TMI Blog2017 (4) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessable value of the goods for purposes of charging excise duty. The accessed private records were in fact maintained by the staff of the office and contained information corelatable to the invoices which are statutory records. Consequently, these records cannot be ignored and can be made basis for confirming the allegation of undervaluation. It is on record that the department had made a series of undervaluation cases against many plywood factories in and around Karnataka, Kerala and Tamil Nadu. The modus operandi adopted was more or less identical to that adopted by the appellants in the present case. Since the present investigation has been undertaken by Revenue subsequent to the earlier cases, it is very much likely that general plywood/trade and all the dealers were clearly alerted and have given statements to the Revenue to the extent that no additional consideration has been paid. In any case, we note that the retraction of the two statements by the dealers at the time of cross-examination was done well over two years after the recording of such statements and can clearly be considered as an afterthought. The adjudicating authority on the above basis has determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products (viz. Ply boards), and (ii) misdeclaring higher quality ply boards as low quality ply boards. Investigations conducted also revealed that invoices issued by Arch and National reflected only part of the actual price recovered from their customers. Central Excise duty was paid on the prices shown on the invoices. The remaining part of the price was recovered in cash through their representatives and the same was not brought on statutory records as well as their account books. Further, a comparison of the production reports maintained by Arch and National with the respective RG-1 entries revealed a shortage of plywood of different varieties to the tune of 28,934 sq. metres. Appellants were issued with 4 SCNs citing contravention of Rules 4, 6, 8, 10 and 11 of CER, 2002 and demanding differential duty of (i) ₹ 94,72,261/- for the period from 1-4-2002 to 23-9-2003 in the case of Arch, and (ii) ₹ 92,87,565, for the period from 1-4-2002 to 23-9-2003 in the case of National. In addition, recovery of appropriate interest on duty payable and imposition of penalties under various provisions of central excise law were proposed. Duty payable on the shortages in sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the death of the proprietor. 6. Sh. PRV Ramanan, ld. Special Counsel fairly conceded the position as above in view of the pronouncement of law by the Hon ble Supreme Court. 7. We have perused the cited decision of the Hon ble Supreme Court in the case of Shabina Ahraham (supra). Drawing reference to the provisions of the Income-tax Act, 1961, the Apex Court held as follows : 19. .. We have seen that the Act contains no machinery provisions for proceeding against a dead person s legal heirs, such as are contained in the Income-tax Act. Obviously, therefore, duty and other sums do not become payable without such machinery provisions. Further, Section 11 deals with modes of recovery of tax payable and does not deal with the subject matter at hand - namely machinery provisions for assessment in the hands of the estate of a dead person and, therefore, does not have much bearing on the matter in issue in the present case. 27. The argument that Section 11A of the Central Excises and Salt Act is a machinery provision which must be construed to make it workable can be met by stating that there is no charge to excise duty under the main charging provision of a dead person, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1-1-2003 to 30-6-2003, which was in the nature of a sales ledger. As per this document, which has been maintained by Sh. Ishaq, Manager, the total sales value for Arch and National put together was ₹ 5,90,87,265/- out of which B/A was ₹ 1,86,35,750/- and O/A was ₹ 4,04,51,515/-. The maintenance of this record and details therein were confirmed by Sh. Iqbal Macklai. (Records at (i) and (ii) above cover certain common entries and such entries worked out to ₹ 2,00,59,633/-). (v) Two note books - S. No. 3 6 of Mahazar - This record, corroborated by Sh. Ishaq, showed purchases of timber and indicated under-declaration of the purchase prices of raw materials for National and Arch, for accounting purposes. These covered periods from 1-4-2002 to 31-3-2003 and 1-4-2003 to 31-8-2003 respectively. Similarly, Books of account relating to other expenses e.g. wages, material purchases showed suppressed amounts. (vi) Note Book - S. No. 2 of Mahazar - This record contained despatch details for the period from 1-8-2003 to 6-9-2003. It showed some entries depicting actual rate applied and value of sales. When compared with the invoices of the units it was seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t house. Out of the six note books shown to him, the note books at Sl. Nos. 3, 5, 6 and 7 diary are written by Sh. Ishaq. The other note books (Sl. No. 2 4) are written by Supervisors of Arch. The statement of Sh. M. V. Shenoy has confirmed that the figures shown in the note books, diary type note book and printout from floppy seized from guest house are in accordance with the amounts recovered. (iv) Statements of several dealers from Karnataka, Kerala, Tamil Nadu and other States were also recorded on 24/25-9-2003. Most of the dealers, in their statements stated that payment to suppliers is made through cheques and further that no amount has been paid by cash. The only exception was Sh. P. T. Francis, prop. of M/s. Ply Wood House, who in his statement dated 24-9-2003 admitted that extra payments were made in cash and that 30% more was paid in cash to the assessees. It is also pertinent to mention that Sh. P. T. Francis, Prop. in his statement dated 5-12-2003 stated that the extent of excess payment over and above, invoice value paid to NPB and Arch varied from 30% to 100%. However, Sh. Francis retracted his statement as above during the course of cross-examination before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order where the ld. Commissioner has confirmed the duty demand in respect of undervaluation with penalties, the appellant has filed the present appeals. On the other hand, the department is aggrieved by that part of the impugned order where Commissioner has dropped the demand of duty in respect of RT-12 quantities. 18. Sh. G. Shivdas, ld. Counsel arguing the case for the assessee has advanced the following main arguments. In the impugned order, for purposes of quantification of duty, the department has relied only on two documents, private note book as well as floppy disc. The Commissioner has relied upon the statements of Shri P. T. Francis, Prop. of M/s. Plywood House and that of Sh. Ishaq who had initially admitted to paying additional consideration in cash to the assessee. Out of 21 dealers who have been investigated by Revenue only two had admitted excess payment. Even these two dealers had gone back on their statements during cross-examination. The department has not produced any evidence of flow back of money other than the above two retracted statements. The private records based on which a demand has been worked out has not been corroborated by any other independe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Tribunal in some of its earlier decisions, has already remanded the adjudication orders covered in those cases for de novo decision. The following cases have thus been remanded by the Tribunal : (a) CERA Boards Doors - 2010 (249) E.L.T. 550 (Tribunal) (b) Hero Plywoods - 2009 (248) E.L.T. 205 (Tribunal) (c) Noble Plywoods - 2009 (248) E.L.T. 440 (Tribunal) (d) Prestige Boards - 2009 (248) E.L.T. 313 (Tribunal) (e) Thumbay Holdings - 2011 (272) E.L.T. 225 (Tribunal) (f) National Boards - 2014 (313) E.L.T. 113 (Tribunal). 19. Shri PRV Ramanan, ld. Special Counsel arguing the case for the department submitted as follows : (i) In his statement dated 24-9-2003, Shri Ishaq, who was in charge of sales and accounts at National and Arch, clearly explained the modus of collection of amounts in excess of the invoiced amounts by cash or DDs and the manner of recording the production in the daily stock account without indicating the grade. He also admitted to having collected additional amounts in cash. (ii) Shri Iqbal Maklai, PA holder from the Proprietor and the person responsible for the day-to-day activities in the factory, confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s - 2006 (200) E.L.T. 571. (x) The entries found in the seized records have been corroborated by the key employees of National and Arch, who were holding responsible management positions and one of them was the PA Holder from the Proprietor of appellant firms. 20. He also argued that in the facts and circumstances of the present case, the appeals filed by M/s. National Plywood merit rejection and the Revenue s appeal seeking to confirm the duty demand as per show cause notice may be allowed. 21. Heard both sides and perused the records. During the course of search undertaken by the Revenue officer against VPB and other connected persons, certain private documents, note books and diaries as well as floppy disc were seized from the factory premises as well as common guest house in the factory compound. Upon analysis of these documents and after recording the statements of Sh. Ebrahim Suleiman, Sh. Ishaq, Manager and Sh. Iqbal and other connected persons as well as various suppliers of raw materials and buyers of finished products, the Revenue came to the conclusion that plywood and plyboards manufactured by the appellant-assessee were cleared by raising invoices indicating p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in detail of collection of amounts in excess of the invoice amount and also the manner of recording the production in the daily stock account without indicating the grade of the plywood. Shri M. V. Shenoy in his statement dated 21-11-2003 agreed that the selling price shown in the invoices was even less than the actual manufacturing cost. 22. After carefully analysing the evidences as above, we are led to conclude that the allegation of underinvoicing is well established on the basis of the investigation done extensively by Revenue. The seized records indicate both the recovery of billed amounts as well as additional amounts recovered as OA by cash. The entries found in the seized records have been corroborated by key employees of NPB, who were holding responsible management positions. Sh. Maklai, P.A. holder is one of them. The Prop. in his statement clearly stated that the factory was managed by Sh. Maklai, consequently, admission by the P.A. holder assumes significance. The statement of other employees of NPB not only fully corroborates and supports the documents recovered, but also clearly brings out the fact that NPB was recovering amounts in addition to invoiced prices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation. The department first calculated the excess collection on the basis of the diary maintained by Sh. Ishaq and from the printouts taken from the seized floppy disc. Then an average factor (value) is determined and this average figure has been considered as the amount which has been collected in cash per sq. mtr. of the final product cleared on payment of duty. This average factor has been uniformly applied to all the clearances effected during 2002-03 and 2003-04. After going through the calculation, we find that in the show cause notice the average factor as in the above paragraph has been applied not only on the figures obtained from the seized documents i.e. diary, note books and printout, but also on the entire clearances shown in RT-12. However, at the time of passing the impugned order, ld. Commissioner has taken the view that it is not proper to calculate the total duty evaded by such mathematical calculation. He has in fact restricted the total demand only to that attributable to the amount of cash recovered as available in the other amounts . Accordingly, he has reduced the total duty demand from ₹ 92,87,565/- to ₹ 55,64,187/-. 26. W.e.f. 1-7-2000, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is evidenced by the documentary and oral evidence recovered and produced by the Revenue. In fact, he has restricted the demand only to that evidences. This is a case in which Revenue has succeeded in unearthing voluminous documentary as well as oral evidence which unambiguously supports the allegation of underinvoicing. Of course, the Revenue has not been able to unearth evidence of each and every invoice-wise collection of additional consideration in cash. A large number of dealers have also not admitted the payment of additional consideration in cash. However, the question before us whether, on the basis of available evidence, can we come to the conclusion that the goods were undervalued and duty demand is justified. It is very well established that in quasi-judicial proceedings, as in civil cases, the principle to be applied to evaluate the evidence is preponderance of probabilities . The standard is whether the proposition is more likely to be true than not true. Lord Denning in Miller v. Minister of Pensions described it simply as more probable than not . The Apex Court in the case of Maharashtra State Board of Secondary and Higher Education v. K.S. Gandhi Others - (199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of consideration of the appeal by the Tribunal. It has further been submitted that the evidence unearthed by the department in most of these cases are similar. 28.1 We have gone through the orders of the Tribunal in the case of Cera Boards Doors (supra) and other cases wherein the cases were remanded by the Tribunal. We are of the view that each case needs to be decided on the basis of evidence available in that case. It is also well-settled position of law that any decision of a judicial forum is strictly applicable only to the facts of the case discussed therein. We are also of the view that the present case does not merit remanding to original authority, in the light of evidences presented herein. 29. In view of the above discussions, we order as follows : Excise Appeal Nos. 851-852/2006 - Abated on account of death of the proprietor. The portion of Revenue appeal pertaining to M/s. Arch Ply Board is also disposed of. Excise Appeal Nos. 853-854 of 2006 - Impugned order upheld in respect of M/s. National Ply N Boards. The appeals filed by the assessees as well as Revenue are rejected. (Pronounced on 5-4-2017) - - TaxTMI - TMITax - Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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