2024 (10) TMI 561 - AT - Central Excise

Revenue appeals dismissed in PTY undervaluation cases lacking independent verification beyond officer statements

Commissioner of C.E & S.T. -Valsad Versus Everlon Synthetic Ltd And Commissioner of C.E & S.T. -Silvasa Versus Supertax Industries Ltd

CESTAT Ahmedabad dismissed revenue's appeals challenging adjudication orders in PTY undervaluation cases. The department alleged evasion through ... Evasion of Central Excise duty by resorting to gross undervaluation of PTY (Polyester Texturized Yarn) - contention of the investigating agencies was that under the modus operandi while the sale of PTY be shown at the factory gate, the invoice used for clearance of PTY contained name of fictitious buyers and generally such invoices issued contain particulars of buyers - HELD THAT:- It is found from the close scrutiny of the show cause notice and Adjudication order and records related thereto, it is observed that the investigation, all the evidences are absolutely identical and the charge in the show cause notice also same in bunch of cases, out of which majority of cases has been finally settled in favour of the assessee in the case of COMMISSIONER OF CENTRAL EXCISE, VAPI VERSUS SYNFAB SALES [2015 (6) TMI 777 - SUPREME COURT]. The identical issue in the case of COMMR. OF CEN. EXC. & CUSTOMS SURAT VERSUS SURESH SYNTHETICS & ORS. [2016 (4) TMI 838 - SUPREME COURT], the Hon’ble Supreme Court held that 'From the orders passed by the Tribunal and the High Court, it is clear that the revenue has really built its case on the base of the statement made by the authorized officer and, accordingly, there has been intervention by the Tribunal and the High Court. If the whole case is founded on the statement of the authorised officer of the respondent without verification of any other independent evidence, it would not merit acceptance.' In view of the above judgments, it is clear that the present appeals as well as the above judgments are on identical issue and facts. Therefore, the ratio of the above judgments are directly applicable in the present case. It is also noteworthy that in the present cases, the show cause notices were kept in call book by the department awaiting the decision of Supreme Court in the cases cited above. This also shows that the present appeals are on the identical issue and facts involving the same investigation and evidences as that in the above judgments. The present appeals of the department do not survive, as the adjudication orders impugned herein do not suffer from any infirmity. Revenue’s appeals are dismissed. Issues Involved:1. Allegations of Central Excise duty evasion through undervaluation of Polyester Texturized Yarn (PTY).2. Legality of reliance on previous judgments for adjudication.3. Adequacy of evidence presented by the Revenue.4. Validity of adjudication orders dismissing demands based on similar facts and investigations.Detailed Analysis:1. Allegations of Central Excise Duty Evasion:The case revolves around allegations that manufacturers of Polyester Texturized Yarn (PTY) were evading Central Excise duty by undervaluing their products. The modus operandi involved showing sales at the factory gate with invoices issued to fictitious buyers, while actual sales were made at higher prices through brokers from godowns. The Revenue issued a show cause notice based on statements from transporters, yarn brokers, and the Managing Director of the respondent, along with bank stock statements, alleging that the sale value declared to banks was higher than that declared in monthly Excise returns.2. Legality of Reliance on Previous Judgments:The Adjudicating Authority had dropped the proceedings against the respondents by relying on the judgment of the Supreme Court in the cases of M/s Kayem Synthetics Pvt and M/s Synfab Sales. The Revenue argued that each case of duty evasion should be considered on its individual facts and that reliance solely on previous judgments without examining the evidence was incorrect. However, the respondent contended that the investigations and evidences in the current case were identical to those in previous cases where proceedings were dropped, justifying the reliance on earlier judgments.3. Adequacy of Evidence Presented by the Revenue:The Tribunal noted that the investigation and evidence in this case were identical to those in previous cases settled in favor of the assessee, as in Commissioner of Central Excise, Vapi Vs. Synfab Sales. The Tribunal highlighted that the Revenue failed to provide evidence of any flow back of additional consideration from buyers to the manufacturer, which would justify the rejection of invoice values. The Tribunal emphasized that reliance on bank statements alone, without corroborating evidence, was insufficient to prove undervaluation.4. Validity of Adjudication Orders Dismissing Demands:The Tribunal upheld the adjudication orders that dismissed the demands, finding no infirmity in them. It was observed that similar cases had been decided in favor of the assessee, and the present appeals were based on identical issues and facts. The Tribunal concluded that the adjudication orders did not suffer from any legal errors, as they were consistent with the Supreme Court judgments cited by the respondents. The Tribunal dismissed the Revenue's appeals, affirming the legality of the orders dropping the proceedings.In conclusion, the Tribunal found that the reliance on previous judgments was justified given the identical nature of the investigations and evidence. The Revenue's failure to present additional evidence to substantiate allegations of undervaluation led to the dismissal of their appeals. The adjudication orders were upheld as they were in line with established legal precedents.