TMI Blog2010 (12) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... aw materials etc. The suppressed turnover, being the excess collection over and above the recorded value or income in their books, is related to the sale value which escaped assessment under the Central Excise Act. Once the suppressed turnover is admitted beyond any doubt and the assessee opts to accept the tax liability under the Income Tax Act, no meaningful purpose would have been served to cause further detailed probing under the Central Excise Act and Rules. - Order travelled beyond the scope of SCN, demand set aside. It is to be noted that the recalculation or re-quantification of an amount received in excess of the MRP declared and collected from the customers has to be done in a prescribed manner - CBEC vide circular No.334/1/2008-TRU dt. 29/2/2008 made it clear that the MRP Valuation rules are effective from 1/3/2008 - his would indicate that prior to 1/3/2008, there was no procedure to revise the MRP and demand the duty even though there being a provision under sub-section (4) of Section 4A of the Central Excise Act, 1944 - Held that: In the absence of any legal machinery during the relevant period, re-determination of RSP /MRP by the Department is without any author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Controller of RFPL and PFPL. On the conclusion of investigation, the Central Excise officers were of the view that the appellant companies had clandestinely cleared goods to the extent of Rs. 3.75 crores during the period December 2001 and January 2002 and thereby, evaded Central Excise duty amounting to Rs. 60,93,750/-; and that the Executive Director, Managing Director and Financial Controller of RFPL and PFPL are responsible for the evasion of duty and suppression of production and clearance. On such a view, Show Cause Notice dated 25.11.2006 was issued demanding an amount Rs. 60,93,750/- from both the appellants RFPL PFPL and asking them to show cause as to why penalty should not be imposed on them. The Directors and Financial Controller of the appellants companies were also directed to show cause as to why penalty should not be imposed on them. All the appellants contested the show cause notice on various grounds mainly on the ground that the information which was given to the Income Tax authorities and admitted before the authorities could be an acceptance of suppression of income for the Income Tax purpose and the said information cannot be relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the appellants submits as under : (i) The show cause notice issued to the appellants, more specifically in paragraphs 24 25, relied up on the documents received from Income Tax department alleging that the appellants herein were indulging in clandestine clearances. It is the submission that the appellants completely denied the allegation of clandestine removal; submitting details of raw material procured, the input and output ratio etc. and contented that the charge on clandestine removal as set up in the show cause notice was not corroborated by any other evidence. It is the submission that the Commissioner has given up the charge of clandestine removal as recorded in Para 57 of the impugned order and held that the suppression of turn over was considered. It is the submission that once the Commissioner has found that the charge of clandestine removal was not sustainable, the proceedings should have been dropped and confirmation of demand on a new ground cannot be done by the Commissioner. For this proposition, the learned Counsel relied on the following decisions : (i) CCE Vs. Ballarpur Industries Ltd. [2007 (215) ELT 489 (S.C.)] (ii) CCE Vs. Champdany Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been recovered by the Income Tax department, cannot be considered as admissible evidence under Section 36B of the Central Excise Act, 1944 inasmuch as there is no proof adduced to show such printouts were obtained in accordance with the requirement of Section 36B of the Act. It is the submission that they have always contested the authenticity of the documents inasmuch as neither the author has been examined nor any corroborative statement/evidence recorded under Section 14 of the Central Excise Act, 1944. For this proposition, the learned Counsel relied upon the judgment of the Tribunal in the case of Sri Chakra Ltd. Vs. CCE [2008 (231) ELT 67]. (vii) It is the submission that the allegations are not corroborated by any other evidence and the department has failed to prove that the raw materials required for manufacturing and clearing finished goods valued at Rs. 3.75 crores for the month of December 2001 and January 2002 were procured and unaccounted during this period. (viii) It is also alleged that the appellants have not accounted the raw materials nor the raw materials were clandestinely disposed off by them. The learned counsel drew our attention to the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evidentiary value of the statement recorded under Section 132 of the Income Tax Act is restricted and limited to the provisions of the Income Tax and the same cannot be used or relied upon by any other purpose. He also draws our attention to Section 14 of the Central Excise Act, 1944 wherein it is clearly mentioned that the statement recorded under Section 14 of the Central Excise Act is much more wider and is deemed to be a judicial proceeding within the meaning of the Section 193 and Section 228 of the Indian Penal Code, 1860 while it cannot be used in any other act other than Income Tax Act. He relied on the following decisions : (i) CCE Vs. Laxmi Engineering Works [2001 (134) E.L.T. 811 (Tri.-Del.)] (ii) CCE Vs. Haracharan Brothers [2004 (168) ELT 454] 4. The learned SDR, on the other hand, submits that the evidence before the Income Tax authorities i.e. statements under Section 132 (4) of the Income Tax Act, 1961are admissible evidence in any court of law. It is submitted that the statements of key persons and in-charge of the companies who admitted that there being unaccounted sale of the goods, are not retracted and since they had admitted to the suppression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and consequent penalties and interest, and whether the employees are liable to be saddled with penalties as imposed by the adjudicating authority on the ground of suppression of production and clearances of the final products. 8. The undisputed facts are that the appellant companies i.e. RFPL and PFPL are manufactured products like biscuits, wafers and confectioneries. The said products manufactured by the appellant companies are chargeable to the duty based upon the MRP as provided under Section 4A of the Central Excise Act, 1944. The appellants company was raided by the Income Tax authorities and statements were recorded as regards the computer print out recovered from the appellant companys premises which indicated a certain amount of suppressed sales turnover during the month of December, 2001 to January, 2002. Directors of the company in a statement recorded under Section 132(4) of the Income Tax Act, 1961 had admitted to the Income Tax authorities that the amounts shown on the computer printout for the month of December, 2001 to January, 2002 were undisclosed/suppressed sales turnover. The said information was passed on to Central Excise authorities. Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice of the Central Excise Department. No statutory record contained the above particulars except the slips of manuscripts and other papers recovered during search. The suppression of production and clearances were clearly admitted by the Director and the Financial Controller during the statements given before the IT Department. The details of the production and clearances were never made known to the Department, though they have been filing regular periodical returns under Central Excise Rules, with a malafide intention to evade payment of duty. Thus, there was enough evidence to invoke the proviso to Section 11A of Central Excise Act, 1944 for demanding duty beyond one year from the date of detection. It can be seen from the above reproduced paragraphs that the show-cause notice initially proceeded on the ground that there was a suppressed production and clandestine removal of the goods and hence, there was a evasion of duty. It is seen from the records that but for the statements recorded by the Income Tax authorities under Section 132(4) of the Income Tax Act, 1961, the Revenue authorities in the investigation could not come up with any evidence as regards the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CCE, Nagpur Vs. Ballarpur Industries Ltd. [2007(215) ELT 489(SC)] and in CCE, Bhubaneswar-I Vs. Champdany Industries Ltd. [2009(241) ELT 481(SC)], has settled the law that once the order confirms a demand beyond the allegations mentioned in the show-cause notice, then impugned order is not sustainable. 11. Be that as it may, we find from para 26 of the show-cause notice that the show-cause notice has proceeded ahead for the quantification of the duty based upon the monthly returns filed by the appellant companies and extrapolating amount of Rs.3.75 crores which has been admitted as undisclosed / suppressed sales turnover for the month of December, 2001 and January, 2002 before the Income Tax authorities. The said para 26 is reproduced below:- It can be seen from the above reproduced paragraph that the lower authorities in the show-cause notice have tried to quantify the demand by re-working out the Retail Sale Price (RSP) / Maximum Retail Price (MRP) by taking the amount of Rs.3.75 crores as addable to the MRP. 12. We find that the provisions of Section 4A during the relevant period needs to be considered for coming to a conclusion whether the amount quantified by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and the like and the price is the sole consideration for such sale : Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2. For the purposes of this section, - (a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price; (c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates. It can be seen from the above reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lines or rules for determination of value as provided under sub-section (4) of Section 4A of the Central Excise Act. We find that Notification No. 13/2008-C.E. (N.T.), dated 1-3-2008 incorporates Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 which reads as under :- Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. [Notification No. 13/2008-C.E. (N.T.), dated 1-3-2008] In exercise of the powers conferred by Section 37 read with sub section (4) of Section 4A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules, namely :- RULE 1. (1) These rules may be called the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. (2) They shall come into force on the date of their publication in the official Gazette. RULE 2. In these rules, unless the context otherwise requires. (a) Act means the Central Excise Act, 1944 (1 of 1944); (b) retail sale price means the retail sale price as defined in Section 4A of the Act; and (c)Words and expressions used in these rules and not defined but defined in the Act or any other rules made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale price available on such goods, then, the highest of such retail sale price shall be taken as the retail sale price of all such goods. RULE 6. If the retail sale price of any excisable goods cannot be ascertained under these rules, the retail sale price shall be ascertained in accordance with the principles and the provisions of section 4A of the Act and the rules aforesaid. It can be noted that these rules came into force with effect from 1-3-2008. We are of the considered opinion that if these rules came to be effective on 1-3-2008, the ascertaining of value of similar goods has to be done so, with effect from 1-3-2008 and cannot be used to determine the value for the clearances made prior to 1-3-2008. We find strong force in the contention raised by the learned Counsel that the decision of the Tribunal in the case of Aditya Cement (supra) would squarely cover the issue in favour of the appellants. The relevant ratio in Para 9 of the said decision is reproduced :- 9. It can be seen from the above reproduced rule that it was in context of the definition of person liable for paying the Service Tax. This provision in itself may not suffice revenue to direct the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered under Section 4A of Central Excise Act, 1944. 15. In the case before us, the question of undervaluation would not arise, and assuming even if it arises, during the relevant period (in this case prior to 01/03/2008) there was no procedure under Section 4A of the Central Excise Act to demand the duty, as the said procedure came into statute from 1/3/2008 only. As regards the finding by the ld. adjudicating authority that suppression could be on account of volume, we have already recorded that there is no corroborative evidence nor there is any finding as to the exact quantity of goods clandestinely cleared to come to the conclusion that the value of Rs.3.75 crores is attributable to the specific quantity of goods on amount of clandestine removal. In the absence of any such details, we are of the considered view that the impugned order is unsustainable. 16. Before parting with the case, we would like to record that since we disposed off all the appeals only on the merits of the case, we are not recording any other finding on the other submissions made by both sides on various issues. 17. In view of the foregoing findings, we are of the view that the impugned order is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
