2018 (8) TMI 319 - AT - Central Excise

Valuation - manufactured goods under-valued - The department has alleged undervaluation of excisable goods manufactured by the appellants to the extent of 40% i.e., it was alleged that the actual price was suppressed and only 60% of the price was declared on the invoices - allegations leveled by the department on the basis of few chits/slips/documents recovered during searches - disowning of statements during the cross-examination - penalty. Whether the allegations leveled by the department on the basis of few chits/slips/documents recovered during searches can be sustained? - Held that - The statements recorded at different locations from different persons on different dates giving the same conclusion is amply proof that the statements are reliable documents. The learned Commissioner (A) has either remanded back the cases with a direction that the quantification of evasion on the basis of evidence available on record is required to be restricted with reference to the actual evidence available and cannot be extended to those transactions which relate to other dealers/customers where no evidence is available - the Commissioner (A) has taken a fairly judicious view of the case of the appellant and has given directions to restrict the duty liability to the extent of documents, statements which corroborate the actual transactions whereas the show-cause notices were issued with a generalized principle extrapolating one instance to the entire set of clearances by the appellants - the question is answered in affirmative. Reliability of statements - Whether disowning of statements during the cross- examination is a valid ground for not taking the statements into consideration? - Held that - In this case, the cross examination was not denied and the case was not only based on the statements of the persons it was corroborated by the evidence wherever it was available. As observed by the adjudicating authority, nothing has been brought on record by the appellants that the statements have been recorded under duress/coercion. It is not the case of the appellant that the said statements were retracted in reasonable time - Division Bench decision in the case of D.R. Chakrapani Chettiar and Others 1985 (6) TMI 180 - CEGAT MADRAS has held that If the appellant did not controvert the confession immediately and did not make any grievance on remand before the Magistrate about any alleged act of extortion or coercion regarding the statement, confession cannot be said to have been extorted by coercion or was not voluntarily and that Retraction of confessional statements after a period of more than six months from the date of its recording not attached any credence . Whether penalty can be leveled separately on the partners of the firms invariably? - Held that - In the case of Pravin N.Shah vs. CESTAT 2012 (7) TMI 850 - GUJARAT HIGH COURT it has been held that once firm is penalized, separate penalty is not imposable upon the partner of the firm because partner is not a separate legal entity and cannot be equated with employee of the firm if no specific role is attributed to partner - penalty on partners set aside. Appeal disposed off.

Issues Involved:
1. Whether the allegations of undervaluation based on recovered documents can be sustained.
2. Whether retracted statements during cross-examination are valid grounds for disregarding the statements.
3. Whether penalties can be imposed separately on the partners of the firms.

Detailed Analysis:

Issue 1: Allegations of Undervaluation
The Department alleged that four units under the A.K. Group Firms engaged in the manufacture of plywood and related products were undervaluing their goods. It was claimed that only 50% of the actual price was shown in invoices, with the remainder paid in cash by customers. Evidence included emails, handwritten slips, notebooks, price lists, bank counterfoils, and ledgers. The original adjudicating authority confirmed the demands and imposed penalties, which were upheld or modified by the Commissioner (A).

The Tribunal noted that the learned Commissioner (A) found sufficient evidence to establish a prima facie case of undervaluation. The Commissioner (A) restricted the duty liability to transactions with available evidence, rejecting the generalized approach of the show-cause notices. The Tribunal agreed with this approach, emphasizing that logical cause corroborated by evidence is sufficient for establishing undervaluation.

Issue 2: Retraction of Statements
The appellants argued that statements recorded during the investigation were retracted during cross-examination and should not be considered. They cited legal precedents requiring corroborative evidence for such statements. The Tribunal found that the statements were not recorded under duress and were corroborated by other evidence. The Tribunal referenced the decision in Mysore Chipboards Ltd. vs. CCE and Fathima Panels vs. CCE, which upheld the validity of statements recorded by Central Excise officers, even if retracted later.

Issue 3: Penalties on Partners
The appellants contended that penalties should not be imposed separately on partners of the firms. The Tribunal referred to the decisions in Pravin N. Shah vs. CESTAT and Jaybee Industries vs. CCE, which held that once a firm is penalized, separate penalties on partners are not warranted unless a specific role is attributed to them. The Tribunal set aside the penalties imposed on the partners, following this legal principle.

Conclusion:
1. M/s. AK Woods Industries and M/s. Nafeesa Frameworks: The orders of the Commissioner (A) were upheld, and the adjudicating authority was directed to quantify the duty based on available evidence.
2. M/s. A.K. Boards & Doors and M/s. A.K. Panels: The appeals were rejected, and the orders of the Commissioner (A) were upheld.
3. Shri Niyaz Ahmed, Smt. Seeliya Simmith, and Shri Naushad Ahmed: Penalties were set aside, and the appeals were allowed.

(Order was pronounced in Open Court on 03.08.2018.)

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