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TMI Blog2017 (6) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... t be ignored and can be made basis for confirming the allegation of undervaluation. With effect from 01.07.2000, the concept of value in Section 4 of Central Excise Act was changed. The concept of transaction value has been introduced w.e.f. 01.07.2000. Transaction value refers to the actual amount charged for the transaction - By definition, a necessary concomitant of transaction value is that the price should be the sole consideration for the sale. Thus, in a scenario where the buyer has to necessarily pay an amount in cash over and above the prices indicated in the invoices, as was the case w.r.t. the appellants, the invoice values cannot be regarded as transaction values. This is because one of the necessary conditions for the existence of a transaction value on each removal at the factory gate is not satisfied. The question before us is whether, on the basis of available evidence, can we come to the conclusion that the goods were undervalued and whether duty demand is justified. It is very well established that in quasi-judicial proceedings, as in civil cases, the principle to be applied to evaluate the evidence is preponderance of probabilities. The investigation do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re found to be realised in the guise of transportation and labour charges. Appellants were issued with SCN dated 3.8.2005 citing contravention of Rules 4, 6, 8, 10 and 11 of CER, 2002 and demanding differential duty of ₹ 39,80,193/- for the period from 1.1.2003 to 30.06.2003. In addition, recovery of appropriate interest on duty payable and imposition of penalties under various provisions of central excise law were proposed. On adjudication the impugned order held as under:- (i) Duty confirmed ₹ 11,91,671/- based on seized records (ii) Penalty of ₹ 11,91,671/- (iii) Interest on duty payable and (iv) Penalty of ₹ 1,00,000/- each on Shri Iqbal Maklai, PA holder and Shri A Ishaq, Manager While appellants have filed appeals against confirmation of duty and interest, fine and imposition of penalties, Revenue has filed an appeal against restriction of the duty demand to clearances based on seized records and not the entire clearances, in respect of which the charges of undervaluation was made. 3. To come to proper findings with reference to the appeals filed by both sides in respect of the case against M/s NVP it is necessary to enum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvalued price. The documents and floppy disc, seized by the revenue officers were kept for his reference by himself and Sh. Ishaq in the company guest house. Out of the six note books shown to him, the note books at Sl. No. 3, 5, 6 and 7 diary are written by Sh. Ishaq. The other note books (Sl. No. 2 4) are written by Supervisors of M/s. Arch Ply. The statement of Sh. M. V. Shenoy has confirmed that the figures shown in the note books, diary type note book and print out from floppy seized from guest house are in accordance with the amounts recovered. 5. On the basis of investigations, the appellants were issued show cause notice dated 03.08.2005 alleging undervaluation of wood veneer manufactured and cleared and further that the appellants had collected a part of the sale price from their customers in cash. For the purpose of quantification of duty, the department included the extra amounts collected in the assessable value as follows: For the period 01.01.2003 to 30.06.2003 : Extra amount collected in cash as per seized private diaries /note book: ₹ 72,96,947/- Extra amount collected as per print out: ₹ 8,49,069/- Extra amount collected i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner has dropped the demand of duty. 9. Sh. G. Shivdas, ld. Counsel arguing the case for the assessee has advanced the following main arguments. In the impugned order, for purposes of quantification of duty, the department has relied only on two documents, private note book as well as floppy disc. The private records based on which demand has been worked out has not been corroborated by any other independent private records, consequently, the demand based on such evidence is not sustainable. The alleged excess collection considered by the department as reflected in the private diary of Ishaq is only for the period 01.01.2003 to 30.06.2003. Sh. Shivdas further argued that the allegation of undervaluation is not corroborated by buyers. No dealer has been investigated by Revenue and hence it is not confirmed that excess payment in cash has been made. Hence, the entire demand becomes unsustainable in the absence of corroboration from the buyers end. One of the evidences relied upon by the department is the data extracted from floppy disc recovered during investigation. Floppy discs are not specified as admissible evidence under Section 36B of the Central Excise Act and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aq about pricing, delivery, collection of extra payments and accounting of purchase transactions. (iii) Shri M. V. Shenoy, has in his statement dated 21.11.2003, agreed that the selling prices shown in the invoices was less than the actual manufacturing cost. The diary type note book used for despatches and production reports, maintained by Sh. Ishaq and other employees also corroborates the fact of non-declaration of the quality of the products to derive the benefit of under-invoicing. (iv) Production reports, when compared with the RG-1 entries showed that the production record showed veneer of qualities 'A' 'B' where as invoices mostly showed the inferior variety 'C'. (v) Computer print outs of the floppy seized from the Guest house showing the details of transactions between NVP and M/s. Ravela Doors and Indian Timber Products. In this document, the amount realized is shown under 2 categories, viz. B/A (Billed Amount) and O/A(Other Amount), the latter indicating the extra amounts collected in excess of the invoice amounts. The veracity and correctness of these entries were confirmed by Shri Ishaq, in his statement dated 24/9/2003 and agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that wood veneers manufactured by the appellant-assessee were cleared by raising invoices indicating prices which were significantly lower than the correct price of the goods. Revenue has also concluded that higher quality products were invoiced as lower quality products. The computer print out of the floppy/ disc seized from the guest house showed the details of sale transaction and payments received from major customers of the appellant during the period April 2002 to September, 2003. In these documents the amount realised was shown under two categories: (i) Billed amount which indicated the amount as per invoice which has been realised through banking channel and (ii) the other amount indicated the extra amount collected in cash in excess of the invoice amounts. The veracity and correctness of these entries were confirmed by Sh. Ishaq in his statement dated 24.09.2003 and agreed to by Sh. Maklai in his statement dated 25.09.2003. Similar details in the form of billed amounts and other amounts were also found in the diary type note book. Sh. Ishaq, Sh. Maklai and Sh. Shenoy, who are senior functionaries of the appellant, have deposed in their separate statements that the detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is no underinvoicing and the entire demand is based on presumptions and assumptions. 16. The appellant has also assailed the method adopted by the department to calculate the aggregate value of clearances for the purpose of determining excess amount collected on account of undervaluation. The department calculated the excess collection on the basis of the average price arrived on the basis of the evidence collected for the period 01.01.2003 to 30.06.3003 as per diary. After going through the calculation, we find that in the show cause notice the average factor as in the above paragraph has been applied not only on the figures obtained from the seized documents i.e. diary, note books and printout, but also on the entire clearances shown in RT-12. However, at the time of passing the impugned order, ld. Commissioner has taken the view that it is not proper to calculate the total duty evaded by such mathematical calculation. He has in fact restricted the total demand only to that attributable to the amount of cash recovered as available in the other amounts . Accordingly, he has reduced the total duty demand from ₹ 39,80,193/- to ₹ 11,91,671/-. 17. With ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived in cash and which is evidenced by the documentary and oral evidence recovered and produced by the Revenue. In fact, he has restricted the demand only to that evidences. This is a case in which Revenue has succeeded in unearthing voluminous documentary as well as oral evidence which unambiguously supports the allegation of under invoicing. Of course, the Revenue has not been able to unearth evidence of each and every invoicewise collection of additional consideration in cash. The question before us is whether, on the basis of available evidence, can we come to the conclusion that the goods were undervalued and whether duty demand is justified. It is very well established that in quasi-judicial proceedings, as in civil cases, the principle to be applied to evaluate the evidence is preponderance of probabilities . The standard is whether the proposition is more likely to be true then not true. Lord Denning in Miller Vs. Minister of Pensions described it simply as more probable than not . The Apex Court in the case of Maharashtra State Board of Secondary and Higher Education V. K.S. Gandhi Others -1991 (2) SCC 716 wherein it has been held in para 37 as follows: 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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