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TMI Blog2018 (3) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A)-VIII/123/DC SK Cir.HMT/2014-15 Now as CIT(A)-2/197/DC. S.K. Cir.HMT/2014-15, reversing Assessing Officer s action making addition of ₹ 41,38,760/- on account of suppression of sales by adopting GP rate @ 15% on unaccounted sales of ₹ 2,75,91,738/-, in proceedings u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961; in short the Act . 2. Case called twice. None appears at assessee s behest. The registry has already sent it an RPAD notice dated 22.02.2018. The same has been received back unserved. We thus proceed ex parte against the respondent assessee in the instant case. 3. We notice at the outset that the CIT(A) has deleted the abovestated addition made by the Assessing Officer with following detailed reasoning: 3.3. Decision: I have carefully considered the facts of the case, the assessment order and the contention of the appellant. The AO has made the addition of G.P. @15% of the sale value of ₹ 2,75,91,738/- on the basis of the investigations carried out and the search and seizure proceedings carried out by the DGCEI. It was held by the AO that the appellant was indulged in under valuation of its sale bills and clandestine removal of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be deliberated upon:- (i) Whether the appellants mentioned in Para 5.1 above have indulged in clandestine manufacture and clearance of Ceramic Glazed Mixture (Frit), in view of the adjudication orders passed the adjudicating authorities on the basis of natural gas consumption norms per metric ton? (ii) Whether the appellants mentioned in Para 5.1 and 5.2 have indulged in undervaluation of frit and also clandestinely cleared frit as per a personal ledgers retrieved from a pen-drive recovered from SANYO and other personal records and pen-drives from the ceramic tile manufacturers read With their statements? (in) Whether the adjudicating authorities were justified in denying cross-examination of witness under the provisions of Section 9D of the Central Excise Act, 1944 read With the judicial pronouncements on the issue? 8.4 In view of the settled proposition of law laid down above, estimation of quantity of goods manufactured and clandestine removal of goods by the appellants cannot be slapped on the basis of averages arrived and calculated based on norms of gas consumption in manufacture of 1 MT of frit. It is rightly contested by the appellants that frit man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turers. Appellants have argued that the print-out taken from the pen-drive 'AJTAK XYZ' are not admissible as a piece of Evidence as the same are not the documents admissible as evidence under the relevant Section of the Central Excise Act, 1944. It was also argued by the appellants that the number of Panchnamas recorded and the opening of the said pen-drive clearly suggest that the date recovered from the pen-drive is highly objectionable, suspicious and not acceptable. It is observed from the case records of Wellsuit Glass Ceramic Pvt. Limited [E/13720/2014] that seizure of the said pen-drive was effected on 17.7.2008 under a Panchnama and it was not stated in this Panchnama that the pen-drive was put inside a sealed cover. It has been admitted by Shri V.N. Thakkar (Superintendent) DGCEI in the cross-examination before the Adjudicating authority that when an article is seized, the same is placed in a sealed cover and mention of the same is made in the Panchnama. It is also admitted by Shri Thakkar that as he remembers the seized pen- drive was placed in a paper Cover and sealed with adhesive tapes, It is the claim of the appellants that the way the said pen-drive was han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for establishing undervaluation/ clandestine removal of frit based on the private records, the statements of tile manufacturers and Shroff/Angadias is concerned; it is argued by the appellants that the entire exercise of such quantification has been made as per the statements of the witnesses whose cross-examination has not been allowed by the adjudicating authority as per- Section 9D of the Central Excise Act, 1944. Appellants relied upon the following case laws:- (i) J.K. Cigarettes Limited vs. CCE-[2009 (242) ELT189 (Del.)] (ii) CCE, Allahabad vs. Govind Mills Limited -[2013 (294) ELT 361 (All.)] (iii) Basudev Garg vs. CC -- [2013 (294) ELT 353 (Del.)] (iv) Swiber Offshore Construction Pvt. Limited vs. Commissioner, of Customs, Kandla -[2014(301) ELT 119(Tri.Ahmd.)] 10.1 Section 9Dofthe Central Excise Act, 1944 is reproduced below:- 10.2 In the case of J.K. Cigarettes Limited vs. CCE (Supra), following conclusions were drawn by the Delhi High court, in Para 32:- 10.3 In the adjudicating proceedings, a list of witnesses to be relied upon by revenue is disclosed to the appellants alongwith the show cause notice. The reasons For r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t certain additional consideration coming to the appellant by way of cash flow from the tile manufacturers to the frit manufacturers is required to be added to the assessable value. In the present circumstances and factual matrix the exact amount of such additional consideration was required to be determined for addition to the transaction value even if all the statements and documents were held to be admissible evidence and satisfied the test of Section 9D of the Central Excise Act, 1944. In Appeal Nos. E/l 1960/2013 and E/l2386/2014, the valuation has been enhanced solely based on the assumption that after booking of the case these appellant enhanced their prices. In the case of transaction value realm the same product can be sold at different prices as per Section 4 of the Central Excise Act, 1944 unless actual additional consideration has been shown to have flown back to the appellants. Appellants in these appeals and in Appeal Nos. E/13720/2014 and E/534/2011 have also not admitted during investigation that they have received any additional consideration. In other appeals on the issue of undervaluation investigation attempted to show the flow back of such additional cash flow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , appeals file by the appellants mentioned in par as 5.1 and 5.2 of this order, are allowed with consequential reliefs, if any. Miscellaneous applications are also disposed of accordingly. It has been noticed that the AO has rejected the books of accounts u/s.145(3) of the Act merely on the basis of the findings in the show cause notice issued by the DGCEI. No independent defects or discrepancies have been pointed out for making the addition. Thus there was no case for invoking the provisions of Section 145(3) of the Act. So on these facts when the original basis of addition i.e. the show cause notice issued has been dismissed/the demand of excise duty has been nullified then the basis itself remains no more to upheld the addition on account of G,P. rate made by the A.O. in this case. Thus, the addition made by the A.O. on account of G.P. is not sustainable and hence the same is deleted. The ground of appeal is allowed. 3. Learned Departmental Representative vehemently contends that the CIT(A) has erred in law as well as on facts in deleting the impugned addition. He however fails to dispute the fact that the impugned re-assessment exercise is based on the Central Excise Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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