2008 (11) TMI 506 - AT - Central Excise

Tribunal overturns penalties for buyers in undervaluation case, citing lack of evidence

The Tribunal set aside the penalties imposed on the buyers of goods due to undervaluation and duty evasion, finding no evidence of deliberate connivance ... Penalty - Undervaluation - Connivance and collusion Appeals arise from a Commissioner's order imposing penalties under Rule 26 of the Central Excise Rules, 2002, on buyer-units and proprietors for alleged undervaluation and underpayment of duty on yarn cleared by a 100% EOU to DTA. Revenue's case relied on investigative findings against the manufacturer and concurrent show-cause notices. Tribunal notes the manufacturer's appeal was dismissed for non-compliance with stay directions. Adjudicating authority's finding that the buyer-appellants 'deliberately connived and colluded with' the manufacturer and that such conduct 'is evasion of duty' is unsupported: statements of the buyers and the manufacturer contain 'nothing ... to reflect upon the involvement of the buyer units,' and 'No evidence, in fact, stand discussed by adjudicating authority.' For lack of evidential foundation, imposition of penalties upon the appellants 'is not called for.' Impugned order is set aside and all appeals are allowed with consequential relief to the appellants.