TMI Blog2009 (5) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... column. The Commissioner, in the impugned order, has held that the goods seized from (1) M/s. Decowood Interiors, Cochin; (2) M/s. Neo Plywoods, Trichur; (3) M/s. Bhandari Agencies, Hyderabad; (4) M/s. Umiya Plywoods, Coimbatore; and (5) M/s. Jamuna Agencies, Vellore; are liable for confiscation. He had imposed Redemption Fine in respect of each of these items. He had also imposed penalties on these parties, the details of which are also given in the tabular column. Sl. No. Appeal No. Name of the Parties Amount involved Period of dispute 1 E/1010/2006 M/s. Hero Plywoods Boards v. CCE, Calicut Duty : Rs. 1,16,867/- Interest u/s 11AB Penalty : Rs. 1,16,867/- u/s 11AC 1-4-2001 to 17-10-2002 2 E/1011/2006 K.S. Faizal, Managing Partner of Hero Plywoods Boards v. CCE, Calicut Penalty of Rs. 5,000/- u/r 209A/26 3 E/1012/2006 M/s. Bhandari Agencies v. CCE Duty : Nil RF : Rs. 20,000/- 1-4-2001 to 17-10-2002 4 E/1004/2006 M/s. Neo Plywoods Duty : Nil RF : Rs. 1,500/- Penalty of Rs. 5,000/- u/r 209A/26 1-4-2001 to 17-10-2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the invoice price, cash was paid in respect of each consignment of goods purchased from M/s. Hero Plywoods Boards. Two show cause notices were issued. Show cause notice dated 8.4.2003 proposed confiscation of goods valued at Rs. 1,29,134/- seized from M/s. Decowood Interiors, Cochin; goods valued at Rs. 15,932/- seized from M/s. Neo Ply, Trissur; goods valued at Rs. 2,18,527/- seized from M/s. Bhandari Agencies, Hyderabad; goods valued at Rs. 35,600/- seized from M/s. Umiya Plywoods, Coimbatore; and the goods valued at Rs. 27,420/- and Rs. 14,429/- seized from M/s. Jamuna Agencies, Vellore. There was also proposal for imposition of penalties on them under Rule 25 and personal penalty under Rule 26 on Shri K.S. Faizal. Another show cause notice dated 4-10-2004 was issued for demand of differential duty of Rs. 22,49,180/- for the period from 1-4-2001 to 17-10-2002 along with interest. There was proposal for imposition of penalties also. After the issue of two show cause notices, the Commissioner of Central Excise, Calicut had taken up the adjudication and passed the impugned order. 6. The Commissioner has given his findings from Para 42 to 68 in the impugned order. In para 43, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractions had been made long after the investigations. 6.2 Para 47 is the crucial para, where the Commissioner had restricted the demand of duty only in respect of the dealers, who have accepted the undervaluation. In other words, while the Revenue had demanded duty for the period from 1-4-2001 to 17-10-2002 for an amount of Rs. 22,49,180/- in respect of all the clearances. The Commissioner has given a very categorical finding that I find no evidence before me for examination in respect of the clearance said to be made to the customers other than the aforesaid five customers. The investigating officers have not recovered any private pricelist showing the actual price of the plywood sold by M/s. Hero Plywoods Boards applicable to all of their Dealers/Customers from the premises of any of the dealers/customers. They also have not recorded statements from these dealers/customers admitting that M/s. Hero Plywoods have supplied goods to them showing lesser price in invoices and collected the differential amount between invoice price and actual price by cash. Whatever document seized from the dealers/customers and whatever the statements recorded from the dealers/customers are relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the demand. While doing so, he has referred to the correlation of the data retrieved from the CPU of the computer with the statements of the Managing Partner and various dealers of the assessee in different states. The Commissioner had relied on the decision of the Hon ble Supreme Court in the case of Collector of Customs, Madras v. D. Bhoormull [1983 (13) E.L.T. 1546 (S.C.) = AIR 1974 (S.C.) 859] wherein it has been held that prosecution of the department is not required to prove its case with mathematical precision to a demonstrable degree. He had also relied on the following decisions to hold that the Department can sustain the allegation by preponderance of probability. (i) Rajasthan Foam Ltd. v. CCE, Jaipur - 2000 (116) E.L.T. 151 (Tribunal), which has been upheld by the Supreme Court as reported in E.L.T. Vol 118 page A 244 (S.C.) (ii) Beauty Dyers v. CCE, Chennai - 2001 (136) E.L.T. 339 (T) wherein it is held that Revenue is required to sustain the allegation only by preponderance of probability. 6.5 In Para 52, the Commissioner has dealt with the contentions that the Show Cause Notice ignores the statement of Shri K.S. Faizal, Managing Partner of M/s. Noble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idential premises of the partners of the assessee and at the premises of the appellant s dealers but could not unearth any evidence which would corroborate or support he alleged undervaluation. The entire demand rests only on the alleged evidences in the form of pricelist recovered from the computer and no incriminating evidence of any sort could be found at any other place. (ii) Appellants during the relevant period had the following number of dealers in each state. Sl. No. State Year 2001-2002 2002-2003 1 Kerala 14 26 2 Karnataka 3 3 3 Tamil Nadu 7 8 4 Andhra Pradesh 4 4 5 Other States (Pondicherry) - 1 TOTAL 28 42 (iii) Statements have been recorded only against few of the dealers. No statement has been recorded from any dealer in Karnataka. As against 30 dealers in Kerala, the department had recorded the statement of only two dealers. In Tamil Nadu, the department has conducted investigations only with two dealers as against 12 dealers. In Andhra Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned advocate Shri Shiva Dass, invited our attention to the following decisions. (a) The State of Kerala v. C. Velukutty - [1996] 017 STC 0465 (b) CCE, Meerut v. Century Laminating Co. Ltd. - 2006 (198) E.L.T. 321 (S.C.) (c) Vidarhha Veneer Industries Ltd. v. CCE, Nagpur - 2008 (223) E.L.T. 314 (Tribunal- Mumbai). The decision in the C. Velukutty s case is given in gist below. The respondent had two offices, both in Kozhikode, the head office doing retail business, and a branch office doing wholesale business, each maintaining separate accounts. The head office maintained accounts disclosing goods transferred by the branch office as well as goods purchased by it locally. The branch office had also transactions with its customers. For the assessment year 1955-56 the respondent was assessed to sales tax on the turnover disclosed by its regular books. Thereafter on a surprise inspection of the head office some secret books of account and records were discovered disclosing additional transactions to the extent of 135 percent of the turnover recorded in the books. The Sales Tax Officer made a reassessment by adding 135 percent of the turnover of the head offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t agents at Gauhati, Goa, Chandigarh, Hyderabad and Cochin. According to the appellants, the ex-factory gate sales amounted to around 25% during the period from 1991-92 to 1995-96. Proceedings were initiated against the appellants on the ground that over and above the price at which the goods were sold from the depots and, consignment agents, cash realization was made. The investigation revealed that the factory gate price was not genuine. It was argued by the assessee that once the factory gate price was available at which 25% of the goods were sold, the same cannot be ignored. Further, it was contended that the investigation did not reveal extra collection from any of the depots, branch or consignment agent except Calcutta and since the appellant did not have different price for different region, the same price for Calcutta region also cannot be treated differently. Only in very small instances, there was extra collection. Such small percentage cannot be construed ordinarily sold in the course of wholesale trade . Only in respect of all the sales to Calcutta region, extra cash realization were made and there were only 10 factory gate sales to, Calcutta region during the period f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. At the time of cross-examination the dealers retracted from their original version. The authority ignored these retractions and held all these statements given before the investigating authority considered as the corroborative evidences. Placing reliance on the judgments of Apex Court in the case of Sony Vallabdas Liladhar v. Asst. Collector of Customs, Jamnagar [1983 (13) E.L.T. 1408 (S.C.)] and on the decision of Apex Court s in the case of State of Maharashtra v. P.K. Pathak reported in 1983 (13) E.L.T. 1628 (S.C.). (C) The Adjudicating Authority admitted the evidence of suppressed value from the printout taken from the CPU but demand confirmed only on those dealers whose statements were recorded. The view taken by the Adjudicating Authority is contradictory to the reliance placed in the case of Collector of Customs v. D. Bhoormull [1983 (13) E.L.T. 1546 (S.C.) = AIR 1974 SC 859] wherein it was held that the department is not required to prove its case with mathematical precision and all that it requires is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the fact in issue, thus, legal proof is not necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sunny John revealed details, which were only known to them. These were not retracted at the earliest opportunity. No complaint of duress or threat was made. (vi) The said statements were resiled from only at the time of cross-examination, i.e., after more than 2 years. Such retraction has no value, because of time lag, no evidence of duress or threat having been produced. (Ref. decisions rendered in the case of Surjit Chaabra and Beauty Dyers are relied on). (vii) The Order-in-Original placed reliance on certain Tribunal decisions, though the same were contrary to Commissioner s findings elsewhere in the Order-in-Original, which is the subject matter of department s appeal dealt with later. (Reference may be made in this regard to the decisions rendered in the case of Alfa Ceramics and Surya Ceramics). (viii) Argument that valuation of subject goods should be on the basis of normal price that existed for the remaining clearances is devoid of merit, since this is a case of invoice price, not being the sole consideration for sale. This issue has also been dealt with in Para 12 of the order in Alfa Ceramics case. (ix) Without prejudice to the stand taken by the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to buyers who admitted extra payment to M/s. Hero Plywoods and Boards constituted 12% to 20.2% of total sales. (c) Taking into account the sales by M/s. Hero Plywoods and Boards to dealers who bought goods from the group as a whole and who admitted having paid extra amounts, the position that emerges is as follows: Karnataka : Rs. 8.43 lakh out of Rs. 8.86 lakh - 95.1% Kerala : Rs. 30.14 lakh out of Rs. 92.20 lakh - 32.7% Tamil Nadu : Rs. 7.18 lakh out of Rs. 9.15 lakh - 51.6% Andhra : Rs. 12.69 lakh out of Rs. 14.15 lakh - 89.6% (vi) In view of the evidence as above and applying the principle of preponderance of probability as set out in D. Bhoormull s case by the Apex Court, the Commissioner ought to have confirmed the entire amounts of duty demanded in the respective show cause notices. Accordingly, other aspects such as interest on duty and penalties should also have been decided. 9.4 The Central Excise Customs Officers are not Police Officers and the statements recorded by them, even if confessional in nature, are admis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presented in the present case is far more detailed, strong and conclusive inasmuch as there are a number of slips, evidencing recovery of extra amounts, corroborated by corresponding entries in the collection books/ledgers maintained by the employees of the assessee, entries/cash statements showing cash remittances to the Head Office at Kannur through employees and others; the confirmatory statements of the employees from whom the said books were recovered and also the statements from dealers, confirming extra payments made in cash, etc. Therefore, he said that this case cannot be compared with the facts of the Sharon Veneers case. 9.8 In Alfa Ceramics, (cited supra), the evidence presented clearly established through documents and statements of the two distributors established in Madhya Pradesh that with reference to the transactions effected through the distributors, Alfa had realized extra amounts in excess of the invoiced amounts. The tribunal accepted this argument of Revenue. But the Tribunal further held that evidence gathered has convincingly established that part of the sale price from the MP distributors have been collected by cash. Such evidence is lacking in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, which are not corroborated. This is one of the contentions of the assessee. 11.2 Now, coming to the various contentions put forth, we find that the learned Counsel for the assessees argued that the evidences available cannot conclusively establish under-invoicing. He objected to the legality of the various documents, which have been seized, the statements which have been made, the retractions of the statements, etc. 11.3 Another important point, which the learned Advocate Shri Shiva Dass made was that the total clearances fall under two periods. The period prior to 1-7-2000 when the concept of normal price was prevalent. After 1-7-2000, the concept of Transaction Value has been imposed. Shri Shiva Dass argued that for all the clearances prior to 1-7-2000, only the normal price should be adopted. He stated even if excess collections had been made in few cases, that should be ignored and the normal price, which according to him, is the invoice price or the factory gate price, should be adopted. This is his main point. 11.4 As regards the period after 1-7-2000, he stated that the Transaction Value has to be adopted. That means, you have to go only by the evidence and wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the assessee or the party charges a particular value and in respect of all the other dealers, they would be charging only 1/3rd of that value. He stated that it is normally not possible to have such a huge price differential. Therefore, he stated that the probability principle should be adopted and demand should be confirmed. This is the essence of his argument and he distinguished all the case-laws relied on by the learned Advocate for the assessees. For example, there is the case of Sharon Veneers (cited supra). Shri Ramanan had distinguished it on the ground that the facts and circumstances and the quality of evidence produced in the present case are entirely different from those in the case of Sharon Veneers. As regards the Somany Pilkington Ltd. (supra) case, there, one of the sales executive of the company Mr. Vyas was collecting some excess amount on his own behalf. In this case, there is no evidence that any person collected cash on his own behalf. So, this case-law also cannot be applied here. He distinguished the other cases also. 11.8 Similarly, the learned Advocate for the assessees produced before us a large number of case-laws to show that the differential duty s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, there have been evidences that the assessee had collected cash over and above the invoice prices. Even in respect of clearances prior to 1-7-2000, the evidences are available. We have seen the working sheet with regard to the calculation of differential duty. Therefore, as far as the clearances prior to 1-7-2000 are concerned, the duty should be decided on the basis of the normal price. What is normal price? During the relevant period, Section 4(1) (a) read as follows: (4)(1)(a): the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. 11.10 We are of the view that the normal price in respect of the clearances prior to 1-7-2000 should be determined by the Commissioner on the basis of the available evidence in accordance with law. Once the normal price in respect of each variety of goods is decided, then that value should be adopted for calculation of duty. Once that is done, the differential duty can be calculated. Therefore, this cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner has to go strictly by the Transaction Value and decide the short levy. After deciding the differential duty leviable on the basis of the above principles, the Commissioner can determine the quantum of penalty etc. 11.13 With regard to the Show Cause Notices proposing confiscation of seized goods, the Commissioner, in the impugned order in para 68, has held that the goods seized from (1) M/s. Decowood Interiors, Cochin; (2) M/s. Neo Plywoods, Trichur, (3) M/s. Bhandari Agencies, Hyderabad; (4) M/s. Umiya Plywoods, Coimbatore; and (5) M/s. Jamuna Agencies, Vellore; are liable for confiscation. His findings are based on the fact that the documents seized from the Depot of M/s. Hero Plywoods Boards, residences of their employees and from the premises of their dealers were corroborated by the statements of the persons concerned revealed undervaluation by showing lesser price, namely 30% of the actual price in invoice and collecting amount over and above the invoice price. In view of the overwhelming evidence, we confirm the findings of the Commissioner that the above dealers are liable for penalty under Rule 209A of the erstwhile Central Excise Rules, 1944/Rule 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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