2009 (7) TMI 799 - AT - Central Excise

Waiver of the deposit - penalty - undervaluation of the product manufactured - authority imposed duty liability - Held that - there was total absence on the part of the applicants in giving any explanation in relation to data - the same was retrieved from the lap top which was seized from the premises of the applicants - stay order in relation to the recovery of interest on the duty amount till the disposal of the appeals - no case for waiver of duty - penalty is sought to be levied not only under Section 11AC, but also under Rule 25 of the said Rules - interest and penalty stands waived till the disposal of the appeals

Issues Involved:
1. Application of the ratio of 2.49 for valuation.
2. Violation of principles of natural justice due to denial of cross-examination.
3. Denial of access to statements of distributors.
4. Reliability of data retrieved from the seized laptop.

Issue-wise Detailed Analysis:

1. Application of the Ratio of 2.49 for Valuation:
The applicants challenged the application of a multiply of 2.49 to the alleged suppressed valuation without any basis. The respondent argued that the multiply was derived from data retrieved from the seized laptop and corroborated by other documentary evidence and statements. The tribunal found that the correlation between the data from the laptop and other documentary evidence justified the application of the multiply. The tribunal noted that the duty liability was not based on assumptions but on a detailed analysis of the manufacturing activities and the data retrieved.

2. Violation of Principles of Natural Justice Due to Denial of Cross-Examination:
The applicants contended that the denial of cross-examination of persons whose statements were relied upon violated principles of natural justice. The respondent argued that the statements were used as additional corroborative evidence and that the findings were supported by other substantial evidence. The tribunal found that the applicants did not demonstrate any prejudice caused by the denial of cross-examination. It was noted that even the deponents who were cross-examined did not disprove the Department's case. The tribunal concluded that the findings on duty liability were not perverse or contrary to the material on record.

3. Denial of Access to Statements of Distributors:
The applicants argued that they were denied access to statements of distributors, which were favorable to their defense. The tribunal observed that these statements were not relied upon by the Department and that the applicants could have examined these distributors as their witnesses. The tribunal found no prejudice caused by the non-disclosure of these statements, as they were not relevant to the matter at hand.

4. Reliability of Data Retrieved from the Seized Laptop:
The applicants questioned the reliability of the data retrieved from the seized laptop, arguing that it lacked corroborative evidence. The respondent contended that the data was corroborated by other documentary evidence and statements. The tribunal found that the correlation between the data from the laptop and other documentary evidence was sufficient to support the conclusions. The tribunal noted that the applicants failed to provide any explanation regarding the data retrieved from the laptop, which was seized under proper procedures.

Conclusion:
The tribunal concluded that the applicants did not make a prima facie case for waiver of the duty amount. However, the tribunal found merit in the applicants' contention regarding the penalty and interest. The applications for stay were partly allowed, with the duty amount to be deposited within twelve weeks, and the recovery of interest and penalty stayed until the disposal of the appeals. The tribunal emphasized that the findings were prima facie and subject to detailed examination during the appeal hearing.

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