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TMI Blog1998 (7) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents. He also imposed penalty of Rs. 25,000/- on the respondents under Rule 9(2), 52A, 173Q(1) and 226 of the Central Excise Rules, 1944. He also imposed personal penalty of Rs. 20,000/- on Ram T. Harpalani, Partner of the respondents Company under Rule 209A of the Central Excise Rules, 1944. He issued warning to D. Chatlani to be more careful in future. The proceedings initiated against Shri N. Nabhubani, Proprietor of the respondents, Shyam Harpalani, Bobhi Bhambani, Dinesh Chatlani, Manager of Man s favourate Chop, Deepak Wadhwani incharge of Bombay Office of the respondents, R. Kaoor, employee of M/s. Uni Lingeries International (P). Ltd., New Delhi, Anil Dutta employee of M/s. Traders India, and Sumen Malhota, MD of M/s. Uni Lingeries International Pvt. Ltd. and Partner of M/s. Traders India for imposition of penalty have been dropped by the Collector. The proposal to confiscate land, building and machinery of the respondents under Rule 173Q of the Central Excise Rules has also been dropped by him. 2. The Revenue is aggrieved against this order of the Collector. 3. It is contended by the Appellant-Collector that the allegations in the show cause notice are broadly clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices, and Annexures D1 and D2 are lists of invoices. Thus striking out of 35,31,735 pieces from the value of clandestine removals vide tabulation in paragraph 83 of the order appears to be incorrect. (ii) The party has claimed that certain pieces were not sent at all as the customers did not honour the documents, but that these have found place in the Order-cum-Despatch book and have been included in the tabulation of clandestine removals in Annexure D4. The Collector has accepted this contention after seeing letters from the Bank to M/s. JMC stating that the customers have not honoured the documents. Apart from the fact that there is no finding as to whether these letters pertain to the particular entries in the Order-cum-Despatch book that find a place in Annexure D4, but not admitting that even if the parties have failed to honour the document, that does not exempt the goods from payment of duty as duty is payable at the time of removal of the goods. The order does not also speak on the reasons for excluding the value of Rs. 20,72,615/- numbers of pieces from the value of goods clandestinely removed (tabulation is at Para 83 of the order). (iii) The party has contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mannequins manufactured and sold by them. The distributors and agents have stated that they booked and sold mannequins on the rates indicated in the said price list and catalogue. Evidence of the order forms recovered from the party showed that the correct value of the mannequins was recorded in the said form and also the amount to be billed was given as an instruction in coded form. The order form also indicated the advance collected at the time of booking the order which was some time found in excess of the amount finally billed. The flow back of additional value was established in some cases in the form of drafts being credited to the account of persons connected to JMC. (ii) The Collector has taken a view that the intrinsic value of identical looking mannequins can vary and that for this reason the all India price list of company has no validity. He has recorded that it was demonstrated to him during the personal hearing the intrinsic value of three mannequins that looked identical was Rs. 350/-, Rs. 1000/- and Rs. 200/- respectively. However, he has not elaborated on how he verified these 3 values for which were claimed for the mannequins that were demonstrated before him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of 1.5 meaning Rs. 1,500/-, 3 meaning Rs. 3000/- and 5 meaning Rs. 5000/- etc.). The invoice is raised on this amount while the amount collected is higher, corresponding to the negotiated price indicated in the form. (f) Shri Ram Harpalani has also explicitly admitted collection of cash in excess of invoice value and utilisation of the same for production and business activities. The board also noted that the order does not speak on the above points. The calculation of assessable value in Annexure D1 is based mainly on the order forms and the billing instructions contained therein. No findings has been given with regard to the evidence of the order forms. Many entries in D1 are based on a computer print out of the sales register seized from the office of JMC. No finding has been given on this either. The statement of the agents and Managing Partner have been ignored. The affidavits which have been submitted as an after thought have been given weight as against the evidence adduced by the investigation and not discussed in the order. The Board has also noted that further though the party s contention that certain items have been duplicated in the quantification by finding pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MC appear to have produced certain persons claiming to be workers of FMC for cross examination at the time of personal hearing who have affirmed that they were workers of the FMC. That is not admissible as evidence, as the department was not given an opportunity to cross-examine these person who were examined by the party. 4. Shri Rama Rao, the learned DR appeared for the appellant-Collector and Shri Narahari, learned Consultant appeared for the respondents. 5. The learned DR laid much stress on the grounds made out by the Revenue in their appeal which has been incorporated above. Arguing on each of the points, he submitted that the Collector should have accepted the plea of under valuation and clandestine removal of the goods by the respondents and about the existence of the dummy unit. He stated that the order was not a speaking order and prayed for setting aside the order or to remand the same. He pointed out that the Collector has accepted the statement of the party without due regard of the allegation and without discussion and hence his order is not a speaking order. He relied upon the judgment rendered in the following cases : (1) 1991 (53) E.L.T. 585 (Tribunal) = 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be of a man, or a lady standing alone. The customer may choose only half portion or only legs, or model of a sitting posture and their price is restricted to that portion only for which supplies are made. The price list may have indicated for a model in standing posture while in fact part of the model may have been booked or only half of that model. Therefore, price of any such goods is restricted one and the department cannot adopt the price for the entire model for which no supplies were made. He submitted that the price conform to the individual invoice has to be accepted and the department cannot adopt Rule 4 of the Valuation Rules in this case. He pointed out that Section 4 has to be taken into consideration only when there is extra or additional consideration flowing directly or indirectly from the buyer to the assessee. He pointed out that whenever there was receipt directly or indirectly by the party and the same has been confirmed, by the Collector, where there was no evidence he has granted relief to the party. He pointed out that stray cases of under-valuation cannot be a case for holding that all the clearances made are under-valued. He pointed out that all the find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of the goods. He pointed that this evidence was taken into consideration to reduce the value of the clearance to Rs. 8 lakhs. he pointed out that the appeal memorandum is a mere conjecture and not based on facts. 8. As regards clubbing, he pointed out that FMC had been closed in 1990 while search was carried out in 1993. He pointed out that said unit was in existence as an independent unit in 1988-89. The Collector has gone into in great detail all the aspects of manufacture and found they are independently functioning and had SSI registration and had sales tax registration and the premises had been on sub-let and the lessee had given affidavit and rent receipt had been produced. The workers had also given affidavits but they had not been produced to cross examine the respondents. The suppliers had also given statement about the unit FMC. He pointed out that the question of dummy unit does not arise as the unit was functioning independently and there was no flow back. Hence the Collector had rightly relied upon the judgment in the case reported in 1994 (71) E.L.T. 689 in the case of Alpha Toyo Ltd. v. CCE. He also submitted that there is no ground for enhancement of penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 4 value. He noted that it is only in the case of units not availing the benefit of small scale exemption or not exempted from filing price list the normal price has to be arrived at. He has also held that if JMC had received any additional consideration over and above the invoice value, it is upto the department to prove such receipts of extra commercial consideration in each and every transaction. Taking the list price for all the clearances effected where order form is not available is not in confirmity with Section 4. He noted that Section 4 itself allows clearance of goods at varying prices. In fact proviso (i) of clause (a) of sub-section (12) of Section 4 of the Act says that where in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different classes of buyers (not being related persons) each such price shall subject to the existence of the other circumstances specified in clause (a) be deemed to be normal price of such goods in relation to each such class of buyers . Therefore, JMC can sell the goods at varying prices and they need not have to sell the goods at the list price. He noted that they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents are selling the goods at a price over and above the invoice price. Noting the judgment rendered in the case of Babcok Venkateshwara Pvt Ltd. v. Collector of Customs reported in 1985 (20) E.L.T. 335 (Tribunal), he observed that the Tribunal held that suspicion however grave cannot take the place of proof. He noted that it is well settled legal position that in case transaction value is rejected, then the burden is on the department that the value adopted by the department is legal as per Section 4 of the Central Excise Act, 1944. If transaction value is available i.e. the price actually paid or payable, then the assessable value shall be determined by accepting the price actually paid or payable unless it is found to be not genuine. He noted that only in few cases, the buyers paid to the assessees amount clandestinely more than the invoice value, in those cases only the assessable value will have to be redetermined. He held that the burden to prove that in each and every transaction the assessee received additional consideration lies on the department and this burden cannot be discharged by mere suspicion. He noted various other aspects of this matter and detailed accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evidence placed including the invoice, we find that the order of the Collector is well reasoned and is sustainable and we confirm that the value under Section 4(1)(a) is in terms of the judgment of the Tribunals and hence it does not require any interference and we confirm the same. 11. As regards the clandestine removal is concerned, we note that the finding is given in paras 81 to 87 of the order. Based on this allegation that computer print out has been recovered from the premises showed there were two entries against M/s. Mahaveer Agencies. One pertaining to invoice No. 1015 and the other pertaining to No Bill. Th order forms of the respondents show that NB has been written which means No Bill . The statements sent by Traders India, New Delhi says No Bill and to some parties such as M/s. Auromodele Atelies, Auroville the goods have been despatched without any gate pass or invoice and in many cases, the letter of M/s. JMC shows they have sent fresh mannequins in lieu of the damaged ones. It was stated by the party before the Collector that all statements are repetition of entries either in D1, D2, or D3; that some of the entries in the list are the goods not despatched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t available. The Collector shall proceed to verify about the clearance of clandestine removal and duty arrived at in terms of this order correctly. To this extent this plea of the Revenue on this aspect is accepted by way of remand for recalculation and reworking out the clandestine removals. The Collector shall grant relief to the appellant wherever it has been worked out already. We hold that any re-working has to be done after hearing the party and on such verification, if any duty is found to be payable, the same shall be confirmed. 13. As regards the plea of clubbing of clearances we note that the Collector has given detailed and factual finding that the two units were independently in existence with separate SSI registration, ST registration and IT assessment. Therefore, the Collector has examined in great length each of this aspect and noted that they are independent units and there was no flow back in the matter. He noted that the party has purchased raw materials like chopped strand mates, Golcoat, Polyester resin and even corrugated boxes. He has also examined the evidence including affidavits of the workers, affidavits of independent owners of those units and after car ..... X X X X Extracts X X X X X X X X Extracts X X X X
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