2013 (8) TMI 423 - AT - Central Excise

Penalty uner Rule 173Q - Quantification of the demand of duty - Commissioner rejected assessee s demand of quantification of the demand of duty - Held that - The demand of duty is required to be re-quantified by treating the entire realization as cum duty price and by excluding the value of bought out monitors - Existence of sales invoices and purchase invoices of the appellants is not disputed, as the annexure to the show cause notice wherein duty calculation has been worked out, indicate the existence of such purchase invoices. Both the lower authorities instead of accepting the chart produced by the appellant has put onus on the appellant to produce the evidences of the value of monitors claimed as deduction by the appellant, instead of accepting the fact that the said value can be ascertained by themselves from the records available in their possession - invoices are not available in one case and not producing in another case itself indicates that department was not serious in arriving at the correct duty liability on the appellants - Following decision of CMS COMPUTERS PVT. LTD. Versus COMMISSIONER OF C. EX., MUMBAI - I 1998 (11) TMI 280 - CEGAT, MUMBAI - Decided against assessee.

Summary

Issues:
- Evasion of central excise duty by clandestinely manufacturing/assembling computers system
- Quantification of the demand of duty
- Reduction of the value of bought out items like monitors
- Violation of principles of natural justice in the adjudication process
- Confirmation of duty liability and penalties

Analysis:

1. Evasion of Central Excise Duty:
The appellants were charged with evading central excise duty by manufacturing/assembling computers clandestinely and passing them off as trading items. The investigation revealed that buyers had purchased fully manufactured computer systems, but bills were raised as parts of computers. Show cause notices were issued to the appellants, leading to a series of appeals challenging the duty demands.

2. Quantification of Duty Demand:
The appellants contested the quantification of duty, arguing for the consideration of amounts received as cum duty price and the exclusion of the value of bought out items like monitors. The adjudicating authority confirmed the demands initially, leading to subsequent appeals. The Tribunal, in a previous order, directed re-quantification of duty based on the entire realization as cum duty price and excluding the value of bought out monitors.

3. Reduction of Value of Bought Out Items:
In the second round of litigation, the lower authorities reduced the duty liability but did not fully deduct the cost of bought out items like monitors from the value. The appellants argued for the inclusion of all relevant invoices to determine the actual duty liability accurately. The lower authorities were criticized for not considering the evidence already in possession and placing the burden on the appellants to produce it.

4. Violation of Principles of Natural Justice:
The Tribunal found that the lower authorities violated principles of natural justice by not accepting the appellant's chart indicating the value of monitors and placing the burden of proof on the appellants. Despite the appellant's requests for copies of relevant invoices, the authorities failed to provide them, casting doubt on the fairness of the adjudication process.

5. Confirmation of Duty Liability and Penalties:
Ultimately, the Tribunal confirmed duty liabilities for both appellants, considering the evidence presented by the appellants in the absence of documents withdrawn by the Revenue. Penalties were imposed under the Central Excise Rules for clearing computers without preparing invoices or discharging duty liability. The Tribunal ordered adjustments of the confirmed duty liabilities against amounts already paid and imposed penalties of Rs.25,000 each on both appellants.

In conclusion, the Tribunal upheld the duty liabilities for the appellants, emphasizing the importance of fair adjudication processes and the burden of proof on authorities to substantiate claims. The penalties imposed were deemed appropriate under the circumstances, and the appeals were disposed of accordingly.