2007 (3) TMI 21 - AT - Central Excise

Tribunal Upholds Decision on Revenue Evasion Allegations, Emphasizes Need for Concrete Proof

The Tribunal affirmed the Commissioner's decision to drop proceedings, citing lack of evidence supporting Revenue's evasion allegations through ... Valuation (Central Excise) – Alleged that the price at which the goods were cleared by appellant at the factory did not appear to be the correct price – Authority find that allegation was not established and dismissed the appeal. Issues:Revenue's appeal against dropping of proceedings by Commissioner based on alleged evasion of excise duty through undervaluation and fictitious sales.Analysis:The Revenue accused the respondent-assessee of evading excise duty through undervaluation by showing fictitious factory gate sales and transferring goods to godowns for actual sales at higher prices. The material seized during a search supported the allegation that goods were cleared in the name of bogus buyers and transported to Bhiwandi for higher-priced sales. However, the Commissioner found the under-invoicing allegation unsubstantiated, as no material was presented to prove it. The Commissioner also noted the lack of effort to cross-check sales prices against actual realizations before resorting to price determination under Valuation Rules.The Revenue contended that evidence showed goods were sold to bogus buyers and actual sales occurred at higher prices, supported by untraceable buyers and unknown payment sources. On the other hand, the respondent argued that sales were made through brokers to known buyers, with invoice-wise cheques received and reflected in records. The respondent maintained that the brokers' statements confirmed genuine sales at market prices.The Tribunal found that the goods were sold through brokers, with invoices reflecting market prices negotiated by buyers. Payments were mainly made by cross bearer cheques from weavers, as confirmed by brokers. The Tribunal emphasized that the Commissioner rightly dropped the demand as no evidence proved sales realization exceeded invoiced amounts. The lack of allegations regarding ledger book falsification further supported the decision. The Tribunal upheld the Commissioner's decision, dismissing all appeals based on the evidence and reasoning presented.In conclusion, the Tribunal affirmed the Commissioner's decision to drop proceedings, emphasizing the lack of evidence supporting the Revenue's allegations of evasion through undervaluation. The judgment highlighted the importance of substantiating claims with concrete proof and conducting thorough cross-checks before challenging invoice prices. The dismissal of the appeals signified the Tribunal's agreement with the Commissioner's well-founded decision based on the available material and lack of grounds for interference.