Justification of upholding the penalty imposed u/s 51(7)(b) for...

Justification of upholding the penalty imposed u/s 51(7)(b) for goods imported from an excise duty-exempt state on the ground of undervaluation based on MRP provisions under the Central Excise Act. The court held that the invoices were issued by the manufacturer in the excise duty-exempt state, leading to a lower purchase price. Merely because the MRP was higher, it cannot be presumed that the invoices were undervalued. The dealer would further sell the goods to distributors, and a lower sale price does not necessarily imply tax evasion. Imposing a penalty based on such presumption would be an exercise of arbitrary power. Additionally, the court ruled that the power to impose penalties u/s 51(7)(b) should be exercised by the assessing authority after determining the actual valuation, not during roadside checking. The questions were answered in favor of the assessee.