2004 (6) TMI 146 - AT - Central Excise

Summary

Issues: Alleged evasion of duty through under-valuation and clandestine clearances of PTY, incorrect assessable value in invoices, levy of interest and penalties, applicability of Central Excise Valuation Rules, 1975, methodology of valuation, identification of actual buyers, burden of proof on Revenue, payment methods, comparison with previous Tribunal decisions.

The judgment concerns assessees engaged in manufacturing PTY/Twisted Yarn under CET sub-heading 54.02, accused of evading duty through under-valuation and clandestine clearances. Officers conducted a search at a godown in Bhiwandi, seizing records and alleging that PTY was cleared at lower values from the factory gate to fictitious firms, then sold at higher values through brokers. Show cause notices were issued, proposing to compute PTY value based on bank statements and levying interest and penalties. The Commissioner dropped the charges, leading to appeals from the Revenue.

The main legal issue revolved around the application of Central Excise Valuation Rules, 1975, specifically Sec. 4(1)(b) and Rule 7, as the normal price of PTY sold was deemed unascertainable. The judgment analyzed Sec. 4(1)(a), defining the price at the place of removal, which included the Bhiwandi godown. It was held that valuation under Sec. 4(1)(b) couldn't be applied if sales from the depot had occurred. The Commissioner found the sales to Bhiwandi buyers genuine, as identified by local transporters and payments made through account payee cheques. The value computation based on bank statements was deemed incorrect, supported by a previous Tribunal decision. Reference was made to similar cases where allegations of undervaluation failed, emphasizing the burden of proof on the Revenue to show additional consideration from buyers.

The judgment cited previous Tribunal decisions, such as Beekaylon Synthetics v. CCE, to establish that undervaluation allegations must be substantiated with evidence of excess payment. The burden of proof lay with the Revenue, and payment by crossed bearer cheques alone didn't imply additional consideration. The judgment declined to interfere with the Commissioner's order, upholding it based on the lack of evidence supporting undervaluation allegations. The decision aligned with previous rulings and rejected the Revenue's appeals, emphasizing the need for concrete proof to sustain allegations of undervaluation.