2015 (9) TMI 1208 - AT - Central Excise

Valuation - normal value under old section 4 - Demand of differential duty - Penalty u/s 11AC - Interest u/s 11AB - Held that - Period 1999 when the old Section 4 was in force and the concept was of the normal value of the goods and not of the transaction value. We also note that at the time of issuance of the show-cause notice itself revenue has claimed that the normal value of the said pillow is ₹ 162/-. Appellant has not questioned the same and did not produce any evidence to show that they were selling at some other price to other customers. - The invoice and the documents nowhere indicates that the pillow sold were old and damaged. Appellants have also not been able to produce any evidence in support of their contention that the pillow were old and damaged. No statutory or other records could be produced by them which would indicate that the pillow manufactured in 1994 were lying with them till 1999. Normal price at which such pillow were being sold will be the correct assessable value for the goods in question. Accordingly, on merits, we find that the case made by the revenue is correct and we therefore uphold the same. The contention of the appellant was that the extended period of limitation cannot be invoked as all the information was available with the department. We are not impressed with the said argument. The appellant were doing self assessment at the relevant time and the fact that they have sold the pillow at such a low price was suppressed and in our view the extended period of limitation has been correctly invoked. - penalty under Section 11AC is also upheld. Interest under Section 11AB will also be chargeable - Decided against assessee.

Summary

Issues:
1. Clearance of luxury pillows at a low rate.
2. Failure to produce documents during investigation.
3. Discrepancy in the pricing and condition of the sold pillows.
4. Invocation of extended period of limitation.
5. Applicability of penalty and interest charges.

Analysis:

Issue 1: Clearance of luxury pillows at a low rate
The appellant cleared luxury pillows at a significantly low rate of &8377; 10 per pillow in 1999, while similar goods were being sold at a much higher price of &8377; 162 per piece. The investigation revealed discrepancies in the pricing and condition of the sold pillows, leading to a demand notice for differential duty, penalty, and interest.

Issue 2: Failure to produce documents during investigation
The Excise officer and Finance manager of the appellant failed to produce necessary documents related to the clearance of the luxury pillows despite repeated summons. The lack of documentation and evasion raised suspicions regarding the authenticity of the transaction and the condition of the goods sold.

Issue 3: Discrepancy in pricing and condition of sold pillows
The appellant claimed that the pillows were badly damaged by 1999 and were sold at a low price due to their condition. However, they could not provide concrete evidence to support their claim that the pillows had been in stock since 1994. The absence of records indicating the pillows' condition and duration of storage raised doubts regarding the appellant's explanation.

Issue 4: Invocation of extended period of limitation
The appellant contested the invocation of the extended period of limitation, arguing that all relevant facts were known to the department and nothing was suppressed. However, the Tribunal upheld the invocation, stating that the appellant's sale of pillows at a significantly low price was a suppressed fact justifying the extended period.

Issue 5: Applicability of penalty and interest charges
The Tribunal upheld the demand for penalty under Section 11AC and interest under Section 11AB, considering the suppressed information regarding the sale of pillows at a low price. The appellant's argument against the penalty and interest charges was dismissed, emphasizing the correctness of the revenue's case based on the normal price assessment of the sold goods.

In conclusion, the Tribunal dismissed the appeal, upholding the revenue's case regarding the pricing and condition of the luxury pillows sold by the appellant. The decision was based on the lack of evidence supporting the appellant's claims, the invocation of the extended period of limitation, and the applicability of penalty and interest charges in the case.