TaxTMI 
TaxTMI 
2010 (12) TMI 290
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....008 Shri B. Vivekananda Rao, Financial Controller, RFPL - 5,00,000/- 5. E/142/2008 Shri Ramesh Kumar Agarwal, Director, RFPL - 5,00,000/- 2. 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 ....
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....entioned at Sl. No. (i) above shall be payable under Section 11AB of the Central Excise Act, 1944; (iv) I demand duty of Rs. 5,79,600/- (Rupees Five lakhs seventy nine 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, 200....
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....the department has accepted the MRP declared on the package then it is for the department to prove that any amount in excess of the MRP declared was collected from the customer. It is the submission that in the absence of any such verification, the declared MRP cannot be revised. (iv) It is the submission that the provisions of Section 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 co....
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....5 (192) E.L.T. 606] (iii) Chemco Steels Pvt. Ltd. v. CCE [2005 (191) E.L.T. 856] (iv) Arch Plarmalabs Ltd. v. CC [2005 (182) E.L.T. 413] (v) Hilton Tobaccos Ltd. v. CCE [2005 (183) E.L.T. 378] (vi) Hyderabad Electrodes v. CCE [2005 (191) E.L.T. 1164] (vii) Swati Polyster v. CCE [2005 (192) E.L.T. 985 (Tri.- Mum)] It is further submitted that the adjudicating authority has not considered the plea raised by the appellants that there is no abnormal consumption of electricity during the relevant period. It is the submission that the Apex Court in the case of Triveni Rubber and Plastics [1994 (73) E.L.T. 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....
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....Govindasamy Ragupathy [1998 (98) E.L.T. 50 (Mad.)] (ii) Bhanabhai Khalpabhai v. Collector Customs [1994 (71) E.L.T. 3 (S.C.)] (iii) Devender Exports v. Commissioner of Central Excise, Ludhiana [2007 (219) E.L.T. 533 (Tri-Del.)] (iv) Commissioner of C. Excise, Ahmedabad-I v. Gopal Textile Mills Pvt. Ltd. [2007 (215) E.L.T. 558 (Tri.-Ahmd.)] (v) Commissioner of C. Excise, Surat-I v. N.D. Textiles [2004 (168) E.L.T. 381 (Tri.-Mum)] (vi) Ludhiana Food Products v. Collector of C. Excise [1989 (43) E.L.T. 648 (Tri.)] It is further submitted that Income Tax proceedings under the Income Tax Act, 1961 concluded against the assessee by confirming 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 s....
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....at the entire case started with the information received by the Central Excise authorities from the Income Tax Department regarding the admission of undisclosed/suppressed sales turnover for the months of December, 2001 and January, 2002 by the appellant's company. Further statements were recorded by the Central Excise authorities and conclusion of the statements, a show-cause notice dated 28-11-2006 was issued to RFPL and PFPL wherein in para 24 & 25, the following allegations were made :- "24. From the foregoing it appears that M/s. Ravi Foods (P) Ltd. and M/s. Pahal Foods (P) Ltd. have suppressed the production and sales resulting in clandestine clearances to the extent of Rs. 3.75 crores during the period December, 2001 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....
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....FPL and PFPL, it goes without saying, that there is no clandestine removal of goods. The appellant's company, during the adjudicating proceedings before the authorities, had filed details of input and output ratio as regards the consumption of raw materials and other materials and electricity consumption. The said statement and details furnished by the appellants were summarily dismissed by the adjudicating authority in his Order-in-Original in para No. 59, which is as under :- "59. They have furnished the details of input output in the defence, which, in my view, does not require any notice in view of the above conclusions. Their submission that no reliance can be placed on the proceedings under another 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 appel....
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....otal of both the units Total Assessable value. i.e., 65% of MRP 2,75,12,265.00 Total MRP (100%) will be 4,23,26,561.00 Pahal Foods (%age) 26,58,764 x 100/2,75,12,265 9.66% Ravi foods (%age) 2,48,53,501 x 100/2,75,12,265 90.33% Total M.R.P. value for two months : Rs. 4,23,26,561.00 Total Sale Proceeds received for two months : Rs. 2,76,56,806.00 (As per the records maintained and mentioned in Para 2 supra) From the above it is seen that sale proceeds constitute 65% of M.RP. The total sale proceeds for the month of December 2001 & January 2002 as unearthed and accepted by the assessee (Para no. 6 supra) : Rs. 3,75,00,000/- From the sale proceeds of Rs. 3.75 Crores for the above two months of the above two companies the MRP shall be : Rs. 3,75,00,000x100/65 = Rs. 5,76,92,308.00. The assessable value is equal to MRP - 35% (Abatement) [Notification 8/2001-C.E. (N.T.), dated 1-3-2001.] = Less - Rs. 5,76,92.308 Rs. 2,01 92308 _______________ = Rs. 3,75,00,000 _______________ Excise duty payable = 16% of Rs. 3,75,00,000/- = Rs. 60,....
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....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 be deemed to be the retail sale price for the purposes of this section. Explanation 1 - For the purposes of this section, "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and ....
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....vernment 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, dated 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. v. CCE, Hyderabad [2009 (248) E.L.T. 713 (Tri. - Bang.)], this Bench on this point has held as under :- "9. Another issue involved in this case is regarding the situation that arises where there are no clear cut statutory provisions to arrive at the value. We find that strong force in the contentions raised by the appellants on the provisions of Section 4A ....
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....ved 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 declared on the package of goods after their removal from the place of manufacture, resulting into increase in the retail sale price, then such increased re....
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....at 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 accept the tax liability under the I....