2009 (7) TMI 1125 - AT - Central Excise

Summary

Issues Involved:
1. Admissibility of evidence (Mahazar and loose slips).
2. Reliability of statements and retractions.
3. Allegation of undervaluation of goods.

Summary:

Admissibility of Evidence:
The appellant-company was issued a show cause notice alleging gross undervaluation of goods and evasion of central excise duty amounting to Rs. 44,34,843/-. The adjudicating authority confirmed the demand, imposed penalties, and appropriated Rs. 5,00,000/- already paid by the appellant. The appellant challenged the admissibility of a loose slip recovered from the residence of Sri Pradeep Tantia, arguing it was not signed by witnesses or related to the appellant-company. The Tribunal found that the slip was recovered during an investigation against a different entity, M/s. Cauvery Laminates Pvt. Ltd., and lacked concrete evidence connecting it to the appellant. Thus, reliance on the slip was deemed incorrect.

Reliability of Statements and Retractions:
The appellant argued that statements from two dealers, which were later retracted, were unreliable. The Tribunal noted that the dealers had submitted affidavits retracting their statements and that other dealers, who purchased substantial quantities, had confirmed they did not pay anything over the invoice value. The Tribunal found that the lower authorities failed to prove the charges beyond doubt and that the retracted statements could not be solely relied upon.

Allegation of Undervaluation:
The Tribunal examined the evidence and found no clear connection between the recovered slip and the appellant's clearances. It also noted that statements from other dealers, which were not relied upon by the lower authorities, exonerated the appellant. The Tribunal referred to the decision in Hunsur Plywood Works Pvt. Ltd. v. CCE, Mysore, which emphasized the need for corroborative evidence to sustain charges of undervaluation. The Tribunal concluded that the evidence presented did not substantiate the charge of undervaluation.

Conclusion:
The Tribunal set aside the impugned orders, allowing the appeals with consequential relief. The reliance on the loose slip and retracted statements was deemed insufficient to prove the charges of undervaluation against the appellant.