AI Drafter 
TaxTMI 
TaxTMI 
2017 (8) TMI 217
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....m where the goods were cleared to the customers. 3. The officers attached to the Preventive Unit visited the appellant s unit on 21.6.2004 to study the computation of value of clearances as the appellants were not paying central excise duty claiming their value of clearances to be less than Rs. One crore and thus availing exemption as per the above stated notification. They also conducted visit to the sales office of Kamala Plastics on 29.6.2004. The officers noticed that Kamala Plastics maintained separate private records in the form of notebooks for recording raw material issue, production and dispatch of final products. They were also maintaining two separate notebooks for recording work orders. Scrutiny of the documents revealed that appellants have indulged in suppression of production and thus availed the exemption benefit. The department seized documents such as chits, stock register, file containing details of daily cash receipt and payment, ledgers, cash bills, day book etc. and mahazar dated 29.6.2004 was drawn up. Enquiries were also conducted with the purchasers of plastic bags as well as transporters. Statements of various persons were recorded. From the evidence it....
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....s issued for the period 2.11.2004 to 31.3.2005. In the first show cause notice, duty demand of Rs. 64,98,583/- along with interest as well as penalties were proposed. The duty demand proposed in the second show cause notice is Rs. 6,95,022/- along with interest and penalties. After due process of law, the adjudicating authority vide common Order-in-Original confirmed demand of Rs. 37,27,279/- for the period from 2001 2002 to 2004 2005 (upto 1.11.2004) covered by the first show cause notice and confirmed demand of Rs. 6,95,022/- for the period covered in the second show cause notice. Besides confirming interest thereon, penalty of Rs. 44,22,301/- was imposed on the appellant under section 11AC of Central Excise Act, 1944 r/w Rule 173Q of Central Excise Rules, 1944 and Rule 25 of Central Excise Rules, 2000. 5. Being aggrieved, the appellants are now before the Tribunal. 6. On behalf of the appellant, learned counsel Shri R.Parthasarathy, Advocate made the following main submissions, inter alia, which are summarized as under:- 6.1 That the clearances made as per invoices and cash bills are the actual clearances made by the appellant and value of such clearances for the period....
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..... 6.8 The department has erroneously included the raw materials issued to Venkateshwara Plastics (VP) to ascertain the quantity of clearances of the appellant. That this happened only because the same accountant Shri Valliappan was not only managing the accounts of appellant but also other units namely, Venkateshwara Plastics as well as M/s. Ananda Polymers and M/s. V. Subramanian & Co. 6.9 That Shri Valliappan had given an affidavit to the effect that the production/valuation of clearances based on the private note books maintained by him is not correct. That note books (Sl.No.s.21,23, & 24) contain combined entries for the period. He has also stated that common notebook was used for raw materials stock and issue of granules for appellant company and other units. That department has not given any weightage to the affidavit filed by Valliappan. 6.10 Similarly, an affidavit was field by S. Rengaraj, who is the accountant of M/s. Subramaniam and Co. in which he has affirmed that during the financial year 2003 04, their company did not procure plastic bags weighing 82574 Kgs valued at Rs. 62,88,789/- and during the financial year 2004 2005 did not procure plastic bags weighin....
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....eas the chits corresponding to cash bills showed the value mentioned with regard to weight size, thickness. Again, some of these cash bills were not supported by chits which indicated that appellant has also been clearing plastic bags over the counter without issuance of cash bills. 7.1. The contention of the appellant that only documents relating to the period from 17.4.2003 to 31.3.2004 were recovered and that the details in such documents have been applied to demand duty for the entire period is baseless for the reason that the department has recovered documents relating to the entire period. The document which the appellant is referring to is only the stock register which was seized. The department has seized not only the stock register but also chits, cash bills, ledger etc. which would show the activity of clandestine clearance of plastic bags undertaken by the appellant. The handwritten chits were recovered from their sales office. 7.2. The details of raw materials issued for production and the actual production of plastic bags was available in the notebooks serially numbered 23 and 26 in the Annexure. On comparison with the production and clearance shown in the Stock ....
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.... appellant was maintaining two different records; one showing the actual issue of raw materials for production and the actual manufacture of plastic bags and the other showing a lesser quantity of issue of raw materials and production of finished goods, which was ultimately used by them for disclosure to the statutory authorities. The stock Register and private notebooks clearly prove that the appellants have indulged in clandestine clearance. 7.5 The fact that the chits contained the mention of weight of the bags with details of thickness and size whereas the invoices contained only the description, with regard to number of bags cleared would show that the appellants have not been fairly accounting the finished products. The file serially numbered 7 seized from the sales office of the appellants contained many handwritten chits. In the chits, the details such as actual weight of the bags, size of the bags and value of the bags are mentioned. For example, in a chit dated 4.3.2004, the customer name is shown as Jegan / VRT 80 grams NLF 6 x 9 (the particulars of HM bags) sent 40 Kgs. (weight) Rs. 3,120/- amount is shown. This means 40 kgs of plastic bags of size 6 x 9 40 kg was de....
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....the Sales office of the appellant pertaining to the calculation of commission paid to the dealers / salesman. The statement of calculation of commission for month May 2004 in respect of one sales man Shri S. Venkataraman shows that the total value of plastic bags sold through him during the month of May 2004 is Rs. 3,39,275/- and an amount of Rs. 19,864/- was paid to him as commission. The details when compared with the invoices revealed that the appellants were clearing plastic bags without issue of invoices. They have not raised invoices for the quantity of bags sold by the salesman for which commission was paid. Similar calculation statements with regard to commission paid to others were also recovered. 7.9 The department has also collected evidences from the transporters. On verification of the details of despatch made by appellants through one transporter namely Jothi Van Service with the invoice issued by the appellants for the corresponding period, it is seen that for many clearances/despatches there are no corresponding invoices. e.g.: The records maintained by Jyothi Van Service showed Parcel booking receipt No.3758 dt.1.1.2004 despatched to Diamond Supermarket, Pattuko....
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.... for arriving at the actual weight. In cases where the thickness of the bag (gauge) was not mentioned, the minimum thickness of plastic bags i.e. 40 gauge (10 micron) has been taken as the basis for arriving the actual weight. That the bags are of different gauges of 40, 60, 80 etc. The department has taken the minimum gauge of bag for arriving at actual weight. Thus, the duty demand raised is legally sustainable. 8. We have heard the submissions made by both sides. 9. The allegation raised against the appellant is that they undervalued as well as clandestinely cleared the plastic bags thereby suppressing the value of clearances in order to be eligible for availing the benefit of exemption as per Notification 8/2000. The main allegation raised against the appellant is that they received orders from their customers for supply of plastic bags and such orders were placed on weight basis after specifying the size, thickness of the bag. Though the orders were placed on the basis of size and thickness and weight of the bags which was noted by appellants on chits, the appellants raised invoices to customers for lesser value on the basis of the quantity shown in numbers. Thus, the ac....
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..../microns) and not merely by numbers. When the appellants admit that orders were placed by the parties, stipulating the size, thickness of plastic bags, it is dubious that appellants have issued invoices without mentioning the size and thickness, but only referring to the number of bags cleared. 11. Another contention raised by appellant is that Shri Valliappan who was the accountant for appellant as well as three other units had maintained a combined account and therefore the clearance of another unit, namely Venkateshwara Plastics was also included in the clearances of appellant while ascertaining the value of clearances by department. To substantiate this contention, the affidavit of Shri Valliappan is said to have been filed. Similarly, S. Rengarajan who is the accountant of M/s. Subramanian & Co. is said to have filed an affidavit stating that for the years 2003 04 and 2004 05, relevant weight of plastic bags which have been included for ascertaining the value of clearances and demand of duty, have not been purchased by them from the appellant company. Though, it is stated that Shri Villappan and Shri S. Rengarajan have filed affidavit, on perusal of these documents, we are ....