2004 (9) TMI 284 - AT - Central Excise

Summary

Issues Involved: Confiscation of seized goods, imposition of penalties, demand of duty, jurisdiction of the notice, valuation of goods, and evidence of cash receipts.

Issue-wise Detailed Analysis:

1. Confiscation of Seized Goods:
The Show Cause Notice dated 14-3-2001 sought to confiscate the seized goods. The learned Counsel for the dealers argued that no notice had been given to the dealers from whose custody the goods were seized, making the confiscation invalid. The Tribunal found that the order of confiscation was bad in law as the required notice was not served on the persons in charge from whose custody the sheets were seized or the owners. Consequently, the confiscation ordered was set aside.

2. Imposition of Penalties:
The Show Cause Notice dated 2-5-2001 sought to impose penalties under Section 11AC of the Central Excise Act, 1944, and Rule 173Q of the erstwhile Central Excise Rules, 1944. The learned Counsel argued that penalties imposed on the firms and companies were not sustainable as the allegations were against the partners and directors. The Tribunal held that since no duty demands were upheld and the confiscation was found to be bad in law, no penalties could be upheld. The penalties were thus set aside.

3. Demand of Duty:
The Department alleged that M/s. Woodmac had manufactured and cleared 'Decorative Plywood' by misdeclaring it as 'Repressed Plywood' to evade duty. The Tribunal found that the evidence of cash receipts representing additional consideration was not established. The Tribunal noted that the statements of four dealers were retracted and not sufficient to prove undervaluation. The Tribunal concluded that there was no material on record to upset the valuations and duties paid, and therefore, the demand of duty was not upheld.

4. Jurisdiction of the Notice:
The learned Counsel argued that the Show Cause Notice dated 2-5-2001 was without jurisdiction as no approval was obtained from the Chief Commissioner before its issue. The Tribunal found that the notice issued with the approval of the DG, Central Excise Intelligence, was within jurisdiction, as the DG was declared as the Chief Commissioner by Notification No. 215/86-C.E., dated 27-3-86.

5. Valuation of Goods:
The Department's case was based on the allegation that 'Decorative Plywood' commanded a higher price than 'Repressed Plywood', and the cash receipts represented additional consideration. The Tribunal found that there was no evidence of receipt of cash considerations as alleged. The Tribunal held that the valuation as determined and duty paid could not be upset for want of evidence of undervaluation.

6. Evidence of Cash Receipts:
The Tribunal found that the evidence of cash receipts representing the sale proceeds of seasoned wood was well explained. The Tribunal noted that the denial of cross-examination of the four dealers and the lack of sufficient material to establish cash recovery led to the conclusion that there was no sufficient evidence to prove the feature of cash recovery. Consequently, the allegations of cash generation from the sale of plywood were not sustained.

Conclusion:
The Tribunal set aside the orders of confiscation, penalties, and duty demands, and allowed the appeals. The Tribunal found that the evidence presented by the Department was insufficient to establish the allegations of undervaluation and additional consideration. The appeals were allowed, and the orders were set aside accordingly.