1999 (2) TMI 227 - AT - Central Excise

Summary

Issues:
1. Alleged clandestine removal of goods.
2. Alleged sale at lower price to related person.
3. Violation of principles of natural justice in passing the impugned order.

Issue 1: Alleged Clandestine Removal of Goods

The case involved a show cause notice issued to the appellants for clandestine removal of goods to a fake firm, M/s. Prakash Agency, without recording production in the statutory register. The Department's investigations revealed that the agency was fictitious. Statements from individuals involved confirmed undervaluation and clandestine removal. The Additional Commissioner confirmed the duty demand and imposed a personal penalty. The appellants argued lack of evidence to support the allegations, but the Tribunal found the statements and evidence presented by the Department to be damaging and upheld the decision based on the appellants' failure to provide a convincing defense.

Issue 2: Alleged Sale at Lower Price to Related Person

Another ground of the show cause notice was the alleged sale of goods at a lower price to a related person, M/s. Makesworth Enterprises. The Department contended that the lower price indicated undervaluation, especially considering the subsequent resale at a higher price. The appellants claimed they sold at lower rates initially to establish themselves in the market. However, the Tribunal found that the appellants also sold goods at higher rates to other buyers simultaneously, indicating no valid justification for the price difference. The Tribunal dismissed the appellants' argument, emphasizing the assessable value at the factory gate and the lack of evidence supporting the appellants' defense.

Issue 3: Violation of Principles of Natural Justice

The appellants argued that the impugned order violated principles of natural justice, stating they were not given a fair chance to defend themselves. They claimed the order was arbitrary and emphasized their status as new entrants in the market, justifying lower prices. However, the Tribunal noted that the appellants failed to respond to the show cause notice or appear for hearings despite opportunities granted. The Tribunal found no violation of natural justice, as the appellants had ample chances to present their case. The Tribunal upheld the decision, emphasizing the lack of evidence supporting the appellants' claims and the justifiability of the demand and penalty imposed.

In conclusion, the Appellate Tribunal CEGAT, CALCUTTA upheld the duty demand and penalty imposed on the appellants for alleged clandestine removal of goods and selling at a lower price to a related person. The Tribunal found no merit in the appellants' arguments, emphasizing the lack of evidence supporting their defenses and the Department's strong case based on statements and investigations. The Tribunal also dismissed the claim of violation of natural justice, highlighting the appellants' failure to engage in the proceedings despite opportunities provided.