2004 (8) TMI 465 - AT - Central Excise

Summary

Issues:
1. Appeal against demand of duty and penalty by assessees
2. Appeal against restricting duty demanded and not imposing penalty by Revenue
3. Allegations of under-valuation and suppression of facts in the manufacture of fireworks
4. Challenge to de novo adjudication orders by both assessees and Revenue
5. Absence of corroborative evidence and cross-examination in de novo proceedings
6. Application of Section 11AC penalty provision retrospectively

Analysis:
1. The appeal filed by the assessees was against the order of the Commissioner regarding the demand of duty and imposition of penalty. On the other hand, the Revenue appealed against the Commissioner's decision to restrict the duty demanded and not impose penalties under Section 11AC of the Central Excise Act, 1944. Both sets of appeals arose from orders passed by the Commissioner of Central Excise, Madurai.

2. The central issue in all cases was the alleged under-valuation and suppression of facts by the assessees in the manufacture of fireworks. Central Excise officers conducted investigations based on discrepancies between invoice values and purchase order values. The investigations revealed that the assessees had allegedly suppressed the actual value received, with substantial amounts deposited in personal accounts. Show cause notices were issued, leading to adjudication orders by the Commissioner.

3. The Tribunal, in earlier orders, remanded the matters back to the Commissioner due to insufficient enquiry and lack of evidence regarding the collection and remittance of additional considerations. Upon re-adjudication, the Commissioner found limited evidence of under-valuation, primarily through excess payments received from some dealers and deposits in personal accounts. The Commissioner restricted the demand based on available evidence and extended the benefit of doubt where investigations were incomplete.

4. Both the assessees and the Revenue challenged the de novo adjudication orders. The Revenue argued for the confirmation of duty in its entirety and the imposition of penalties under Section 11AC, citing corroborative evidence. The assessees contended that the orders were based on assumptions without sufficient supporting documents or cross-examination of witnesses.

5. The Tribunal examined the evidence on record and found that the Commissioner had appropriately restricted the demand based on available evidence. The Tribunal emphasized the need for acceptable and positive evidence to support allegations of under-valuation and suppression of facts. The Commissioner's orders were upheld as reflecting a proper application of mind and consideration of the totality of facts.

6. Regarding the plea for imposing penalties under Section 11AC, the Tribunal noted that the relevant period predated the introduction of this provision and, therefore, penalties could not be applied retrospectively. Consequently, the Commissioner's decision not to impose penalties under Section 11AC was deemed appropriate. The Tribunal upheld the impugned orders, confirming the demand of duty and penalties as per the Commissioner's orders, and dismissed the appeals filed by both the Revenue and the assessees.