2011 (11) TMI 581 - AT - Central Excise

Undervaluation of the goods - first appellate authority set aside the demand prior to February, 1997 on the ground of limitation. As regards demand for the period February, 1997 to March, 1997, the first appellate authority had set aside the Order-in-Original, on the ground that there was no clearance from the appellant to the alleged two trading units during the relevant period - held that - Respondents herein have produced evidences which indicated that the respondents were clearing their final product to the trading firms as well as to independent buyers more or less at same price and were discharging duty liability accordingly. Revenue authorities, in their grounds of appeal, have not disputed this finding of first appellate authority which would mean that there is no under-valuation of the goods cleared by the respondents. In our considered view, the impugned order, in its entirety, is correct and legal and does not suffer from any infirmity. - Decided against Revenue.

Summary

Issues: Alleged undervaluation of goods cleared by the respondents to trading firms for the period February 1997 to March 1997.

The judgment pertains to an appeal filed by the Revenue against Order-in-Appeal Nos. RS/215-218/SRT-II/2006, dated 24-7-2006. The lower authorities had concluded that the respondents had undervalued goods cleared to their trading firms during February to March 1997, leading to a Show Cause Notice for the period December 1996 to March 1997. The adjudicating authority confirmed the demand, interest, and penalties, alleging undervaluation by clearing goods to trading firms created by them. The first appellate authority set aside the demand before February 1997 due to limitation but also set aside the Order-in-Original for February to March 1997, citing no clearance from the appellant to the alleged trading units during that period.

The Revenue, represented by the AR, challenged the first appellate authority's decision, arguing that the trading firms were fake entities operating from the manufacturing unit's premises, with goods supplied directly to customers despite bills raised by the trading firms. The authorized signatory and Director admitted to preparing trading firms' documents, and clearances during February to March 1997 were confirmed from computer printouts. The Revenue did not contest the limitation aspect of the Commissioner (Appeals) decision.

The respondents' counsel contended that the first appellate authority's detailed findings supported setting aside the demand for February and March 1997, emphasizing that the goods' valuation was consistent whether cleared to trading firms or independent buyers, a point not challenged by the Revenue.

The issue revolved around the alleged undervaluation of goods cleared to trading firms from the manufacturer's premises in February and March 1997. The Revenue disputed the first appellate authority's decision, claiming a failure to consider the issue holistically.

The first appellate authority's findings highlighted that the respondents cleared goods to both trading units and other customers at comparable prices, negating under-valuation allegations. The Revenue did not contest this crucial finding, indicating no under-valuation of goods by the respondents. Consequently, the judgment upheld the first appellate authority's decision, deeming it legally sound and free from flaws.

Ultimately, the appeal by the Revenue was rejected, affirming the first appellate authority's decision.