TaxTMI 
TaxTMI 
2010 (12) TMI 290
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..... The relevant facts that arise are that the main appellants, M/s. Ravi Foods Pvt. Ltd. (hereinafter referred to as RFPL) and M/s. Pahal Foods Pvt. Ltd. (hereinafter referred to as PFPL) are manufacturers of biscuits, wafers and confectionery falling under Chapter Heading No. 19.05 of Central Excise Tariff Act, 1985. Intelligence gathered revealed that the two companies were evading Central Excise duty by not accounting the production and clearances of finished goods in statutory records. The entire investigation started with a raid of Income Tax department in the premises of two units and recovery of certain documents by the Income Tax officers. During the raid of the Income Tax department, certain documents which indicated unaccounted clearance/sales were recovered and the Income Tax department proceeded to collect the income tax on such unaccounted sales and clearances. Income Tax department forwarded the said information to the Central Excise department on a presumption that Central Excise duty might not have been paid on those clearances. On receipt of such information, the Central Excise officers recorded statements of Managing Director, Executive Dire....
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....ne thousand six hundred only) from M/s Pahal Foods P. Ltd. being the duty payable on the suppressed value of Biscuits and Confectionery not accounted and on which appropriate duty was not paid under proviso to Section 11A (1) of the Central Excise Act, 1944. v) I impose a penalty equal to the amount mentioned at Sl. No. (iv) above on M/s Pahal Foods P. Ltd., under Section 11AC of the Central Excise Act, 1944. vi) I order that interest at the applicable rate on the amount of duty mentioned at Sl. No. (iv) above shall be payable under Section 11AB of the Central Excise Act, 1944. vii) I impose a penalty of Rs. 5,00,000/- (Rupees Five lakhs only) on Shri Ramesh Kumar Agarwal, Director of M/s Ravi Foods P. Ltd., under Rule 26 of Central Excise (No. 2) Rules, 2001. viii) I impose a penalty of Rs. 5,00,000/- (Rupees five lakhs only) on Shri B. Vivekananda Rao, Financial Controller of M/s Ravi Foods P. Ltd., under Rule 26 of Central Excise (No. 2) Rules, 2001. ix) I impose a penalty of Rs. 2,00,000/- (Rupees Two lakhs only) on Shri Srinivas Agarwal, Director of M/s Pahal Foods P. Ltd., under Rule 26 of Central Excise (No. 2) Rules, 2001. Aggrieved by such an order, the appellants ar....
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....ection 4A of the Central Excise Act, 1944 provides for the determination of duty payable on excisable goods on the basis of retail selling price where it is mandatory for the assessee to declare the retail selling price on the package. It is the submission that with effect from 1.3.2008, the Central Government has prescribed the MRP Valuation Rules which are required to be followed for re-determination of retail sale price / maximum retail price in cases mentioned in clause (a) & (b) to sub-section (4) to Section 4A. (v) It is the submission that there is no machinery provided during the relevant period under Section 4A of Central Excise Act, 1944 to enable the department to undertake an exercise of re-determining the retail sale price, as has been done by the Commissioner in the impugned order. For this proposition, the learned counsel relied on the following decisions : (i) Millenium Appliances India Ltd. s. CCE [2009 (248) ELT 713 (Tri.- Bang.)] (ii) Malhotra Shaving Products (P) Ltd. Vs. CCE [2010 (250) ELT 118 (Tri. - Bang.)] (vi) It is the submission that the document relied upon by the authorities is only a copy and not admissible as evidence unde....
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.... during the relevant period. It is the submission that the Apex Court in the case of Triveni Rubber and Plastics [1994 (73) ELT 7 (S.C.)] has held that the demand could be confirmed on the basis of normal consumption of electricity and also that this should be coupled with other factors such as raw material consumed, etc. (ix) It is the submission that the quantification of duty is without authority of law. The adjudicating authority has held that the entire liability of Rs. 3.75 crores needs to be proportionately distributed between the two companies and the duty liability has to be worked out based upon the figures available by the appellants companies in monthly returns. This is totally incorrect and unacceptable way of deciding the duty liabilities. (x) Finally, he submits that the demand of duty based on evidence recorded by the Income Tax authorities is not sustainable as the nature of taxes and computation of taxes is totally different and incomparable. He draws our attention to Section 132 of the Income Tax Act, 1961 and more specifically to sub-section (4) and submits that the authorized officer can record a statement under ....
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....firming the demand under Income Tax Act for December 2001 & January 2002 holding that the amount of Rs. 3.75 crores is an unaccounted income. It is the submission that evidence recorded by the adjudicating authority in paragraphs 50 & 53 of the impugned order are very clear and indicate that the appellants were not recording the proper sales statutory records and discharging the Central Excise duty in accordance with law. It is the submission that the details of input and output which were produced by the appellants does not require any mention at all as no enquiry needs to be made for establishing the turn over which has been admitted as being suppressed. It is also her submission that the Director had given an admission that they were maintaining two sets of accounts, one for regular book and another for suppressing the income. 5. In rejoinder, the ld. counsel specifically draws our attention to the provisions of Section 132 of Income Tax Act, 1961 and submits that the Revenue has not rebutted this fact. It is also his submission that for the charge of clandestine removal cannot be based on mere assumption and presumption, but must be based upon the....
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....001 and January, 2002 and thereby evaded the Central Excise duty amounting Rs.60,93,750.00 as discussed supra. It further appears that Shri Ramesh Kumar Agarwal, Director of M/s. Ravi Foods (P) Ltd., Sri Srinivas Agarwal, Director of M/s. Pahal Foods (P) Ltd. and Shri B. Vivekananda Rao, Financial Controller are responsible for the evasion of duty and suppression of production and clearance.The evidence also proves that there was a written plan about the execution of the evasion of duty by the companies, which was meticulously adopted as was detected by the Income Tax Department. The fact that the records and material were available at the residence premises proves that these three personnel fried to keep the records and evidence pertaining to production and clearances away from the regular checks of the officers who frequent their factories. It therefore appears these three personnel are liable for penal action under appropriate rules and relevant provisions of law. Thus it appears that both these companies have failed to maintain appropriate records and failed to assessee and pay appropriate duty on the goods cleared by them, which resulted in contraventio....
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....d on the proceedings under an other Act, are misplaced as it depends upon the nature of proceedings and the documents recovered and relied. The ratio of different decisions relied is also not applicable as discussed above. In this case, there is no dispute on the evidentiary value of the documents as they stand admitted without any doubt before the Income Tax authorities, the Assessing Officer as well as the Commissioner(Appeals). 10. We find that though the show-cause notice charged the appellants with the allegation of clandestine manufacturing and removal of the goods with intention to evade Central Excise duty, the findings of the adjudicating authority has not supported the said charge. It is seen from para 55, 56 and 57 that the adjudicating authority has let go the charge of clandestine removal from the factory premises, obviously for the reason that there was no corroborative evidence as regards the clandestine manufacturing and removal of goods. The adjudicating authority having not given any positive findings as regards the clandestine manufacturing and clearance of the goods, in itself would indicate that the said charges as alleged against....
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....then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer - (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall b....
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..... 1/3/2008. It is also to be noted that the recalculation or re-quantification of an amount received in excess of the MRP declared and collected from the customers has to be done in a prescribed manner. The provisions of MRP Valuation rules under sub-section (4) of Section 4A was introduced w.e.f. 1/3/2008 wherein the Central Government prescribed a procedure to be followed for re-determination of RSP and MRP in case where assessee has collected an amount in excess of the RSP / MRP declared. This re-determination has to be done, failing which the RSP / MRP cannot be revised by the authorities. We find that the CBEC vide circular No.334/1/2008-TRU dt. 29/2/2008 made it clear that the MRP Valuation rules are effective from 1/3/2008. This would indicate that prior to 1/3/2008, there was no procedure to revise the MRP and demand the duty even though there being a provision under sub-section (4) of Section 4A of the Central Excise Act, 1944. In the absence of any legal machinery during the relevant period, re-determination of RSP /MRP by the Department is without any authority of law. We find that in the case of Millennium Appliances India Ltd. ....
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....eir removal from the place of manufacture, then, the retail sale price of such goods shall be ascertained in the following manner, namely:- (i) if the manufacturer has manufactured and removed identical goods, within a period of one month, before or after removal of such goods, by declaring the retail sale price, then, the said declared retail sale price shall be taken as the retail sale price of such goods: (ii) if the retail sale price cannot be ascertained in terms of clause (i), the retail sale price of such goods shall be ascertained by conducting the enquiries in the retail market where such goods have normally been sold at or about the same time of the removal of such goods from the place of manufacture: Provided that if more than one retails sale price is ascertained under clause (i) or clause (ii), then, the highest of the retail sale price, so ascertained, shall be taken as the retail sale price of all such goods. Explanation - For the purposes of this rule, when retails sale price is required to be ascertained based on market inquiries, the said inquiries shall be carried out on sample basis. RULE 5. Where a manufacturer alters or tampers the retail sale price decla....
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....ept with it. 13.It is seen from the findings of the adjudicating authority in para 55, 56 and 57 that the adjudicating authority has confirmed the demand based only on the ground of undervaluation and extrapolating the amount for the period December, 2001 and January, 2002 as being 65% of the MRP declared and confirmed the demand. As we have already held that this could not be done by adjudicating authority in the absence of any rules or authority under the section, the demand is not sustainable. We find that in para 55 and 57, the adjudicating authority has recorded a finding which is as under:- 55. Thus, in this case, the suppression of turnover is admitted and can be either on account of undervaluation or on account of volume. 57. As the suppressed turnover is in value terms only, no enquiry need be made for establishing the turnover to the use of raw materials etc. The suppressed turnover, being the excess collection over and above the recorded value or income in their books, is related to the sale value which escaped assessment under the Central Excise Act. Once the suppressed turnover is admitted beyond any doubt and the assessee opts to ....