TMI Blog2010 (12) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... der Invoice No. 013 and 014 both dated 12-4-2004. The details contained in the slip are as follows : M/s. Navin Glass Plywoods, Davangere B/B Plywoods :- FP Comml. Marine 12-4-04 19mm BB MR 7x3 09 189 @ 33/= 6,237.00 18mm Ply 8x4 10 320 7x4 10 280 20 600 @ 32.90 19,740.00 12mm Ply 7x4 25 700 @ 22.75 15,925.00 BWP Grade 19mm BB 8x4 49 1568 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less : Bill (108903 + 71614) 1,80,517.00 1,55,979.00 Less 2% CD 6,668.70 1,49,310.30 2. Corresponding invoice showed a lower price than the respective prices for the same clearances reflected in the slip. It appeared that the slip was for recovering the actual sale price less the invoice price. It appeared that the invoiced amount was only 47.61% of the actual consideration realized for sale of the goods. Two other slips recovered also indicated similar prices relating to clearances against invoice No. 270, dated 25-2-2004 and 214 215 both dated 2-1-2004. These slips indicated the invoiced amount to be 46.49% and 53.85% of the respective actual sale price. A price list recovered under Panchnama dated 28-2-2004 from the office of the BA Group of firms indicated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up of companies. He stated that chits similar to the ones seized in the past from his residence used to be destroyed after operating for sometime. The same practice was followed in respect of other group companies. Shri Ashraf Khan gave a statement on 28-4-2004 endorsing the version of Shri Manoj Kumar Amin as regards collection of amounts in excess of the invoice value in cash through Shri Manoj and submitted that under-invoicing was to the extent of 35 to 40% of the invoice price. Shri M. Ashok Kumar, partner, M/s. Shri Balaji Plywoods in his statement dated 28-4-2004 also submitted that goods sold to him by the BA Group of companies were under invoiced and the balance of the actual price was paid in cash to Fathima Panels through Shri Manoj. 3. A show-cause notice dated 11-10-2006 was issued proposing to recover the duty due on the amounts collected in excess of the invoice value and to penalize the persons concerned with the offending transactions. The proposals were contested. After due process of law, the Commissioner confirmed demand of ₹ 49,73,107/- against M/s. Fathima Panels for clearances made during 7/01 to 3/04 along with applicable interest. A penalty of equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements. 3.1 Yet another ground raised is that the authorities had used the bank statement obtained illegally in contravention of the Bankers Books Evidence Act, 1891. Such statements were required to be obtained with the permission of a High Court Judge. The Commissioner had ignored the record of cross-examination of various witnesses. The Commissioner had wrongly relied on the decision of the Supreme Court in D. Bhoormull [1983 (13) E.L.T. 1546 (S.C.)] to hold that the case of undervaluation could not be proved with mathematical precision. It is submitted that that said judgment was rendered in the context of smuggling of gold and did not apply to removal of excisable goods by under valuing the same. The quantum of differential duty had been worked out by enhancing the value of the goods across the board by an average figure of 49.32% determined. Percentages based computation of duty on the basis of law of average for four years for all the products was not permissible in law. In support of the above claim, a large number of judicial authorities were cited; for instance, Oudh Sugar Mills Ltd. v. UOI [1978 (2) E.L.T. J172 (S.C.)] and CCE v. Ratna Fireworks [2005 (192) E.L.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth transactions. The impugned order did not follow the valuation provisions in determining the duty of the impugned clearances. There was no justification for the investigation to reject the transaction value based on three slips of paper. The impugned order did not bring out on record details of brand of goods cleared to particular buyers from whom excess consideration was collected in cash, what were those goods, what was the specification and on which date the removal took place, to which customer, by which vehicle etc. The impugned order did not find as to how much consideration was collected in cash for each such removal. 3.4 The appellant submits that, the definition of the expression transaction value is restricted to encompass only such amounts that are collected for the sale of goods, as consideration. The transaction value, can differ from one transaction to another, and cannot be the very same for three long years, inflation factor being considered and taken into account. The price of goods can never remain constant in a decontrolled, market driven economy, and when there is no price control by the government. This factor has been ignored with impunity by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Panels had manufactured and cleared plywood and block board without payment of appropriate duty by resorting to gross undervaluation. Retractions of statements were afterthought. Suppression of facts by Fathima Panels and its management attracted the provisions of Section 11A and 11AC of the Act. 4.2 The Department relied on the following evidence :- 1. Three slips recovered from M/s. Navin Glass Plywoods, Davangere. The veracity of these slips was corroborated by Shri L.S. Navin of the said dealer. 2. One price list recovered from Shri L.S. Navin. He stated that the price lists showed prices per sq. ft. of different plywood products purchased from various manufacturers of the group. He affirmed that the document was in his handwriting and that the rate/sq. ft. shown therein against the company name BA was the rate at which payments were made to Fathima Panels and the prices shown on the invoices were not the actual prices charged. 3. Price list seized from the office of BA group of companies. This document indicated that actual prices realized from the customers were much higher than the prices shown on the invoices. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration by way of cash was also found to be identical. Employees like S/Shri Ashraf and Manoj Kumar Amin were acting on behalf of all the units. Dealers have stated that while they placed orders with Shri Ashraf, Shri Manoj Kumar Amin was the one who collected the amounts in cash, which represented the additional consideration over the invoice prices. Further, they received supplies from any one of the three units; all the nine slips recovered from the residential premises of Shri Navin were admittedly signed by Shri Ashraf. These related to invoices issued by HTC, FP and THPL. The prices shown on the invoices and the actual values recovered were the same for the three units. 4.3 The ld. Counsel for the Revenue sought to support the impugned order on the principle of preponderance of probability . Effectively, this standard was satisfied if there was greater than 50% chance for the proposition to be true, it is argued. Lord Denning in Miller v. Minister of Pensions described it simply as more probable than not . Courts have adopted preponderance of probability as the standard in the context of clandestine activity such as smuggling and clandestine removal of excisable goods w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case, incriminating documents/records had been supported by admissions by the employees/partner of the firm. Both the lower authorities have concluded that undervaluation by Fathima Panels was across the board. It is submitted that the degree of proof was more than adequate to come to the conclusion that the Revenue s version of the facts was credible and convincing. Once it was accepted that the duty evasion on account of the undervaluation was substantially or likely to be true, it was legal to hold that the allegation stood proved in toto. Even if the degree of proof was 51% for the Revenue as against 49% for the appellant, the case of the Revenue should be upheld. Requirement of establishing undervaluation with reference to each dealer would mean asking for the highest degree of proof. Such a standard was applied only to criminal cases. The Hon ble Apex Court and this Tribunal have time and again ruled against stipulating a standard of proof which would demand a high degree of mathematical precision in cases involving clandestine activity. 4.6 The documentary evidence, supported by the statements of the employees of the assessee and dealers proved the facts sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Item Prices charged from Tata Prices charged from others 6 mm Ply ₹ 126.95/sq.m. ₹ 51/sq.m. 12 mm Ply ₹ 213.45/sq.m. ₹ 85/sq.m. 18 mm Ply ₹ 307.30/sq.m. ₹ 125/sq.m. The above table showed that in respect of other buyers, the invoice prices cannot be regarded as transaction value. The additional consideration received had escaped payment of duty. Reliance is placed on the valuation provisions to argue that in case of the clearances in question, there was no transaction value and the additional consideration had to be included in the value for the purpose of duty. 5. We have carefully examined the records and studied the rival submissions. We find that the impugned order confirmed demand of Excise Duty to the tune of ₹ 49.73 lakhs being differential duty on clearances of commercial plywood, block boards, etc. made during 7/2001 to 3/2004. A slip recovered from one of the dealers of the assessee had figures which corresponded to lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had attempted any such retraction. Retractions came a couple of years later when the assessee appellant arranged their cross-examination before the adjudicating authority. The statements recorded are all under Section 14 of the Central Excise Act. The Central Excise Officers are not Police officers and the statements recorded by them are valid evidence. Moreover, the statements find corroboration in the documents recovered by the authorities. In the absence of retraction or allegation of coercion to give an involuntary statement, we are inclined to accept their initial statements as voluntary and valid evidence. As far as the statements given by Shri Manoj Kumar Amin, Marketing Executive of BA Group of Companies and Shri J.M. Ashraf, Manager, HTC, are concerned, we find that it was incumbent on them to retract the same if they contained an incorrect version obtained by force. They are not third party witnesses. Their belated retraction cannot be accepted as valid. We hold that the versions contained in their initial depositions to be true to facts. 5.2 As far as the challenge to the original authority relying on the statement of accounts obtained from Vijaya Bank on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lars of prices of plywood sold directly to M/s. TATA Coffee Ltd. and the corresponding prices of such goods sold to other buyers as given in the table at para 4.9 in respect of THPL. All the group concerns followed the same pattern of marketing and invoicing. 5.4 As far as the Revenue s case that preponderance of probability governed quasi judicial proceedings and could be applied to judicially quantify the duty short paid during the entire period of dispute, relying on one slip showing the actual price charged in respect of a few transactions and corresponding invoice prices, we are not in a position to accept this proposition. The argument is based on the premise that preponderance of probability implied a test of evidence, which was satisfied when the proposition was more likely to be true than not true. The standard was satisfied if there was a greater than 50% chance that the proposition was true. In the case in hand, we are convinced that the preponderance of probability is that the assessee evaded duty due on the clearances it made. However, the fact that in a lion s share of its sales during a period of one year, Thumbay Holding Pvt. Ltd. (THPL), one of the BA Group of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, we hold that in the instant case, demand cannot be assailed on the ground of limitation in the face of overwhelming evidence of evasion found against the assessee. The larger period of limitation was correctly invoked by the Commissioner. 6. The appellants have raised a valid ground to assail the demand on the basis that during the material period, each clearance was assessable to duty on the particular price charged for each removal. Duty of excise was liable to be paid on the transaction value charged for each clearance. We are in agreement with the assessee that the value for the purpose of demanding duty on the impugned clearances, therefore, has to be determined as the relevant transaction value. It will be legally inappropriate to apply a percentage to the invoice value to notionally determine the value and the corresponding duty due. In a similar case of evasion of excise duty by undervaluation, the Tribunal held as follows in the case of CERA Boards Doors v. CCE, Calicut [2010 (249) E.L.T. 550 (Tri.-Bang.)] : 11.12 As regards the period after 1-7-2000 for valuation, the concept of transaction value has been introduced. In the concept of transaction value, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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