2011 (2) TMI 265 - HC - Central Excise

Duty and penalty - Undervaluation of goods - The Tribunal has taken into account the evidence on record and come to a factual finding, which is not shown to be perverse - Additionally, the procedure laid down in Rule-4 is not only parameter for ascertaining undervaluation of goods, but reference can also be made to Rules 5 & 6 of the Rules which gives further power to the Assessing Officer to detect the cases of undervaluation - Imposition of penalty was subsequent to confirmation of the duty demanded - Decided in favour of assessee.

Summary

Issues:
Challenge to judgment confirming duty and penalty demanded by the Assessing Officer based on under-valuation of goods. Examination of evidence by the Tribunal. Imposition of penalty subsequent to duty confirmation.

Analysis:
The appellant challenged the judgment passed by the Tribunal confirming duty and penalty demanded by the Assessing Officer, alleging that proper procedure was not followed to establish under-valuation of goods. The appellant argued that the Department did not compare the value of goods sold by the assessee with the sale of the goods in question, as required by Rule 4 of the Central Excise [Valuation] Rules, 1975. However, the Tribunal found that the goods were indeed under-valued. The Tribunal noted that the appellant failed to demonstrate that the goods were sold at the same value to other buyers, especially considering the close relationship between the seller and the buyer. Consequently, the Tribunal upheld the duty demand of Rs. 4,41,407 and Rs. 5,81,310 for clearance of goods without payment of duty, based on evidence such as octroi receipts and the proprietor's admission of clearing goods clandestinely.

Upon review, the High Court found no substantial question of law arising from the appeal. The Court observed that the Tribunal had considered the evidence on record and reached a factual conclusion that was not shown to be unreasonable. Additionally, the Court highlighted that while Rule 4 is crucial for detecting undervaluation, Rules 5 and 6 also empower the Assessing Officer to identify such cases. As no legal infirmity was found in the Tribunal's decision, the Tax Appeal was dismissed. Furthermore, the imposition of the penalty was deemed justified following the confirmation of the duty demanded. Therefore, Civil Application No. 113 of 2011, seeking to challenge the penalty imposition, was rejected for lacking merit.

In summary, the High Court upheld the Tribunal's decision regarding the duty and penalty demanded, emphasizing the importance of following proper valuation rules and procedures in assessing duties. The judgment underscores the significance of factual findings supported by evidence in such cases and affirms the authority of the Tribunal to make determinations based on the available records.