TMI Blog2010 (12) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the normal course. It would appear that in respect of the invoices covered by the slips which were recovered, evasion to the extent of 67% as found by the Adjudicating Authority is sustainable. Original Authority rightly (relied on the decision of the Larger Bench of the Tribunal in the case of Nizam Sugar Factory (1999 (10) TMI 123 - CEGAT, NEW DELHI) to hold that five year period is available from the relevant date for the Department to raise demand through a show-cause notice. The date of knowledge by the Department did not curtail this period. The Hon’ble High Court of Gujarat interpreted the provisions of Section 11A vide its judgment in the case of CCE v. Neminath Fabrics Pvt. Ltd. [2010 (4) TMI 631 - GUJARAT HIGH COURT]. Therefore find that the demand is not barred by limitation. The ld. Counsel for the Revenue had argued that the case of evasion of the Revenue is established by the fact that in the case of direct sales of goods to Tata Coffee Ltd., the assessee had raised invoices for the following three varieties of plywood at much higher prices compared to prices invoiced for such goods when sold to others. As regards applying the finding of evasion in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units, on a day to day basis. Shri J.M. Ashraf is the chief executive of BA group of companies and special power of attorney holder of the said THPL. Shri Manoj Kumar Amin, is the marketing executive of BA group of companies. The factory premises, offices and various premises of the dealers of the BA group were searched and incriminating documents were recovered. Further investigation and verification of documents indicated that all the units are involved in large scale evasion of Central Excise duties by undervaluing their clearances of final products. Incriminating documents, such as chits, indicating the actual amounts collected, etc., were recovered from various premises indicating the modus operandi. On the basis of price list and chits recovered from the premises of M/s. Navin Glass and plywood, Davanagere, a dealer of the goods of THPL, price list seized from the premises of the office of BA group, statements of the persons of THPL, statements of the customers of THPL, Bank statements and transactions, it appeared that THPL had adopted the modus operandi of under-valuing the goods in their invoices and collecting some amount over e above the invoiced value in cash, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority did not give specific findings on the grounds raised by the assessee-appellant. The case of the Revenue was that amounts were collected in cash in excess of the invoice value and deposited in current account No. 1750 at Vijaya Bank, Brigade Road, Bangalore. It is submitted that the Commissioner (Appeals) did not render any finding on the following submissions made before him. (a) First of all, the above bank statement cannot be relied on as evidence since the provisions of Bankers Book Evidence Act, 1891 were not followed and non-observance of the said Statute, the bank statement loses its value as evidence. (b) Even assuming that the above bank statement has evidentiary value, there are no cash deposits in the said bank statement except of Rs. 4,000/- deposited for opening the account. (c) The entries in the said bank statements were purely financial transactions and the nature of these financial transactions has been explained by Shri Abdul Salam in his statement deposed on 18-7-2006. (d) All the entries in the above bank statement were duly accounted in the books of account of the appellant and there was no suppression whatsoever under any of the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entries in page No. 44 of the file were to the best of his knowledge made by their accountant. He had further stated that page No. 53 of the file was their price list. During cross-examination on 12-2-2007, Shri Manoj Kumar Amin disowned the statement and stated that the same was obtained under coercion. The impugned order relying on retracted statements of witnesses was bereft of legality. The statement obtained from Shri J.M. Ashraf was signed by him after certain portions appearing in the same had been deleted at his instance. This cast aspersions on the manner in which the investigation had recorded the statements. Shri Manoj Kumar Amin had signed a statement already kept ready. The investigation gathered four chits/slips corresponding to three invoices from the premises of M/s. Navin Glass Plywoods which was alleged to be the price list of the appellant. The finding that Shri Manoj Kumar Amin had signed on the slip of paper alleged to be the appellant s price list was erroneous because there was no signature present on the said slip of paper. This price list was not specifically mentioned in any of the mahazars nor shown to any of the employees of the appellant. The author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no evidence indicating practice of undervaluation in relation to clearance to dealers all over the country - demand to be restricted to clearances made to parties/regions receiving undervalued goods. (b) Alfa Ceramics Industries v. CCE [2002 (145) E.L.T. 454 (T)], wherein it was held hat evidence collected in respect of sales to Madhya Pradesh Distributors about collection of part of sale price in cash over and above the invoiced price, not to lead to reasonable inference that similar was the case in respect of sales in other areas also. This decision was maintained by the Supreme Court in 2003 (156) E.L.T. A325 (S.C.). (c) Truwoods Pvt. Ltd. v. CCE, 2005 (186) E.L.T. 583 (T), wherein it was held that presumption cannot be the basis of demand. Demand was confirmed on the basis of evidence in respect of a period prior holding that it is not possible to raid every buyer every time for all the future periods to uncover the evidence. It was held that impugned order proceeds on presumption that the same modus operandi adopted by the appellant continues and that such an order was not sustainable. (d) Sri Parasakthi Fire Works v. CCE, 2004 (174) E.L.T. 449 (T), where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the clearances given and no investigation made regarding the seller and purchaser of the goods, Department had failed to prove the charge of clandestine removal. Other case laws following the same line of reasoning were also cited. 2.2 The show-cause notice was barred by limitation. Entire documents were recovered on 28-4-2004. Show-cause notice was issued on 11-10-2006. It is submitted that when it was established that there was short payment etc. due to suppression, fraud etc. with intention to evade duty, then the Department could go back five years from the date of knowledge but the demand notice ought to be issued within a period of one year from the date of knowledge. In the present case, the demand notice has been issued after a lapse of 894 days from the date of knowledge and therefore, was barred by time. The impugned order did not discuss as to how the appellants suppressed the facts with intention to evade duty. The impugned order had not discussed several case laws cited by the appellants and did not find as to how they did not apply to the facts of the appellants case. 2.3 The charge of undervaluation could not be sustained in the absence of finding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of each case. In the appellant s case, the manner of computing the purported demand of duty for all the goods sold by the appellant during 2003-04 was not only arbitrary but was also harsh and without basis. It was held in United Glass v. CCE [1995 (75) E.L.T. 209 (S.C.)] that exercise of discretion for conducting a best judgment assessment should not be arbitrary. The appellate authority had not appreciated that the decision of the Tribunal in Woodman Industries v. CCE [2004 (164) E.L.T. 339 (Tri.)] maintained by the Supreme Court in 2004 (170) E.L.T. A307 (S.C.) had held that allegation of undervaluation was not sustainable on the basis of scribblings in personal notebook of the Chartered Accountant when there was no corroborative evidence regarding the same. The impugned order was therefore liable to be set aside. 2.4 The appellant has assailed the penalty on the ground that no evidence was adduced by the authorities to establish that the alleged acts or omissions had been committed by the appellant deliberately or contumaciously or in flagrant violation of provisions of law or with intention to evade duty. A large number of case laws are cited in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f BA group of companies. This document indicated that actual values realized from the customers were much higher than the prices shown on the invoices. 4. Statements of S/Shri L.S. Navin, Ashraf Khan and Ashok Kumar confirmed the billing practice of the BA group, namely, recovering from the customers values much higher than those indicated on the invoices. All of them named Shri Manoj Kumar as cash collecting agent of THPL. 5. Statements of Shri B.A. Salam dt. 17-5-2004, 28-9-2005 and 18-7-2006. He confirmed that he was in-charge of all the day-to-day activities of BA group of companies viz. Hajee Timber Complex, Fathima Panels and THPL. He explained the role played by S/Shri Ashraf and Manoj Kumar Amin. On showing 9 slips seized from the dealers, he offered to examine the matter after going through the record. He never came up with an explanation. Explaining the bank transactions, he stated that in order to meet their financial commitments, BA group of companies discounted cheques from M/s. Kumar Plywoods in their bank accounts and when the funds were arranged they were squared up. 6. Statements of S/Shri J.M. Asharaf, Manoj Kumar Amin. Shri Ashraf confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne removal of excisable goods without payment of appropriate duty time and again. In Maharashtra State Board of Secondary and Higher Education v. K.S. Gandhi Ors. [(1991) 2 SCC 716], it was held as under : 37. It is thus settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal. It is open to the authorities to receive and place on record all the necessary facts though not proved strictly in conformity with the Evidence Act. The evidence must be germane and relevant to the facts in issue. In grave cases like forgery, fraud, conspiracy, misappropriation, etc. seldom direct evidence would be available. Only the circumstantial evidence would furnish the proof There must be evidence direct or circumstantial to deduce necessary inferences in proof of the facts in issue. There can be no inferences unless there are objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish .. The standard of proof is not proof beyond reasonable doubt but the preponderance of probabilities tending to draw an inference that the fact must be more proba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts sought to be established. The degree of proof provided was adequate to establish the Revenue s case. The practice of receiving substantial part of sale consideration in cash by showing lower prices in the invoices would have been in vogue for all clearances in view of the evidence gathered by the Revenue. 3.6 Revenue placed reliance on the following cases :- (a) Apex Court decision and observations in the case of CIT v. H.M. Esuf Ali H. M. Abdullah - 90 ITR 271 SC, wherein , on the basis of private records pertaining to 19 days, projection of turnover for 355 days by the CTO was approved by the Apex Court. (b) The ratio of the decision of this Bench in the case of Gulabchand Silk Mills v. CCE, Hyderabad-II [2005 (184) E.L.T. 263 (Tri.-Bang.)] after weighing the evidence and upholding the extension of the charge of duty evasion to all the clandestine clearances on the basis of the circumstantial evidence is squarely applicable to the present cases. On the same rationale, extension of the charge of duty evasion on account of the clandestine activity of recovering amounts over and above the invoice prices, to all the clearances effected by the appellants is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) National Board others [Final Order No. 670 to 687/2010, dated 1-4-2010] (b) Cera Boards Doors and others v. CCE, Calicut [2010 (249) E.L.T. 550 (Tri. - Bang.)] (c) Sharon Veneers v. Commissioner [2002 (146) E.L.T. 655 (Tri.)] 4. We have heard both sides and perused the case records. The case of the Revenue is that during the material period the assessee sold its products such as Plywood and Block Boards paying excise duty on the value showed on the sale invoices and collected extra amounts in cash. This was arranged to be collected through Shri Manoj Kumar Amin and deposited in current account No. 1750 with Vijaya Bank, Bangalore for eventual transfer to the assessee. Investigation conducted with one of its dealers M/s. Navin Glass and Plywoods, Davangere revealed that the assessee had invoiced lower value than the actual amount collected on clearance and sale of Plywood. A slip recovered from the dealer contained figures which corresponded to a handwritten list of prices communicated to the dealer by Shri B. Abdul Salam (though Shri J.M. Ashraf). The actual prices were fixed by Shri B.A. Salam. Shri Manoj Kumar Amin had explained the actual transactions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice. In any case, a major share of the demand pertains to direct clearances to Tata Coffee Ltd. which has not been considered in affirming the demand of the Original Authority, apparently, for the reason that the particulars had not reached the Commissioner (Appeals) before he passed the order. Therefore, we remand this matter Original Authority for re-working the demand as well as the penal liabilities of the assessee and its employees. The matter has to be remanded also for other important reasons which we discuss below :- 4.3 The impugned order is a continuation of the proceedings before the Original Authority. The Original Authority dealt with the allegations and confirmed the proposals in the show-cause notice. The Original Authority found that statements from Shri B. Abdul Salam, Shri J.M. Ashraf, Shri L.S. Navin, Proprietor of M/s. Navin Glass and Plywood, Shri Manoj Kumar Amin, Marketing Executive of BA Group, Shri Aslam Khan, Proprietor of M/s. Amar Glass Works, Bangalore and Shri Ashok Kumar, Partner of M/s. Balaji Plywoods, Bangalore were recorded in April/May, 2004 and September, 2005. They had retracted the statements only in February, 2007. In between no witnes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed by Shri Manoj Kumar Amin, he had deposited unaccounted proceeds of sales of plywood and block boards in current account No. 1750 with Vijaya Bank, Brigade Road branch, Bangalore. He observed from a statement obtained from the said bank that amounts had been withdrawn from the said account by BA group firms. No amount was withdrawn by M/s. Kumar Plywood Agencies. He concluded that the amounts deposited in the said account represented part of the sale price of plywood and block boards on which no duty was paid by the assessee and its sister units. The ld. Counsel for the assessee had argued that the bank statements relied upon had been obtained in contravention of provisions of Bankers Book Evidence Act, 1891; the same had been obtained without the sanction of a High Court judge as required under the said Act. The same could not be relied upon. The Original Authority rejected this argument on the basis that Section 14 of the Act empowered officers of Central Excise department to obtain such documents. He found that the Valuation Rule relevant to determine the value of impugned clearance was Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Shri J.M. Ashraf and Shri Manoj Kumar Amin. On the basis of the statements recorded, it is established that the assessee short paid duty in respect of clearances covered by the six invoices to the extent of about 67%. Duty payable to the same extent was so evaded in respect of all clearances made by the assessee during the material period. This finding is challenged on the basis that, all the statements were retracted during cross-examination before the Adjudicating Authority on 12-2-2007. The statements ceased to be evidence. In this regard, we find that all the statements are recorded under Section 14 of the Central Excise Act. These statements constitute evidence and cannot be ignored. However, when such statements are retracted, it may be unsafe to totally rely on such statements unless there is corroboration. In the instant case, statements recorded from Shri L.S. Navin cannot be relied on unless it is established by the Revenue that his statement had not been obtained under duress. There is no evidence of coercion adduced by Shri L.S. Navin. Moreover, his initial statement was incriminating since he had paid excess amount towards purchase of plywood which had not suffered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year by the assessee on clearances of excisable goods sold through all of its dealers. 4.7 The lower authorities have relied on statement of accounts obtained from Vijaya Bank to establish evasion by the assessee. It was submitted that as per the Bankers Book of Evidence Act, 1891, the bank statement relied upon was illegally obtained and could not be relied on as evidence. More over, the statements did not indicate deposits of cash allegedly collected in excess over the invoice prices. In this regard, we observe that the Commissioner (Appeals) has not rendered any finding on this submission. The relevant provision in the Bankers Book Evidence Act, 1891 reads as follows :- 6. Inspection of books by order of Court or judge. (1) On the application of any party a legal proceeding the Court or a Judge may order that such party be at liberty to inspect and take copies of any entries in a banker book for any of the produce any banker book for any of the purpose of such proceeding, or may order the bank to prepare and produce, within a time to be specified in the order, certified copies of all Such entries, accompanied by a further certificate that no other entries are to be found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asion in respect of clearances other than those covered by the documents recovered, the ld. Counsel for the Revenue sought to apply the principles of preponderance of probability. This test was met if the proposition was more likely to be true than not true. He had relied on several case laws in support of this argument. It is his submission that the extent of evasion discovered in respect of the invoices recovered by the Department and established with evidence should be applied in respect of all the clearances made by the assessee during the material period. He particularly relied on the decision of the Tribunal in Carpenter Classic Exim Pvt. Ltd. (supra), where the Tribunal upheld applying best judgment valuation in respect of all the goods imported over a period of time under 25 bills of entry relying on documentary evidence in respect of a single consignment and statements of the M.D. and others. He also relied on the decision of the Tribunal in the case of Gulabchand Silk Mills (supra), where the Tribunal upheld extension of charge of duty evasion to all the clandestine clearances on the basis of substantial evidence. Any requirement to prove undervaluation with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction value, each transaction is important. Therefore, the transaction value is to be determined for the clearances after 1-7-2000. As far as the period after 1-7-2000 is concerned, the value for assessable purpose is the transaction value. The transaction value is the value for each transaction. The concept of transaction value is entirely different from the concept of normal value. While the normal value can be notional, the transaction value is the actual amount transacted in respect of the goods. Of course, under certain circumstances, the transaction value has to be determined in accordance with the Rules. Anyhow, we would not go into that. Suffice it to say that for all the clearances after 1-7-2000, the value has to be determined based on each-transaction. Therefore, the differential duty should be confined only to the evidences available on record. These are our two observations. Therefore, the Revenue s contention that uniformly for all the clearances, 70% should be added to the invoice value is not accepted. We reiterate our finding to say that for the period prior to 1-7-2000, the Commissioner has to decide the normal price for each variety of goods and he can ado ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
