TaxTMI 
TaxTMI 
2014 (5) TMI 245
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....nsideration are that the Revenue authorities, on an investigation conducted in the factory premises of the main appellant, noticed that there was under valuation of the goods manufactured and cleared. During the search operation, certain incriminating records/documents were recovered in mahazars, statements of various dealers/sub-dealers, employees as well as the Director of the main appellant were recorded. On conclusion of investigation, the Revenue authorities entertained a view that the main appellant cleared goods without payment of appropriate Central Excise duty by grossly under-valuing the goods, in a way that they were showing only a part of the actual consideration in their invoices and collecting the remaining amount in cash; show cause notices were issued to the main appellant and all the appellants herein, directing them to show cause as to why duty demand be not confirmed along with interest and penalties be not imposed on them. The main appellant, their employees and other appellants contested the show cause notice before the adjudicating authority. The adjudicating authority did not agree with the contentions raised by the main appellant on merit, cross-examination ....
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....t that the adjudicating authority has worked out the differential duty liability on an allegation which was not in the show cause notice by apportioning the average of the presumptive under-valuation of the final products. He would submit that such an allegation was never there in the show cause notice; despite that, it is his submission that the quantification of under valuation based upon the findings that there was cash collection is also incorrect. He would draw our attention to the findings recorded by the adjudicating authority and submit that the statements which are relied upon by the adjudicating authority do not indicate that the dealers/sub-dealers had paid an amount over and above the invoice value directly to the main appellant or any of the employees. It is his submission that on the contrary, in the cross-examination, the individuals have agreed that the amount which was paid in cash by them was commission to the architect, carpenter who brought business to them. He would submit that various judgments of the Tribunal clearly lay down that the clandestine removal has to be proved by the Department with positive and tangible evidences and not by assumption or presumpti....
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...., submits that the adjudicating authority had no other option but to confirm the demand by re-working out the duty liability based upon the evidences on record. It is his submission that there was definitely an under-valuation which was to the tune 60% of the value which was invoiced. He would draw our attention to various statements of the Directors of the main appellant and submit that they have accepted that there may be non-payment of correct Excise duty. He would also draw our attention to the various statements of the purchasers to indicate that the said purchasers had paid cash over and above the invoice value. While attacking the order for dropping the majority of the demand, it is his submission that the adjudicating authority has totally erred in dropping the demand. It is his submission that the adjudicating authority has relied upon only the cross-examination which was conducted to hold that Revenue has no case for sustaining the demand raised; which in his submission is totally incorrect as the persons whose statements were recorded had at the first blush clearly stated that there was under valuation and the amount was paid over and above the invoice value. He would al....
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....ty has recorded that under-valuation is alleged from the fact that the dealers and the sub-dealers had some price lists which when compared with the prices shown in the invoices raised indicated difference. We find that the reasoning given by the adjudicating authority seems to be incongruous in as much as all these dealers from whose premises the price lists were recovered did in the initial stages stated that these are the price lists of the main appellant but on cross-examination, clearly stated that the price lists were their own price lists and not the price lists of the appellant. We also find that the adjudicating authority while quantifying the differential duty as per Annexures E1 and E2 had worked out a presumptuous figure of under invoicing their final product as 60.46% based upon the findings of the valuation shown in the 8 sample invoices and comparing them with the prices shown in price lists. We are afraid this approach of the adjudicating authority seems to be totally incorrect and cannot be sustained for more than one reason. 12.1 Firstly, the adjudicating authority, in our view, cannot hold that there was under valuation when he himself has recorded, on cross-e....
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....r there is an evidence howsoever remote, to connect such were made by the dealers/sub-dealers to the main appellant or their employees in relation to sale of finished goods. In view of the foregoing, we find that the Revenue has not made out any case in their appeal. 14. In our considered view, yet another angle to entire case is that the adjudicating authority had abandoned or let go of the allegations made in the show cause notice, cannot confirm demand on assumptions or presumptions and reworked out the assessable value, is the law which has been settled by this Bench in the case of Magna Laboratories Guj. Pvt.Ltd. in Final Order No.A/10017 to 10019/2014, dt.07.01.2014 wherein in Paragraph 11 & 12, we have held as under:- 11.It can be seen from the above reproduced findings of the adjudicating authority that he has abandoned the allegations made in the show cause notice and has held that the price charged by M/s US Vitamins Ltd., cannot be the price on which excise duty can be demanded from the main appellant. Having recorded such findings, the adjudicating authority in all fairness have dropped the p....