2006 (1) TMI 26 - AT - Central Excise

Appeal granted: Duty demands, penalties, and interest set aside for lack of evidence.

HUNSUR PLYWOOD WORKS PVT. LTD. Versus COMMISSIONER OF C. EX., MYSORE

The Tribunal allowed the appeal, setting aside all duty demands, penalties, and interest. The charges of under-valuation, mis-declaration of goods, and ... Central Excise – Additional consideration and receipt of goods which are different in quality than what has been invoiced (2) Undervaluation (3) Evidence (4) Computerized sheet (5) Statement (6) Demand (7) Confiscation Issues Involved:1. Under-valuation of goods.2. Mis-declaration of description of goods.3. Mis-declaration of the quantity of goods cleared.4. Confiscation of goods.5. Imposition of penalties under Rule 209A of Central Excise Rules, 1944.6. Demand of interest under Section 11AB and penalties under Section 11AC.Detailed Analysis:1. Under-valuation of Goods:The charge of under-valuation was primarily based on a document referred to as the 'Premium Sheet' (Annexure-G). This document was an unauthenticated computer print-out, and its origin was not known to the appellants. The appellants argued that the Premium Sheet was fabricated by the Department and not seized during the search on 17-2-99, as it was not listed in the Mahazar. The Tribunal found that the Premium Sheet and the Katcha Slips were not reliable evidence to sustain the charge of under-valuation. The Tribunal noted that there was no evidence of additional consideration received from customers, and the statements supporting the Premium Sheet were retracted, alleging coercion.2. Mis-declaration of Description of Goods:The allegation of mis-declaration involved the clearance of higher-value goods under the guise of lower-value goods. The Tribunal found that there was no corroborative evidence from customers or any indication of additional consideration received. The Tribunal emphasized that the Revenue did not provide sufficient evidence to prove that goods of higher value were cleared as lower-value goods.3. Mis-declaration of Quantity of Goods Cleared:The charge was based on discrepancies between the loading details slips and invoices. The appellants provided contemporaneous evidence, including statutory documents like Form-39 under the Karnataka Sales Tax Act, Pass Out Slips, Time Office Daily Reports, and Statements of Insurance for goods in transit. The Tribunal found that these documents corroborated the appellants' claim that the goods were cleared as per the invoices and not the loading details slips. The Tribunal held that the Revenue's conclusion based on loading details slips alone, without corroborative evidence, was not sustainable.4. Confiscation of Goods:The Tribunal noted that the goods were not entered in the RG 1 register as they were due for inspection. Since the goods were still within the factory and not cleared, the Tribunal held that they were not liable for confiscation.5. Imposition of Penalties under Rule 209A:The penalties were imposed on the appellants based on the charges of under-valuation, mis-declaration of description, and quantity of goods. The Tribunal set aside these penalties as it found that the charges were not substantiated with reliable evidence.6. Demand of Interest under Section 11AB and Penalties under Section 11AC:The Tribunal noted that Sections 11AB and 11AC were introduced only on 28-9-96, and the bulk of the demand was for the period prior to this date. Therefore, even if the duty demand was sustained, the mandatory penalty and demand of interest would not be applicable for the period before 28-9-96. However, since the Tribunal held that the entire duty demand was not sustainable, all penalties and interest demands were set aside.Conclusion:The Tribunal concluded that:(i) The charge of under-valuation based on unauthenticated documents could not be sustained.(ii) The allegation of clearance of goods in excess of the quantity shown in the invoice was not sustainable merely on the basis of loading details slips.(iii) The allegation of clearance of goods of higher value in the guise of lower value was not sustainable.(iv) Goods within the factory were not liable for confiscation.The Tribunal allowed the appeal with consequential relief, setting aside all duty demands, penalties, and interest.