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TMI Blog2017 (7) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2003. The investigations culminated in issue of a show cause notice dated 25-03-2004, inter-alia, alleging the following: (i) KLR suppressed the actual price charged by them for the sale of rigs manufactured/mounted by them (ii) The amount charged by them over and above the invoice price was collected in cash. (iii) Part of the unaccounted sale proceeds in cash amounting to Rs. 67,98,500- were deposited into the bank accounts of M/s Eastern Steel Corporation towards the unaccounted raw material purchased. (iv) Spares such as hammers, bits etc. manufactured by them out of the unaccounted raw material purchases were not fully accounted and the unaccounted production of the above spares were cleared without accountal and without payment of duty. The show cause notice inter-alia proposed demand from KLR of differential duty of Rs. 2,34,33,989/- alongwith interest thereon and imposition of penalties under various provisions of Central Excise Act and Rules made thereunder. 4. Another show cause notice dated 23.09.2003 had been issued earlier to KLR for confiscation of goods valued at Rs. 42,550/- seized at the Bangalore branch of KLR and imposition of penalty on them under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r are not applicable to the subject case. Commissioner had mainly taken considerations of versions put forth by KLR, co-notices and other witnesses during cross examination which emanated to retraction of statements. 8. In respect of KLR's Appeal No.E/239/2006, Ld. DR submits that the demand of differential duty on hammer assemblies amounting to Rs. 3,94,335/- was very much in order since these goods were not accounted for in the records and adjudicating authority has categorically concluded that they had been cleared clandestinely. So also, confiscation of hammers seized in the Bangalore depot of KLR, and imposition of redemption fine of Rs. 10,000/- thereon, is also proper and does not require and may not be interfered with. 9. On the other hand, on behalf of KLR, Ld. Counsel Shri B.V. Kumar submits, with respect of departmental Appeal No. E/1076/2006, that all the issues alleged by the department have been looked into thoroughly by the Commissioner, only after which he has concluded that the allegation of undervaluation of rigs manufactured by KLR has not been proved and that there is also no proof that unaccounted raw materials have been procured by KLR from Eastern Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for cross examination of the persons whose statements have been relied upon in the show cause notice. The details of such cross examinations have been given in paras 32 to 43 of the impugned order. Perusal of these paras will indicate that the persons who were cross examined have, in the depositions given by them in cross examination, mostly given averments contrary to what had been purportedly given by them earlier in the statements recorded from them by the department officers. In other words, the statements of such persons, which have been relied upon in building up the case against KLR have been retracted by the same persons in the subsequent depositions in cross examination. On the dispute concerning alleged suppression of value of drilling rigs, adjudicating authority has thoroughly analysed the controversy in paras 55.2 to 71 of the impugned order. Lower authority has observed that there is no mention in the show cause notice whether spares sent along with rigs termed as free replacement parts were manufactured by KLR or were bought out ones. He has also observed that while customers had paid extra amounts of cash over and above the invoice price, this could be attributed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ras, even assuming that the model of the rig cleared by KLR is only R-1000 and not KLR-250, the investigation has not arrived at what exactly is the difference in features and values of these two models. No documentary evidence has been relied upon in the SCN to know what exactly is R-1000 and its costing or price. Test certificate is a crucial document which shows that the model cleared is R-1000, but how to arrive at the assessable value and costing of this model in the absence of any clear information in this regard. The lack of information/data in respect of R-1000 is seen as weak point in accepting the contention that the costing adopted by KLR in respect of other models viz; 1) special super (H-Mast) Rig, ii) Tamilnadu Super Star Rig and (iii) Rig (General) can be applied for the purpose of determining the assessable value in respect of all the rigs cleared by them." 15. In the grounds of appeal at para 7.6 and 7.6.1 thereof, Revenue have reported the same contention as has been alleged in the show cause notice. However, the aforesaid lacunas and mismatch in the supporting evidence relied upon in the show cause notice pointed out by the adjudicating authority has not been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val of some spares along with rigs. Further, the items manufactured by KLR being water well drilling rigs, customisation for many customers as per their special requirements, cannot be ruled out. It may not be necessary that prices of each rig cleared may be uniform. It was for the department and the investigation conducted by them to have brought out more convincing evidences to substantiate the allegations made in the show cause notice. On this score, the evidences relied upon by the department have been found wanting. In the circumstances, it is our considered opinion that the portion of the impugned order in respect of show cause notice dated 25.03.2004, restricting the demand of differential duty of Rs. 3,94,335/- on the clandestinely cleared hammers, bits and spares along with interest thereon and equal penalty under section 11 AC on KLR as also penalty of Rs. 50,000/- under rule 25 of Central Excise Rules 2002, at the same time dropping further proceedings initiated in the said show cause notice, does not call for any interference. Revenue appeal No. E/1076/2006 on this score will, therefore fail and requires to be dismissed, which we hereby do. 17. In appeal No. E/239/2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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