2004 (97) ECC 546 (Tri)
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Zonal Bench -- Mumbai
Shri S.S. Sekhon, Member (T) and Shri T. Anjaneyulu, Member (J)
Woodmac (Bombay) Pvt. Ltd. & Ors
Versus
Commissioner of Central Excise, Thane
Appeals No. E/3624, 3627, 3625, 3628, 3626, 3629, 3630, 3631, 3632, 3633, 3634/2003-Mum
[Arising out of Order-in-Original No. 22/NRN/TH-II/2003 dated 28.8.2003 passed by the Commissioner of Central Excise, Mumbai]
Order No. A/798 to 808/WZB/2004-CE-II, dt. 10.9.2004
Confiscation & Penalty (C. Excise)
Undervaluation -- Since the valuation as undervaluation, there is no ground to order the confiscation of the `plywood' as arrived at and ordered. As show cause notice was required to be served in writing, in the persons incharge, from whose custody the sheets were seized or and owners, as per Rule 233A. Such a notice has not been served. The confiscation and Penalty is to be therefore set aside -- Sec. 11AC r/w Rule 209A of CEA.
PRESENT :
Shri Mayur Shroff, Shri J.C. Patel with Shri Naresh Thacker Advs. for the appellants.
Shri K.M. Mondal, Consulant for the respondent.
Cases Cited :
1. B.G. Plywood India (P) Ltd. v. CCE, Madras, 2001 (96) ECR 709.................. [Paras 2, 3]
2. CC, Madras v. Kutty Flush Doors, 1988 (17) ECC 37 (SC)......................... [Paras 2 & 3]
4. Essel Packaging Ltd., 2000 (68) ECC 405 (T).................................................. [Para 2]
5. Galaxy Surfactants Ltd. v. Commissioner of Customs, Mumbai-VII, 2002 (146) ELT 607 [Para 2]
6. Sharon Veneers v. CCE, Chennai, 2002 (84) ECC 158 (T)............................ [Paras 2, 3]
7. Somany-Pilkington's Ltd. v. B.P. Verma (Director, Publications), 1995 (76) ELT 281 (Del) [Para 2]
Per : S.S. Sekhon
These appeals are being disposed by this order as they arise from the same order of Commissioner. The impugned order dated 28.8.2003 of Commissioner disposed of two Show Cause Notices -- one dated 14.3.2001 and the other dated 2.5.2001. The Show Cause Notice dated 14.3.2001 sought to confiscate the seized goods and impose penalties, while the notice dated 2.5.2001 seeks to demand duty from M/s Woodmac (Bombay) Pvt. Ltd. (hereafter referred to as M/s Woodmac for (brief) charge interest and impose penalty under Section 11AC of the Central Excise Act, 1944 as also under Rule 173Q of the erstwhile Central Excise Rules, 1944. It also seeks to impose penalty on various other noticees under Rule 209A of the said Rules.
2. (a) The case of the Department is that during the period 1996-1997 to 2000-2001 (upto August 2000), the appellant M/s Woodmac had manufactured and cleared `Decorative Plywood' by mis-declaring it a `Repressed Plywood' in order to evade payment of appropriate amount of duty; that `Decorative Plywood' commands higher price than that of Repressed Plywood, that cash receipts of Rs. 9.49 Crores, as per books, for the entire period, represent the additional consideration received from the dealers over and above the invoice price; that the appellant's claim that the cash receipts represented sale of `Seasoned Wood' cannot be believed inasmuch as the seven buyers to whom the `Seasoned Wood' claimed to have been sold were found to be non-existent.
(b) During the hearing, the learned Counsel for the appellant contended that the main allegation is under-valuation of `Decorative Plywood' cleared in the guise of `Repressed Plywood' and that this allegation is sought to proved by the statements of 3 to 4 dealers as against 550 dealers spread all over India. He submitted that there is no mis-declaration regarding description of the goods inasmuch as correct chapter heading 4408.30 has been clearly shown in the invoices. In support of this, he tendered a few copies of the invoices for the period 1996-97, 1997-98 & 1998-99 at the time of hearing.
(i) On the alleged under-valuation, he submitted that the case of the Department is based on the statements of 3-4 dealers as against 550 dealers of the appellant and that the same have been retracted by affidavits by the dealers. He also submitted that in similar situations, the Hon'ble Tribunal has not accepted the stand of Department. In that connection, he referred to and relied upon para 17 of the Tribunal's decision in the case of Sharon Veneers v. CCE, Chennai, 2002 (84) ECC 158 (T) : 2002 (146) ELT 655 and para 30 of B.G. Plywood India (P) Ltd. & Ors. v. CCE, Madras, 2001 (96) ECR 709.
(ii) It was then submitted that price is to be determined under Section 4(1) of the Central Excise Act, 1944, i.e. on the basis of normal price of the goods sold ordinarily in the course of wholesale trade, and unless the Department is able to show that the appellant had collected additional consideration from its buyers in majority cases, the Department cannot add any additional consideration from 3-4 dealers even assuming that there was additional consideration from them. In that connection, he relied upon para 76 of the judgment of the Hon'ble Delhi High Court in the case of Somany-Pilkington's Ltd. v. B.P. Verma (Director, Publications), 1995 (76) ELT 281 (Del).
(iii) It is the claim of the appellant that cash receipts of Rs. 9.49 Crores represent the sale proceeds of seasoned wood obtained by cutting timber and drying it in the sun, he submitted that seasoned wood is nothing but sawn timber and it does not amount to manufacture as held by the Hon'ble Supreme Court in the case of CCE, Madras v. Kutty Flush Doors and Furniture Co. (P) Ltd., 1988 (35) ELT 6 (SC).
(iv) The Ld. Advocate took us through the statement of Cash receipts per year as brought out in the Show Cause Notice. Annexure A and submits that the perusal of the same would show inconsistency in the stand and findings of the department inasmuch as for the year 1996-97 there was no purchases/sales made to the four dealers who have allegedly paid the cash shown and for the other years the cash sales recorded of Season Wood would not meet the percentage allegations and on the quantum of sales made to the four dealers the figures arrived would not establish the case of Revenue.
(v) The denial of cross examination of these four dealers and the retractions made and in view of the affidavit filed by them the case of the department as regards the evidence of cash or money collection from the dealers is not established. It was brought out that in case of one of these four dealers by M/s Tej Veneess in his statement dated 26.9.2000 has said to have admitted paying Rs. 5,91,026 as cash when total sales invoiced to him are of only Rs. 1,38,136 which cannot be as alleged at 75% over and above the invoiced value. No such exercise of total sale to all dealers and cash payments has been worked out for the reasons that then the departments case would fail. The total sales to these four dealers is about 2% of the total production/clearance and that cannot be the case to extend and apply to all 500 dealers. In any case only 5 dealers were questioned and one of them gave no statements of cash payments and the four have retracted and not produced for cross examination.
(vi) Reiterate the grounds taken in the appeal.
(c) (i) Learned counsel for the dealers mainly submitted that no notice has been given to the dealers from whose custody the goods were seized. He submitted that the seized goods cannot be confiscated without giving any notice to the owners. The notice dated 14.3.2001 does not ask the appellant-dealers to show cause as to why the goods should not be confiscated.
(ii) He then submitted that the notice dated 2.5.2001 demanding duty from M/s Woodmac is without jurisdiction. He submitted that before issue of this notice, no approval was obtained of the Chief Commissioner. He submitted that D.G. Central Excise Intelligence was given the rank of Chief Commissioner only with effect from 1.7.2001 vide Notification No. 38/2001-CE (NT) dated 26.6.2001. The Show Cause Notice is, therefore, invalid. In this connection, he relied upon the decision of the Hon'ble Tribunal in the case of Galaxy Surfactants Ltd. v. Commissioner of Customs, Mumbai-VII, 2002 (146) ELT 607.