TaxTMI 
TaxTMI 
2009 (4) TMI 756
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....v. CCE, Calicut Penalty: Rs. 50,000/- under Rule 209A/Rule 26 1-12-1998 to 17-10-2002 3 E/944/2006 M/s. Prestige Traders v. CCE, Calicut Duty : Nil RF: Rs. 50,000/- Penatty of Rs. 5,000/- u/r 26 1-12-1998 to 17-10-2002 4 E/945/2006 M/s. Ply Home Duty : Nil RF : Rs. 3,000/- Penalty : 5,000/- u/r 26 1-12-1998 to 17-10-2002 5 E/946/2006 M/s. Gee Ply Duty : Nil RF: Rs. 3,500/- Penalty of Rs. 5,000/- u/r 26 1-12-1998 to 17-10-2002 6 E/1100/2006 Shri Kunjuraman, M/s. Prestige Boards Pvt. Ltd. v. CCE, Calicut Personal penalty of Rs. 50,000/- u/r 209A/Rule 26 3. The Commissioner, in the impugned order, has held that the goods seized from (1) Bangalore depot of M/s. Prestige Boards Pvt. Ltd., (2) goods belonging to M/s. Prestige Traders seized from the premises of the Bangalore depot of M/s. Prestige Boards Pvt. Ltd. (3) M/s. Ply Home, Coimbatore; (4) M/s. Gee Ply, Tamil Nadu; are liable for confiscation. He had imposed redemption fine in respect of each of these items. He had also imposed penalties on these parties. The details of which are also given in the tabular column above in Para 2. 4.&ems....
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....s. Prestige Boards Pvt. Ltd. were showing reduced prices i.e. around 30% of the actual consideration only in the respective invoices while supplying goods to them. The differential amount between the invoice price and the actual price was collected in cash without accounting, through the representatives of the appellant. 5.1 On the basis of the investigation, show cause notices had been issued to the appellants. In fact, there are two Show Cause Notices. Certain goods had been seized at four premises in connection with the investigation on the ground that they had been cleared without payment of the correct rate of duty on account of undervaluation. Therefore, one Show Cause Notice dated 8-4-2003 had been issued proposing confiscation of seized goods. On the basis of the investigation, the Revenue came to the conclusion that the appellants had evaded Central Excise duty from the year 1-12-1998 to 17-10-2002. The allegation is that they had paid duty only in respect of 30% of the actual value. Therefore, the second Show Cause Notice dated 22-12-2003 had been issued for the differential duty for this period in respect of all the clearances made by the unit during this period.....
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....nt and which had been enumerated by him earlier. We do not think that it is necessary for us to repeat his findings on each, of the slips, documents, computer printouts, statements, etc. Suffice it to say that all these documents, printouts, statements etc., point out towards the fact of undervaluation. From the statements and from the facts mentioned in these documents, the Commissioner has come to the conclusion that the appellants had paid duty only on 30% of the actual sale consideration, which is indicated in their invoices. In that case, the balance 70% had escaped assessment of Central Excise Duty. The evidences point out that this balance amount has been collected in the form of cash. There is evidence to show that this amount has been sent back to the appellant at Calicut. In other words, what is shown in the invoice is only 1/3rd of the value of the goods. The Commissioner has made very elaborate comments on each of the document seized. He has also relied on the statements of the dealers/customers and also the officials. 6.3 In Para 64, he has referred to the retraction of some of the dealers in the course of the cross-examination. Relying on the decision rendered....
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.... to show that goods have been sold on prices indicated therein to all the other dealers. (ii) The decision of the Hon'ble Supreme Court reported in 1983 (13) E.L.T. 1546 (S.C.) that the department has to investigate all of the 40 dealers of the assessees all over of South India to prove-under valuation and cannot plead that it is difficult to do so. (iii) Alfa Ceramics Industries v. CCE, Indore - 2002 (145) E.L.T. 454 (Tri.-Del.) wherein it has been held that evidence collected in respect of sales to Madhya Pradesh distributors about collection of part of sale price in cash over and above invoiced price should not lead to reasonable inference that similar was the case in respect of the sales in other areas and thereby the demand under Section 11A of the Central Excise Act in respect of sales in other areas is not sustainable. (iv) He had also referred to the decision of Commissioner (Appeals), Cochin vide Order-in-Appeal No. 353/2002-C.E. dated 17-5-2002 in the case of M/s. Malabar Plywood Works wherein the Commissioner (Appeals) allowed the appeal filed by the assessee and when the Revenue appealed to the Tribunal, the Tribunal ha....
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....Collector of Customs, Madras v. D. Bhoormull - [1983 (13) E.L.T. 1546 (S.C.) = AIR 1974 (S.C.) 859] wherein it has been held that prosecution of the department is not required to prove its case with mathematical precision to a demonstrable degree. He had also relied on the following decisions to hold that the Department can sustain the allegation by preponderance of probability. (i) Rajasthan Foam Ltd. v. CCE, Jaipur - 2000 (116) E.L.T. 151 (Tribunal), which has been upheld by the Supreme Court as reported in E.L.T. Vol. 118 page A244 (S.C.) (ii) Beauty Dyers v. CCE, Chennai - 2001 (136) E.L.T. 339 (T) wherein it is held that Revenue is required to sustain the allegation only by preponderance of probability. 6.9 In Para 71, he has dealt with the contention of the appellant that the Show Cause Notice ignores the statement of Shri K.S. Mohammad Ali, Managing Director of M/s. Prestige Boards Pvt. Ltd., that it was possible that some sales representatives at Bangalore might have collected extra amount and the implied meaning of the statement of the Managing Director thereto that such cash collection was done without the know....
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....esidential premises of the partners of the appellant, but could not unearth any evidence which would corroborate or support the documents seized at Bangalore. (ii) During the period from 1998-1999 to 2002-2003, the appellant had the following number of dealers. Sl. No. State Year 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 1 Kerala 1 2 3 15 5 2 Karnataka 42 80 95 121 97 3 Tamil Nadu 9 9 8 9 9 4 Other States 13 28 29 17 7 TOTAL 65 119 135 162 115 With effect from 1-4-2001, there were two streams of clearances from the factory i.e., (i) direct ex-factory sales to dealers in Kerala and Tamil Nadu; and (ii) clearances to depot at Bangalore from where the goods would be sold to dealers. In respect of ex-factory clearances to dealers in Kerala and Tamil Nadu are concerned, the appellants were raising sale invoice showing the assessable value on which duty was paid. The Bangalore depot was catering to 149 dealers and 86 dealers in 2001-02 and 2002-2003 respectively in Karnataka while the factory gate sales were made t....
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....(Del.) (b) Indian Oxygen Ltd. v. CCE- 1988 (36) E.L.T. 723 (S.C.) (c) DCM Ltd. v. Union of India -1991 (51) E.L.T. 305 (Raj.) (d) Transpeck Industry Ltd. v. CCE - 2003 (162) E.L.T. 1095 (Tri.-Del.) (e) CCE v. Falcon Tyres Ltd. - 2002 (147) E.L.T. 1166 - Affirmed by Supreme Court as reported in 2003 (155) E.L.T. A247 (S.C.). (f) Andaman Timber Industries Ltd. v. CCE - 1999 (114) E.L.T. 946. 23/248 (iv) The demand for the period from 1-7-2000 to 31-3-2001 is not sustainable because this period is governed by the concept of 'Transaction Value'. Since all the clearances were from the factory gate only, each invoice issued has to be treated as a separate transaction and the assessable value should be arrived at for each such transaction. There is no evidence to show receipt of exact collection over and above the invoices raised for this period excepting a few vague statements tendered by the dealers in Kerala and Tamil Nadu. In the absence of any evidence to show that any amount in excess of what has been shown in the ....
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.... appellant. Moreover, the goods were still lying in the depot of the appellant and not sold to any customers. When the goods have not been sold to any customers, the question of realizing any amount over and above the invoice price so as to render the goods liable for Confiscation does not arise. The price of the goods as sold from Bangalore Depot to any other dealer would get settled only at the time of sale from the depot and not before that. It was submitted that the seizure has been made on the assumption that the goods lying at the depot would also be sold by the appellants after allegedly resorting to undervaluation. Any seizure based on such assumptions is premature and not sustainable. 9. Shri P.R.V. Ramanan, the learned Special Counsel, appeared on behalf of the Revenue. He made the following submissions. He had also filed written submissions and case-laws. The gist of his submissions is as follows:- 9.1 Shri Ramanan referred to the six slips and invoices seized from Shri M. Kunjuraman, Sales Manager of M/s. Prestige Boards Pvt. Ltd. which indicated the practice of undervaluation of the goods sold by the appellant. Documents were also recovered from Shri E.....
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....he department. 9.2 Shri Ramanan stated that there is a strong case for considering the operations of the four firms/company as fully unified. He stated the following grounds. (a) The 4 units belong to the same family members. (b) The products manufactured by these units were of identical specifications. (c) Employees like Mr. Xavier and Mr. M.P. Narayanan were acting on behalf of all the units. (d) The brothers in the family too interacted with dealers of any of the Group units and took purchase orders for more than one unit. 9.3 Shri Ramanan stated that the investigations revealed that the under invoicing and collection of cash over and above the invoice values appears to be a uniform practice and there is enough justification for applying in respect of all the clearances of the unit for the past 5 years. He stated that the correct application of the principle of 'preponderance of probability' has considerable significance for the present appeals. The facts and circumstances of the present 4 cases involving evasion of duty through undervaluation, following the same....
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....ossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on that basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof, often it is nothing more than a prudent man's estimate as to the probabilities of the case. He relied, oh the following decisions:- (a) Shah Guman Mal v. State of Andhra Pradesh - 1983 (13) E.L.T. 1631 (S.C.) (b) Manilal Bhanabhai Patel v. UOI - 1992 (60) E.L.T. 99 (Guj.) 9.5 Further, he relied on the decision of the Hon'ble Allahabad High Court in Rishi Kesh Singh v. The State (AIR 1970 All. 51 at 90), wherein it is held that 'preponderance of probability' means 'outweighing in the process of balancing however slight may be the tilt of the balance or the preponderance'. Further, he relied on the decision of this Bench in the case of Gulabchand Silk Mills Pvt. Ltd. v. CCE, Hyderabad-II - 2005 (184) E.L.T. 263 (Tri.-Bang.) wherein it was observed that 'clandestine activity can at best be established only by circumstantial evidence and it would be humanly impossible to establish every link in the chain of ....
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....Customs Officer, though retracted within six days, is an admission and binding. 9.8 With regard, to the duty demands in respect of clearances made before 1-7-2000, Shri Ramanan said that when a normal price is available, indeed, there is no warrant to apply a different price in respect of transactions with the dealers. However, he stated that in the present case, it cannot be said that the price at which the goods were sold to the dealers were the normal price. In this case, there is an additional consideration also by way of cash. One cannot say that normal price existed. The amounts recovered over and above the invoice prices, should be regarded as additional consideration and should be added to the invoice price to arrive at the sale price and determination of value done in terms of the Valuation Rules that existed prior to 1-7-2000. He rejected the argument advanced by the appellant saying that it is devoid of any 'merit. The normal price can be accepted only when such price is the sole consideration of sale. In this case, it is true that it is not the sole consideration. 9.9 Similarly, in respect of the clearances after 1-7-2000 also, the 'Transaction Value' sh....
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....gued that the evidences available cannot conclusively establish under-invoicing. He objected to the legality of the various documents, which have been seized, the statements which have been made, the retractions of the statements, etc. In any case, his point is, if at all the duty has to be confirmed, it should be confined only to 20 dealers. 10.2 Another important point which the learned Advocate Shri Shiva Dass made was that the total clearances fall under two periods i.e., the period prior to 1-7-2000 when the concept of 'normal price' was prevalent and after 1-7-2000, the concept of 'Transaction Value' has been imposed. Shri Shiva Dass argued that for all the clearances prior to 1-7-2000, only the normal price should be adopted. He stated even if excess collections had been made in few cases, that should be ignored and the normal price, which, according to him, is the invoice price or the factory gate price, should be adopted. This is his main point. 10.3 As regards the period after 1-7-2000, he stated that the Transaction Value has to be adopted. That means, you have to go only by the evidence and where there is no evidence, he stated that the duty cannot be de....
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....a factory gate price exists and this factory gate price is the normal price and, therefore, the same should be adopted in spite of the fact that in certain cases, excess collection had been made. We agree with Shri Shiva Dass to the extent that prior to 1-7-2000, the concept of normal price should be adopted in assessing the goods to duty. In the present case, there have been evidences that the assessee had collected cash over and above the invoice prices. Even in respect of clearances prior to 1-7-2000, the evidences are available. We have seen the working sheet with regard to the calculation of differential duty. Therefore, as far as the clearances prior to 1-7-2000 are concerned, the duty should be decided on the basis of the normal price. What is normal price? During the relevant period, Section 4(1)(a) read as follows: "(4)(1)(a): the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale." 10.7 We are of the view that the normal price i....
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....e Commissioner has to decide the normal price for each variety of goods and he can adopt the same for all the clearances. It does not mean that the invoice value has to be accepted. The normal price has to be determined based on the evidence available, in accordance with Section 4 read with the Central Excise Valuation Rules. 10.9 As regards the period after 1-7-2000, the Commissioner has to go strictly by the Transaction Value and decide the short levy. After deciding the differential duty leviable on the basis of the above principles, the Commissioner can determine the quantum of penalty, etc. 10.10 With regard to the Show Cause Notice proposing confiscation of seized goods, the Commissioner, in the impugned order in Para 92, has held that the goods seized from (1) Bangalore depot of M/s. Prestige Boards Pvt. Ltd.; (2) goods belonging to M/s. Prestige Traders seized from the premises of the Bangalore depot of M/s. Prestige Boards Pvt. Ltd.; (3) M/s. Ply Home, Coimbatore; (4) M/s. Gee Ply, Tamil Nadu are liable for confiscation. His findings are based on the fact that the documents seized from the Depot of M/s. Prestige Boards, residences of their employees and fro....