AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 1305
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....nits owned by Sh. Usman Suleiman and Ebrahim Suleiman Darvesh respectively. They are engaged in the manufacture of plywood and block board falling under Chapter 44 of the Central Excise Tariff Act. Simultaneous search operation was carried out at the premises in the compound including four factories NPB, Arch, National Veneer Products, M/s. Alps Veneers and the factory guest house on 24-9-2003. Searches were also conducted at the residential premises of the proprietors and other key personnel of the factories and the business premises of some selected dealers/customers of the said units on 24-9-2003 and subsequent dates. The investigation undertaken by the Revenue concluded that NPB as well as Arch had evaded Central Excise duty through - (i) underinvoicing of their products (viz. Ply boards), and (ii) misdeclaring higher quality ply boards as low quality ply boards. Investigations conducted also revealed that invoices issued by Arch and National reflected only part of the actual price recovered from their customers. Central Excise duty was paid on the prices shown on the invoices. The remaining part of the price was recovered in ca....
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....oceedings against a dead person in the hands of the legal representatives. Therefore, the demand in respect of M/s. Arch Ply Boards as well as penal proceedings on the proprietor should stand abated on the death of its proprietor. 4. Ld. counsel placed reliance on the decision of Hon'ble Supreme Court in case of Shabina Abraham v. CCE - 2015 (322) E.L.T. 372 (S.C.) = 2017 (50) S.T.R. 211 (S.C.) herein the Hon'ble Court while dealing with a similar case of sustainability of demand of excise duty on a proprietorship concern on the death of the proprietor, held that there was no charge to excise duty under main charging provision on a dead person. 5. In view of the above he submitted that the demand of duty on the proprietary concern (Arch Ply) as well as the penalty imposed on the Prop. would abate on account of the death of the proprietor. 6. Sh. PRV Ramanan, ld. Special Counsel fairly conceded the position as above in view of the pronouncement of law by the Hon'ble Supreme Court. 7. We have perused the cited decision of the Hon'ble Supreme Court in the case of Shabina Ahraham (supra). Drawing reference to the provisions of the Income-tax Act, 1961, the Apex ....
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....he Guest house - S. No. 9 of Mahazar - These showed the details of sales transactions and payments received from major customers of the appellants during April, 2002 to August, 2003. In these documents, the amount realised is shown under 2 categories, viz "B/A (Billed Amount)" and "O/A" (Other Amount), the latter indicating the extra amounts collected in excess of the invoice amounts. The veracity and correctness of these entries were confirmed by Sh. Ishaq, in his statement dated 24-9-2003 and agreed to by Sh. Maklai in his statement dated 25-9-2003. (iii) Total sales value of National and Arch as worked out from the aforesaid documents was Rs. 5,44,66,041/- out of which "B/A" was Rs. 1,57,00,855/- and "O/A" was Rs. 3,87,45,186/-. (iv) Diary type note book - S. No. 7 Mahazar - This record contained details of sales for the period from 1-1-2003 to 30-6-2003, which was in the nature of a sales ledger. As per this document, which has been maintained by Sh. Ishaq, Manager, the total sales value for Arch and National put together was Rs. 5,90,87,265/- out of which "B/A" was Rs. 1,86,35,750/- and "O/A" was Rs. 4,04,51,515/-. The maintenance of this record and details therein....
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....of M/s. Arch as well as NPB. The pricing pattern is decided by Iqbal, P.A. holder. The real sale value of the products is not shown in the invoices and a considerable portion of the value is collected separately in cash. The excess realisation is directly collected in cash by himself or by Sh. Iqbal, P.A. holder. (iii) Sh. Iqbal E. Maklai, P.A. holder - Statement dated 25-9-2003. - He is responsible for the overall activities and performance of all the three units. The selling prices of each quality of products are decided by himself and Sh. A. Ishaq. The amount shown in invoice is settled through bank. However, the price shown is invoice does not reflect the actual price. The invoice price shown in undervalued price. The documents and floppy disc, seized by the revenue officers were kept for his reference by himself and Sh. Ishaq in the company guest house. Out of the six note books shown to him, the note books at Sl. Nos. 3, 5, 6 and 7 diary are written by Sh. Ishaq. The other note books (Sl. No. 2 & 4) are written by Supervisors of Arch. The statement of Sh. M. V. Shenoy has confirmed that the figures shown in the note books, diary type note book and printout from floppy s....
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....he proceedings as recorded by Mahazar. The suppliers of the appellant denied receiving any amount in excess of invoice price. 15. The appellants accordingly rebutted the allegation in the show cause notice and contended that the allegations were based on assumptions and presumptions. 16. The Commissioner finally passed the impugned order in which he confirmed the duty demand of Rs. 55,64,187/- as against the demand in the show cause notice of Rs. 92,87,565/-. He reduced the demand from the show cause notice by restricting it only to the figures obtained from seized documents viz. diary, note books and printouts recovered during search. He dropped the demand in respect of goods shown already cleared in the RT-12 on the ground that the department has not adduced convincing evidence to allege undervaluation. 17. Aggrieved by the part of the order where the ld. Commissioner has confirmed the duty demand in respect of undervaluation with penalties, the appellant has filed the present appeals. On the other hand, the department is aggrieved by that part of the impugned order where Commissioner has dropped the demand of duty in respect of RT-12 quantities. 18. Sh. G....
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....RT-12 figures as contended by Revenue in its appeal. Shri Shivdas also relied upon several case laws in support of his argument. In particular, he relied upon in the following cases : (a) Somany Pilkinton's v. B. P. Verma - 1995 (76) E.L.T. 281 (b) Sharon Veneers v. CCE - 2002 (146) E.L.T. 655 (c) Surya Boards v. CCE, Rohtak - 2014 (312) E.L.T. 282 (Tri.-Del.) (d) Woodmac (Bombay) Pvt. Ltd. v. CCE, Thane - 2005 (191) E.L.T. 870 (Tri.-Mum.) (e) Plama Boards v. CCE, Mangalore - 2010 (262) E.L.T. 1058 (Tri. - Bang.) (f) CCE, Thane -I v. Durian Industries Ltd. - 2011 (267) E.L.T. 83 (Tri.-Mum.). Shri G. Shivdas also argued that the revenue has also made several other cases against other plywood manufacturers who were similarly placed. The evidences recovered by Revenue in the other cases were also similar. The Hon'ble Tribunal in some of its earlier decisions, has already remanded the adjudication orders covered in those cases for de novo decision. The following cases have thus been remanded by the Tribunal : (a)  ....
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....elating to the products of Arch and National showing much higher prices. The goods received by these dealers were of waterproof/marine grade while the description shown in the invoices were commercial plywood and boards. Dealers also stated that they received higher valued products under invoices stated to contain commercial plywood. (viii) The adjudicating authority has restricted the demand to clearances based on seized records and not clearances shown in the RT-12s. Revenue has contested this finding on the ground that once it is accepted that duty evasion on account of undervaluation is established, application of the transaction value has to be discarded and resort has to be had to the C.Ex. Valuation Rules, where again resort has to be had to the residuary provision of best judgment assessment. It is not necessary to provide proof of collection of the extra amount in each and every ease of sale. (ix) Revenue would rely on the following case laws in this regard: H.M. Abdulla - 90 ITR 271 (SC), Gulabchand Silk Mills - 2005 (184) E.L.T. 263 (Tribunal) and Rajkamal Plasmolds - 2006 (200) E.L.T. 571. (x) The entries found in the seized records have been corrobora....
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....fact that some price lists recovered from the guest house showed that actual price were about 12% more than the cost of the goods and were much more than invoice prices. Sh. Ishaq, Sh. Maklai and Sh. Shenoy who are senior functionaries of the appellant have deposed in their separate statements that the details found in the documents recovered as well as in computer printout pertain to the operation of NPB. They have also independently confirmed that excise records showed the quality of plywood to be "commercial grade" whereas the clearances were shown to be of different inferior grades. The significance of the terms "billed amounts" and "other amounts" have been clearly explained by Sh. A. Ishaq in his statement dated 24-9-2003. It has been specifically explained that the expression "OA" stood for the amounts collected over and above the invoiced amounts. The factum of collection of amounts in excess of the invoiced amounts by cash has been confirmed in the statements of Sh. Ishaq, Manager as well as Sh. Iqbal Maklai - the PA holder. Sh. Ishaq in fact, has also explained the modus operandi in detail of collection of amounts in excess of the invoice amount and also the manner of r....
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....at both these dealers had retracted their statements at the time of the cross-examination before the adjudicating authority. 24. It is on record that the department had made a series of undervaluation cases against many plywood factories in and around Karnataka, Kerala and Tamil Nadu. The modus operandi adopted was more or less identical to that adopted by the appellants in the present case. Since the present investigation has been undertaken by Revenue subsequent to the earlier cases, it is very much likely that general plywood/trade and all the dealers were clearly alerted and have given statements to the Revenue to the extent that no additional consideration has been paid. In any case, we note that the retraction of the two statements by the dealers at the time of cross-examination was done well over two years after the recording of such statements and can clearly be considered as an afterthought. 25. The appellant has also assailed the method adopted by the department to calculate the aggregate value of clearance for the purpose of determining excess amount collected on account of undervaluation. The department first calculated the excess collection on the basis of ....
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.... maintained by responsible employees duly corroborated by the same employees without any contradiction in their versions point to the fact that appellants did collect certain amounts in excess of the amounts indicated in the invoices and that there were instances of that nature from January, 2002. Consequently, the transaction value as shown in the invoices has to be rejected and resort has to be had to the provisions of Central Excise Valuation Rules, 2000 to determine the assessable value for charging duty. Since only specific situations where the invoice value may have to be adjusted to include certain costs of materials and services not forming part of the transaction value are covered under Rule 6 of CVR, 2000, the redetermination of value in respect of the present appeals has to be done in terms of Rule 11 of CVR, 2000. In other words, resort has to be had to valuation based on the 'best judgment' of the assessing officer. The adjudicating authority on the above basis has determined that the invoice value will need to be added with the additional consideration received in cash and which is evidenced by the documentary and oral evidence recovered and produced by the Revenue. ....