash was collected over and above the factory gate price. In such a situation the factory gate price declared for the Calcutta region as reflected in the invoices has to be rejected and the extra cash amount received over and above the factory gate price has to be added to the assessable value. These were very fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rential duty will be Rs. 41,99,460/- (i.e. Rs. 33,30,631/- + Rs. 8,68,829/-). 22. As regards the plea that this amount should be considered as cum-duty price and duty should be worked out, accordingly, we find this plea to be untenable in view of the Supreme Court decision in the case of Amrit Agro (cited supra) which clearly says that the cash recovered over and above the invoice price which was never intended to represent duty will be addable. The adjudicating authority should determine the quantum of duty at the applicable rate prevalent during the relevant time on this account and the appellants should pay the amount so calculated. As regards imposition of penalty on the individuals, we find that the appellants have pleaded that penalty has been imposed under Section 11AC which was not therein the statute during the relevant period. We accept this plea. However we find that a similar situation was there in the case of Alfa Ceramics where penalty under Section 11AC was imposed even though the section was not in force during the part of the relevant period and still penalty was held to be imposable under Rule 173Q, once it was found that there was evasion of duty, on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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