2005 (1) TMI 509 - AT - Central Excise

Summary

Issues: Valuation of Polyester Texturised Yarn; Allegations of undervaluation and fictitious buyers; Legal infirmity in the order of the Commissioner.

The judgment by the Appellate Tribunal CESTAT, Mumbai addressed the issue of valuation of Polyester Texturised Yarn manufactured and cleared by the respondents to customers in Bhiwandi and other places. The department alleged undervaluation due to unknown and unverifiable customer names and addresses, as well as payments made via crossed bearer cheques. The Tribunal considered similar cases investigated by the Director General of Anti-Evasion and subsequent appeals filed by the department. Referring to a previous order, the Tribunal concluded that there was no evidence to support undervaluation claims, emphasizing that as long as sales realization matched the invoice amount, undervaluation could not be proven based on bank statements submitted for credit purposes. Consequently, the Tribunal upheld the Commissioner's decision to drop duty demands totaling Rs. 1,73,11,872/- and Rs. 55,11,497/- raised in two show cause notices, dated April 17, 2000, and April 18, 2000, for the period April 1995 to March 2000.

Regarding the cross-objections raised by the assessees challenging the Commissioner's finding about fictitious buyer names, the Tribunal dismissed these objections as it upheld the Commissioner's decision to drop the proceedings against the assessees. By affirming the Commissioner's order and rejecting the appeals, the Tribunal found no legal infirmity in the decision to dismiss the duty demands raised in the show cause notices. The judgment highlighted the importance of evidence in proving undervaluation allegations and emphasized the need for a clear link between sales realization and declared invoice amounts to establish undervaluation. The Tribunal's decision was based on precedent and upheld the principle that undervaluation cannot be assumed solely based on bank statements submitted for credit purposes.