TaxTMI 
TaxTMI 
2010 (8) TMI 811
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....f the sale price of plywood purchased from PBPL in cash and balance as per sale invoices. A pocket planner (diary) recovered from Shri. Ashraf, Accountant, PBPL contained entries showing much higher sale price of commercial plywood compared to those declared in the sale invoices for such varieties of commercial plywood. The diary also showed higher salaries for the employees of PBPL for the month of March, 2004 compared to the accounted salaries paid to the employees. In his statement recorded under the Section 14 of the Central Excise Act, 1944 (the Act), the Managing Director admitted irregularities in the rates shown in the invoices as compared to the actual values collected. PBPL made payment of Rs. 5 lakhs during investigation. In his statement Shri Ashraf stated that the sale invoices showed only 25% of the actual prices collected and the balance was collected from the customers in cash. The unaccounted payments towards salary of employees of PBPL were made from the excess amounts recovered from its buyers. The authorities came to a tentative conclusion that PBPL had willfully evaded payment of full duty due on clearances of commercial plywood made by it during the period 1-1....
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....n the impugned order. There was no iota of evidence of PBPL receiving excess cash either through its MD or any other representative. The Adjudicating Authority had gone by the statements which were contradicted during cross-examination. One of the deponents Shri R.C. Kochar of M/s. Plydeal, Chennai did not have business dealings with PBPL. Statement of Shri V.K. Poddar of M/s. Shree Shyam Plywoods, Bangalore (SSP for short) dt. 28-4-2004 relied on in the proceedings was a document in the letter head of SSP, which was denied to have been written by its proprietor Shri V.K. Poddar. Shri V.K. Poddar had only signed the document for having seen it. This became evident during cross-examination of Shri V. Subbaraya, Investigating Officer. No cash was seized from SSP. It was also brought out that no person named Shri Shariff periodically visited SSP or collected any amount in cash. No person by name Shri Shariff was in the employment of PBPL. Though Shri Shariff is held to have collected excess cash, investigation did not ascertain further details of Shri Shariff from SSP which lifted around 60% of the total production of PBPL. Details appearing in the letter head of SSP could not be reli....
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.... cash because of the harassment by the officers. His statement therefore had no evidentiary value. Shri Anand Heda in his statement dt. 28-4-2004 had denied paying any amount in excess of the invoice price in cash. This statement was discarded and another statement dt. 26-5-2004 was relied upon. Shri Heda submitted during cross-examination that he was made to believe that the pocket planner reflected actual sale prices and it was in those circumstances that he gave the second statement. He denied giving any amount in excess of the invoice price at any time during cross-examination. The second statement was not voluntary. During cross-examination, customers of PBPL, Shri Kishor M. Patel of Kalyani Timber & Plywoods, Bangalore, Shri Govind Agarwal of Russa Wood Products, Shri Babu Singh of Yashas Plywoods and Shri Babulal N. Patel of Saraswathi Saw Mills deposed denying having made any payments in excess of the invoice price. Shri Sanjay Agarwal of M/s. Sandeep Enterprises retracted his statement dt. 19-5-2005 and submitted that he had signed the statement without reading the same. He had not paid any excess amount in cash. The statement of Shri Sanjay Agarwal dt. 19-5-2005 was not g....
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....unt to PBPL or to its representatives. He also clarified that there was no agreement between M/s. Plydeal and M/s. Shree Ganapathy Enterprises to buy material from PBPL and give to M/s. Plydeal. He also submitted that his second statement dt. 29-4-2004 had been dictated by the officers and signed under pressure. He also stated that he could not co-relate cash payments figuring in the slips given along with statement dt. 29-4-2004 with any supply from PBPL. It is submitted by the appellants that the computer print out relied upon as Annexure C-7 in the show cause notice could not be linked to payments made to the appellants. Annexure C-7 therefore could not be linked to PBPL. He could not also link payments reflected in the list with supplies by PBPL. Wrong reliance was placed on the statements dt. 28-4-2004 and 29-4-2004. Annexures C-6 and C-7 to the show cause notice could not be relied upon as reflecting cash payments made to PBPL. Shri Razak was shown the statements of Shri Ananth Heda, V.K. Poddar and R.C. Kochar when he signed them in token of having seen them regarding undervaluation of the goods as mentioned by the dealers. Shri Razak had stated that he would verify the fact....
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.... manufacture PF grade plywood. (i) The Commissioner had relied on 3rd party witnesses to find the charge of undervaluation against the appellants. This was contrary to principles laid down in several case laws. Moreover, the evidence relied on were statements recorded from 3rd parties which were disproved in cross-examination. There was no confessional statement from any person in the assessee company. No investigation was conducted with suppliers of raw materials to the assessee regarding the price of the raw materials. (j) As regards particulars of salary recorded in the diary, Shri Ashraf explained that the same was a proposal to raise the salary of employees of assessee. He had recorded the total of payments made to employees of PBPL and Plama International in the month of March, 2004. His explanation that that the figure included payments made to employees of Plama International was not recorded in his statement by the officers. The actual amount paid in the month of March, 2004 was Rs. 56,440/- as per sales ledger for the said month. This ledger was furnished to the Adjudicating Authority. The entry of Rs. 34,930/- pertained t....
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....ree crores during 2000-01, 2001-02 and 2002-03 and this conclusion is sought to be revised by re-determination of value by uniformly applying undervaluation to the extent of 75%. The pocket planner showed the actual sale values realized from dealers and corroborated by Shri Ashraf, the Accountant. Made up file recovered from SSP showed purchase of goods from PBPL by SSP during March, 2004. Proprietor of SSP confirmed the veracity of these documents. Annexure C-6 recovered from M/s. Plydeal showed amounts paid in cash to PBPL representative to be Rs. 41,37,091/- for the period from 30-7-2002 to 29-10-2003. Shri Kochar confirmed the same. Made up file recovered from M/s. Plydeal showed purchases through M/s. Shree Ganapathi Enterprises and the cash amount and invoice amount for purchases made during the period 10/2003 to 3/2004. The cash amounts as per these documents worked out to Rs. 18,64,971/-. Price list of appellant's products seized from M/s. Plydeal showed retail prices of some products to be 6 to 7 times of the rate indicated in the price list of PBPL. The salary details appearing in the pocket planner showed divergence between actual salaries and accounted salaries. This in....
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.... was placed on the judgment of the Apex Court in Maharashtra State Board of Secondary and Higher Education v. K.S. Gandhi & others [1991 2 SCC 716], particularly, the following extract. "37. It is thus well settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal. It is open to the authorities to receive and place on record all the necessary facts though not proved strictly in conformity with the Evidence Act. The evidence must be germane and relevant to the facts in issue. In grave cases like forgery, fraud, conspiracy, misappropriation, etc. seldom direct evidence would be available. Only the circumstantial evidence would furnish the proof...................................... There must be evidence direct or circumstantial to deduce necessary inferences in proof of the facts in issue. There can be no inferences unless there are objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish ..................... The standard of proof is not proof beyond reasonable doubt 'but' the preponderance of probabilities tending to draw an i....
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.... of origin, since the assessee had mis-declared country of origin. Reliance was also placed on Carpenter Classic Exim Pvt. Ltd. v. CC Customs [2006 (200) E.L.T. 593 (Tri.- Bang.)], wherein on the basis of (i) documentary evidence in respect of only one consignment and (ii) statements of the MD and others, the so called 'transaction value' was rejected and the best judgment valuation was applied in the case of the goods imported over a period of time under 25 bills of entry. 6. During hearing the ld. Counsel for the assessee submitted that all the impugned clearances were made against invoices. The charges against the appellants were found relying on the statements of the MD of the assessee, Accountant Shri Ashraf, the marketing person Shri Umar Frooq and statements of various dealers. All the witnesses except the MD were cross-examined when their initial depositions were denied. Important evidence was pocket planner recovered from Ashraf who accepted that he had maintained the same. It showed many others details, prices of commercial plywood and PF plywood. PBPL did not manufacture PF plywood. The diary contained several extraneous particulars. The pocket planner was a privat....
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....ed that the statement recorded on 28-4-04 was not correct as he was scared by the number of officers visited his premises. The statement only corroborate what has been recovered by way of documents The retraction statement at the time of cross examination can not be accepted because he has not brought this incident either to any of the higher departmental officers or to M/s. Plama Board Further it was retracted after a delay of nearly 23 months. 2. Mr. Ramesh Kochar, M/s. Plydeal, Chennai In his statement dt. 28-4-04 and 29-4-04, he has stated that they are dealing in ply wood and visited M/s. Plama Board alongwith his partner during middle of 2002 and discussed business dealings with Mr. Razak. As agreed, M/s. Plama Board raise the invoice to M/s. Ganapathi Enterprise who in turn raise an invoice including their commission of 1.5% to M/s. Plydeal. He also stated that plywood suppliers generally understate their prices in their invoice and gets the balance amount of actual by cash. In the case of M/s. Plama Board, the invoice is raised only to an extent of 30-35% of the actual price and remaining is paid in cash. He has also explained the details of account statement, containin....
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....ntain the details of the invoice value and the cash payable. After receipt of the cash he destroy this paper piece. Annually the cash transaction is around Rs. 7-8 lakhs He told that the statement was written by his son and signed by him. That he was forced to record the statement by harassment. Further he denied that he has paid Rs. 7-8 lakhs in cash over the billed amount. But he has not complained to anybody for the harassment by departmental officers. In the statement written by his son, he stated that the statement is given out of his own free will without any force threat or coercion. Further he has not denied the visit of Mr. Farook along with a piece of paper containing the details of cash payment to be made which are destroyed after cash receipt. 4. Mr. Anand Heda, Partner M/s. Heda Plywoods He stated in his statement that he has paid the differential amount over and above the amount quoted in the invoice, in cash. The cash payment was made to the representatives of M/s. Plama Board who used personally visit them. He has pressurised by the officers to give a false statement & he has not paid any amount over and above the invoice price. To the question of the adjudica....
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....made any complaint to the departmental officers nor informed Mr. Razak regarding ! the statement. In the statement he had stated that the statement is given voluntarily, without force, threat or inducement. Being a graduate, his contention that he has signed the statement without reading it cannot be believed and it is only an after thought. The retraction statement cannot be accepted as the retraction is made after a lapse of 23 months at the time of cross examination. He has not retracted even (sic) 8. Mr. Govind Agarwal, Prop. Ms. Russa Wood Products He stated in his statement that the invoice amount was around 30% of the actual price and the remaining amount is collected in cash. During cross examination, he stated that he has not paid any amount in cash over and above the invoice price. And other persons who were called for signing a statement, he signed it to avoid any further complication. The statement was typed by his own accountant, Mr. Prakash, as deposed by Mr. Govind Agarwal, so the contention that he has not gone through it, is not acceptable. The retraction is only an after- thought 9. Mr. Babulal N. Patel, Partner, M/s. Saraswathi Saw Mills He stated in his....
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....mpanies, he has not paid any amount separately by the other companies. He has also stated that normally the invoice is raised approximatley 25% of the value and the collection of the balance amount is taken care of Mr. Farooq, Mr. Razak or any person assigned by Mr. Razak, regarding the slips, he stated that he is innocent and he is only an employee. He retracted his statement and told that he was under tension as his mother was in hospital, so to avoid any delay to reach the hospital, he signed the statement. Regarding the pocket diary he stated that it contain only his personal data. In both the statements he has accepted that the actual price of various varieties/sizes of plywood/block board are indicated in the pocket diary recovered from him. He has also stated that the normal price indicated in the invoice is around 25% of the actual price. The first statement has written by him, this as not retracted at the time of giving his second statement on 2-8-05 only during cross examination he has retracted his earlier statements hence it can not be accepted as it is an afterthought 9. In the initial statements the dealers had deposed to the effect that the invoices showed on....
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....involved is about Rs. 12.3 crores. It is significant that no cash was found at the premises of PBPL or its MD Shri Razak. The documents recovered from M/s. Plydeal, Chennai cannot be linked to goods cleared by the assessee to find undervaluation since M/s. Plydeal did not purchase plywood from the assessee. However, Shri R.C. Kochar of M/s. Plydeal explained the figure of Rs. 41,37,019/- appearing in the account statement retrieved from their CPU as payment made to PBPL. He had made deposition as regards the amount of Rs. 41,37,019/- to the same effect in his statement dt. 29-4-2004, which was attributed to the pressure applied by departmental officers. The computer statement was explained clarifying what certain abbreviations stood for. These were within the personal knowledge of Shri R.C. Kochar. It may hence be difficult to accept that the statement made during cross-examination of Shri R.C. Kochar is entirely true to facts. As regards the estimate it has not been co-related to any sale invoice of PBPL by the Commissioner. 14. We find that the Commissioner has applied the formula 25% of the sale price as accounted and 75% in cash in respect of clearances to SSP and 30% and....
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....the corresponding amounts collected from the buyers of assessee's products. Undoubtedly assesssee had undervalued excisable goods and short paid duty due. However, the evidence of higher prices realized by PBPL in the form of entries in the pocket planner of Shri Ashraf is not acceptable without corroboration. Same is the case with particulars of invoices related to sale prices reflected in the documents recovered from SSP on 28-4-2004. These documents showed much higher prices for the assessee's products than the respective amounts on which duty was paid. The Commissioner computed the duty short paid in respect of various dealers holding that 70% of the sale price had escaped payment of duty. In the case of sale to SSP, he adopted 75% sale price as having escaped payment, whereas the assessee disputes its liability as determined in the impugned order. The revenue seeks to revise the demand uniformly applying 75% of the sale price as having escaped duty. The period of dispute is post 30-6-2000 when the concept of transaction value has been introduced in the statute. We find that in a similar case of undervaluation of plywood in the case of Cera Boards & Doors v. CCE, Calicut [2010 ....
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....mmissioner in respect of the goods cleared during the relevant period. Once that is done, that would be applicable to all clearances. We want to reiterate that even by the party's own submission, the normal price would be applicable to all the clearances made prior to 1-7-2000. Therefore, we have to remand the matter to the Commissioner for deciding the normal price in respect of each type of goods cleared by the party during the relevant period and compute the differential duty. Needless to say that the normal price would be arrived at in accordance with the law, which prevailed at that time. 11.11.................... 11.12 As regards the period after 1-7-2000 for valuation, the concept of 'transaction value' has been introduced. In the concept of transaction value, each transaction is important. Therefore, the transaction value is to be determined for the clearances after 1-7-2000. As far as the period after 1-7-2000 is concerned, the value for assessable purpose is the transaction value. The transaction value is the value for each transaction. The concept of transaction value is entirely different from the concept of normal value. While the normal value can be notional, t....