2001 (3) TMI 1038 - AT - Customs

Summary

Issues Involved:
1. Under-valuation of UF and PF plywood and veneers.
2. Misdeclaration and misclassification of costlier special varieties of Phenol formaldehyde (PF) bonded plywood as Urea formaldehyde (UF) bonded plywood.
3. Alleged clandestine manufacture and removal of veneer and plywood without payment of Central Excise duty by M/s. BGP, M/s. BGS, and M/s. VE.

Issue-Wise Detailed Analysis:

1. Under-Valuation of UF and PF Plywood and Veneers:
The Commissioner confirmed the charge of under-valuation based on the statements of certain dealers and the recovery of slips from Shri Venkataraman, who was alleged to be a liaison officer for M/s. BGP. The Commissioner noted that there was a significant difference between the invoice prices and the actual prices paid by the dealers. However, the appellants argued that the statements were taken under duress and retracted by most dealers during cross-examination. The Tribunal found that the evidence provided by the Revenue was insufficient to conclusively prove under-valuation for each transaction. The Tribunal emphasized the need for corroborative evidence for each invoice and noted the failure to cross-examine key witnesses like Shri Venkataraman, which violated the principles of natural justice. Consequently, the Tribunal set aside the finding on under-valuation and remanded the matter for de novo consideration, directing the Commissioner to provide an opportunity for cross-examination and to establish under-valuation with concrete evidence for each transaction.

2. Misdeclaration and Misclassification of Plywood:
The Commissioner upheld the charge of misdeclaration and misclassification of costlier PF bonded plywood as UF bonded plywood based on seized documents and statements. However, the appellants contended that the classification should be based on Chapter Note 3(2) to Chapter 44, which requires conformity to ISI No. IS: 710-1966. The Tribunal found that the samples drawn were not tested by the Chemical Examiner to verify if they met the ISI standard. The Tribunal held that advertising material and other documents could not override the specific criteria laid down in the Chapter Note. Therefore, the Tribunal set aside the finding on misdeclaration and misclassification, stating that the primary criteria for classification were not established by the Revenue.

3. Alleged Clandestine Manufacture and Removal:
The Commissioner concluded that M/s. BGS and M/s. VE were merely trading outlets for M/s. BGP and did not have independent manufacturing facilities. The Commissioner based this conclusion on the lack of evidence for manufacturing activities at M/s. BGS and M/s. VE and the statements from transporters and customers indicating that goods were actually removed from M/s. BGP's premises. The appellants argued that M/s. BGS and M/s. VE had separate registrations and permissions for job work, and the goods were processed and returned as per the rules. The Tribunal found that the Commissioner had not adequately considered the evidence provided by the appellants regarding the independent operations of M/s. BGS and M/s. VE. The Tribunal remanded this issue for re-examination, directing the Commissioner to consider the evidence and determine the independence of the entities.

Conclusion:
The Tribunal remanded the case for de novo consideration on the issues of under-valuation and clandestine removal, directing the Commissioner to provide an opportunity for cross-examination and to establish the charges with concrete evidence. The Tribunal set aside the finding on misdeclaration and misclassification of plywood, emphasizing the need to adhere to the specific criteria laid down in the Chapter Note for classification. The Tribunal also directed the Commissioner to re-examine the evidence regarding the independent operations of M/s. BGS and M/s. VE.