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TMI Blog2019 (11) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... tafa. She expired on13.11.2004 along with Sri T.P. Mustafa, and Sri C.P. Marshab died in an accident on 13.11.2004. Subsequent to their death, her legal heir C.P. Javed, Ms. Fatima and Sri Zubair Haji formed partnership firm and continued the operations in the name of M/s Wood Veneers. (iii). M/s Perfect Boards & Doors have Shri T.P. Haneefa and Smt C.P. Jasleena as partners. (iv). M/s Wood Boards is a proprietorship concern. Shri C.P. Marshab was the proprietor who expired on 13.11.2004. After his demise his younger brother C.P. Javid became the proprietor of the unit. 2. DGCEI conducted investigation against M/s Prime Veneer Limited, M/s Wood Veneers & Others, M/s Perfect Boards & Doors and M/s Wood Boards. On conclusion of the investigation DGCEI issued different SCN which were adjudicated by Commissioner. Revenue has based the allegations on certain records, recovered from one of the dealers in Bengaluru namely 'The Veneers' and 'Space System and Agencies', belonging to one person Shri G. Suryanarayana. Investigation claimed that Shri G. Suryanarayana admitted that the records were maintained by him and contain details of payments (additional consideration) made to the repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demands for a certain period in each of the cases but confirmed demands in subsequent period demand for a period on the basis of records recovered at Dealer in Bangalore holding that there was evidence for payment of additional consideration grounds. (i). In respect of M/s Prime Veneer and Wood Industries a partnership firm, he dropped demand, for the period October 2001 to June 2002 as the units were acquired by Prime Veneer Limited in July 2002, on the ground that on the date of acquisition the said demand was not a liability in the books of Prime Veneer & Wood Industries; Section 11 provides only for the recovery of confirmed arrears or demand. (ii). In respect of M/s Wood Boards, Commissioner dropped the demand prior to 13.11.2004, date on which Shri Mashab the proprietor expired and his younger brother C.P. Javid has become proprietor. (iii). In respect of M/s Wood Veneers Commissioner has dropped the demand prior to 13.11.2004 when Smt Nazreena proprietor of the unit expired. (iv). In respect of M/s Perfect Boards Commissioner confirmed the demand for the full period. 3.1. Learned Counsel for the appellants further submits that the allegation of undervaluation has been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant is not legally sustainable. Both the show cause notice and the impugned order attribute the monies paid by G Suryanarayana to Shri Late Mustafa as additional consideration for Ms/ Wood Boards and M/s Wood Veneers, when these firms are proprietary units and Shri Late Mustfa had role in the businesses of these firms; therefore, in the case of M/s Perfect Boards, wherein Shri Late Mustafa has no connection, the allegation cannot sustain at all. 3.2. Learned Counsel further submits that the Investigation has also relied on the statement of some of the dealers namely (i) Gajanan Kallappa Kadolkar of M/s Gajan Glass and Plywoods (ii) Shri Pankaj Shah of M/s Pankaj Associates Secundarabad (iii) B. R. Ramamurthy of M/s Jyothi Glass & Plywood Bangalore (iv) N.Diwakar of M/s Wood ply (India) Pvt Ltd (v) Jeyakar of M/s Saraswathi Traders Madurai (vi) ShafI Ahmed of A. S. Trading Company Bangalore in support of the allegations of undervaluation. The said witnesses have deposed that they have paid additional consideration to the appellant manufacturers in this case. It is pertinent to note that the said statements are not corroborated with any independent evidences. Out of these dealers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relates to removal of goods manufactured at M/s Prime Veneers Limited. It was also noticed that the said unit in Mill Road was not working during the period February 2005; the appellant contested that M/s Bhadriya Industries have another unit at Taliparamba and the invoices relates to clearances from the said unit and the said clearances were reflected in Sales Tax returns filed by the unit. 3.5. On the appeals filed by the Revenue, the learned counsel submitted that main ground of department is that the entire demand ought to have been confirmed by Commissioner. This is not sustainable for the following reasons: (i). evidences recovered from M/s Veneers Bengaluru itself is not a valid evidence since it was recovered from third party and not supported by any evidence; the dealer has retracted the statement during cross examination. (ii). the other evidences were only statements not corroborated by any evidences and dealers retracted the statements; CBEC circular 1053/2/2017 Cx dated 10.03.2017 relied, wherein it is reiterated that statements should be supported by evidences as held in the Final Order Nos. 20244-29248/2019 dated 8.3.2019 in the case of M/s Bhuwalka Castings; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods over and above the invoice price and b) the actual price of the goods sold was worked out. He submitted that Adjudicating Authority confirmed demands partly without any reason on theoretical terms and not on evidence available. The impugned order is not proper, correct and legal for the following reasons. (i). actual sale consideration received by different assessees is worked out based on percentage of invoiced price and percentage of additional consideration; worksheets for differential duty calculation calculated the actual sale value, for each month, on the basis of the general formula by multiplying the total amount in the invoices for the month with the said formula; the figure arrived at is cum duty value and accordingly, assessable value was derived from it. (ii). incriminating documents recovered and other evidences gathered from one dealer namely M/s Veneers, Bangalore and its proprietor Shri G. Surya Narayanan indicate the actual sale price of different variety of goods which is higher than the invoice price under valuation of goods has been admitted by the other dealers also in respect of all the other clearances. (iii). the statements given by the dealers ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved (2012 (27) S.T.R (452), inter alia, that If his family members were to take over the business after his death, continued to carry on the very same business, probably they would comply with the requirements of the statute. If they do not take over the business or comply with the provisions of the Act, they cannot be held liable of the dues of the deceased. That appears to be the principle underlining these two provisions. The above decision has been affirmed by the Honourable Apex Court in the case of M/s Sabrina Abraham as reported in 2017 (50) STR (241) SC. In the instant case, admittedly, the facts presented, points out to taking over of the business of the deceased proprietor by the successors and continued to carry on the very same business. Therefore, the liability on the successor is accordingly sustainable. 5. Heard both sides and perused records of the case. In the instance case all the appeals are of a group of companies i.e (i) M/s. Perfect Boards and Doors (ii) M/s. Wood Boards (iii) M/s. Prime Veneers Limited and (iv) M/s. Wood Veneers and various individuals involved in the case. The genesis of the case is in the investigation conducted by the officers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ryanarayanan, it was alleged that M/s Perfect Boards and Doors have received an amount of Rs. 69,37,219/-; M/s Wood Veneers received an amount of Rs. 51,93,514/-; M/s Prime Veneers received an amount of Rs. 1,85,78,072/- and M/s Wood Board received an amount of Rs. 2,15,18,231/- over and above the price indicated in the invoices. Thus, it was alleged that these companies have indulged in under-valuation of the products sold by them to the tune of 38.31%, 36.7%, 58.51% and 67.56% respectively. 5.3. Learned Commissioner having gone through the various evidences put forth before him has come to the conclusion that the allegations raised in the SCNs were correct in view of the statements of Sh. G. Suryanarayanan on 30.03.2005, 31.03.2005, 11.09.2006 and 05.10.2006; statement of Sh. R. Narayanan dated 30.03.2005 and the statement of Sh. T.P. Haneefa, Director of Prime Veneers in respect of Prime Veneers. Commissioner finds that: "43. I find that from the note books/ private records seized each invoice can be co-related to the actual purchase price. The diaries No.1, 2, 3 & 4 seized from the residence of Sh. G. Suryanarayanan clearly establish the payments made by him to M/s Prime thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Indian Evidence Act, 1872. The so-called account of Mustafa contained various expenses incurred and payments made by Sh. G. Suryanarayanan on behalf of Sh. T.P. Mustafa who expired on 13.11.2004. It can be seen that many of the entries pertain to personal expenses of Sh. Mustafa, his son, Sh. Marshab and their apartment. The entries like driver's salary, apartment maintenance, electricity, telephone, car repair etc. in no way can be said to be the considerations collected over and above the invoice price from different dealers and customers. The contents of the registers cannot be linked to any company. (iv). Learned Commissioner has erred factually in stating that Sh. T.P. Haneefa has accepted the findings of the investigation by way of statements of Sh. G. Suryanarayanan. In fact, on being shown all the figures, Sh. Haneefa, who was not aware of the authenticity of the figures and had no knowledge of facts and hence, offered no comments. This cannot be taken as failure to deny. 6. On going through the rival contentions, we find that the issue involved is that of under-valuation of Plywood, Veneer etc. manufacture and cleared by the appellants. The evidence made available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice is not the correct price. There is evidence that the appellants had been collecting cash over and above the invoice price. We find that as the issue involved in both the cases is about the undervaluation of Veneers and plywood, the ratio of the case is very much applicable as far as the appreciation of principle is concerned. 7. Understandably, we are dealing with a case of tax-evasion and not a criminal case wherein the degree and standard of evidence is much higher and more precise. As far as the tax-evasion cases are concerned, we find that the principle of pre-ponderance of probability has precedence over proof beyond doubt. It is widely accepted that 'Preponderance of probability' is met when a proposition is more likely to be understood by people of reasonable intelligence to be true than to be not true. Effectively, the standard is satisfied if at least there is 50% or more chance that the given proposition is believable by a reasonably prudent to be true. In this regard, Hon'ble Supreme Court in the case of Maharashtra State Board of Secondary and Higher Education v K. S. Gandhi & Others (1991) 2 SCC 716 1 held that "It is thus well settled law that stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical in finding that the method of approximation cannot be applied. We find that the Commissioner has found as below: "54. The calculation of actual sale value on the basis of average formula will never reflect the correct and actual value. For example, in respect of Invoice No. 205/ dated 5.10.04 (clearance by M/s Prime) to M/s The Veneers the invoice value is Rs. 87,069/- and actual sale value proved by investigation is Rs. 2,52,585/-. The actual sale value by formula is Rs. 2,09,862/-. Similarly, in respect of invoice No.41/dated 11.05.04 the invoice value is Rs. 62,965/- and actual value by investigation is Rs. 1,93,448/-. But actual value on the basis of formula is Rs. 1,51,764/-. Again, in respect of invoice no.249/dated 09.11.2001 (clearance by PVWI) the invoice price is Rs. 52,780/- and actual sale value on investigation is Rs. 1,34,366/-. But the actual sale value on the strength of the formula is Rs. 1,23,277/-. Again, in respect of invoice no.34 dated 20.04.02 (clearance made by PVWI) the invoice value is Rs. 1,27,034/- whereas actual sale value by investigation is Rs. 3,23,213/-. The actual sale value by formula is Rs. 2,96,710/-. The above examples clearly illustrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 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 adopt the same for all the clearances. It does not mean that the invoice value has to be accepted. The normal price has to be determined based on the evidence available. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e listed invoice wise and a reference is given to the seized documents, the names of dealers/traders/customers are not mentioned. Commissioner has also not recorded any findings on the same. We find that the quantification of the duty requires to be arrived on the basis of evidence available. 12. Moreover, the appellants submit that whereas the Show Cause Notice Proposed valuation under Rule 6 of the Valuation Rules, Learned Commissioner has confirmed the duty after arriving at the value under Rule 11 of Central Excise Valuation Rules.; thus, the commissioner has traversed beyond the scope of Show Cause Notice and is against the principles of Natural Justice. 13. We find, in view of the discussion above, that the Learned Commissioner has rejected the method of quantification arrived at in the annexure-D in respective to SCNs saying that the duty cannot be arrived on an assumption and presumption basis, by multiplying the average percentage of duty evasion quantified to all the clearances. Commissioner has placed reliance on the annexures of the C series. However, he has not elaborated on the reasons as to why he was following the same except stating that the record has invoice wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared from M/s Prime Veneers Ltd; if the same was cleared from M/s Prime Veneers Ltd. under the invoices of M/s Bhadriya Industries, appropriate duty on the same would be paid. We find that this is a partly committal statement. It is not coming forth whether any further evidence has been adduced to establish the clandestine removal. The charge of clandestine removal is a serious charge and is required to be proved along with use of raw material, electricity, labour, manufacture of the material, transportation and receipt of money for the same. Going by the records of the case, no effort in that direction appears to have made except noting that M/s Bhadriya Industries was closed during that time and depending on the statements of different persons. The appellants submitted that M/s Bhadriya Industries have Sales Tax Returns and declared the same in their Returns. The impugned order silent in this regard. Under these circumstances, we find that enough evidence has not been put forth before us to come to a definitive conclusion. Therefore, we find it necessary to remand the matter back to the Commissioner to analyze the evidence available, and submissions made by the appellants and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey had paid additional amount over and above the invoice price. Dealers have confirmed that assessee had been collecting additional amount in cash, over and above the invoice amount for each transaction. Hence the fact regarding the payment of additional amount stands established / substantiated. (iv). In terms of Section 11(A)(2), the adjudicating authority needs to verify the correctness of the representation vis-à-vis the facts and figures mentioned in the show cause notice. The additional amount paid by the dealers to the manufacturer having been already established and it was the responsibility of the adjudicating authority to verify, whether the figures mentioned in the Annexure-D were correct. If it was found incorrect, he could have arrived at the value in the light of submissions made by the dealers under the provisions of Rule 11 of Central Excise (Valuation) Rules, 2000 using reasonable means consistent with the principles and general provisions. (v). the assessee has taken over M/s PVWI with all its assets & liabilities on 01.07.2002. The demand made in the SCN was for the duty evasion committed by M/s PVWI during the period assessed prior to 01.07.2002 itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rix than the other cases detected by DGCEI during the relevant period. In this case the evidence is in the form of records and diaries maintained by one dealer, M/s Veneers Ltd Bangalore and the statement of its proprietor, Shri G. Suryanarayanan. The facts are not corroborated at the end of the appellant and no such records were available. Shri T.P. Mustafa who was proprietor/looking after the affairs of group companies expired and his brother T.P. Haneefa had taken over. Records seized contain a record called "Mustafa Account". As Shri Mustafa is no more his statement was not recorded. There are references to one Mr Thangal who was supposed to be middle man between Shri Suryanarayanan and Shri Mustafa. Revenue could not trace the said Shri Tangal and record his statement. Shri T.P. Haneefa who later took charge of the Group could not/did not confirm the entries in the books/accounts maintained by Shri Suryanarayanan or his statement. However, as the issue relates to undervaluation and the preponderance of probability suggested the existence of the same and could not be brushed aside. There should be a reasonable way to quantify the duty evasion. There were certain records availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f there was a confirmed demand as on 01.06.02/01.07.02 it would be the responsibility of the new assessee to settle the liability. In the present case the SCN is issued on 18.10.06. No fresh demand can be enforced/recovered from the assessee. There is no allegation that the successor company had committed the offence/evaded duty during the period prior to 01.07.02. Also, no notice is issued to the partners of the erstwhile PVWI. Generally when a manufacturing firm is bought by another party, the duty on pre-takeover manufacture cannot be recovered by the department from the buyer of the firm even though under purchase agreement buyer is liable to pay such liabilities because department can initiate proceedings for recovery of duty only against a person who is liable to pay under the Excise Law. The buyer firm is not responsible for the duty liability or irregularities committed by the firm and is partners as per the ruling of the Hon'ble Tribunal in the case of Makers Development Services Vs Collector [1989 ELT 126 (T)]. They submitted that the amount was not a confirmed demand as on the date of transfer of the unit. The appellants further submitted that Section 11 of CEA, 1944 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essor/Transferee for recovery of duty on account of commissions and omissions of the predecessor/Transferor. We find that there are no reasons to interfere with the order of the commissioner in this regard. 16. Dropping of Demand due to the death of proprietor: Learned Commissioner has also dropped the demand relating to M/s Wood Boards and Wood Veneers where respective proprietors expired in an accident. We find that as contended by the appellants, the decision is in conformity with the ratio of the decision of the Tribunal cited by the Commissioner and was also relied upon in the case of Sharda Industries, 2017 (347) ELT 180 (Tri. Bang). Hon'ble Apex Court decision in the case of Sabina Abraham, 2015 (322) ELT 372 (SC) supports the same view. Therefore, in this regard also, we find that the Department's contentions are not acceptable and the Commissioner's order need not be interfered with in respect of the demands dropped by him for the period up to 13.11.2004 in the case of Wood Boards and Wood Veneers. In view of the above, we find that the Departmental appeals do not survive and hence are liable for rejection. 17. (i). In respect of the main appellants, the appeals are dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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