Cera Boards & Doors v. Commissioner Of Central Excise, Calicut

[Order per : T.K. Jayaraman, Member (T)]. - All these appeals have been filed against the Order-in-Original No. 14/2006, dated 12-5-2006 passed by the Commissioner of Central Excise and Customs, Calicut.

2. In fact, 8 appeals are from the assessees and Revenue has also filed one appeal against the same impugned order.

3. First, let us deal with the appeals of the assessees concerned, who have been affected by the impugned order. The details of all the appeals are given in the following tabular column. The Commissioner, in the impugned order, has held that the goods seized from (1) M/s. CERA Boards & Doors, Bangalore; (2) M/s. Ply Home, Coimbatore; (3) M/s. Gee Ply, Tamil Nadu; (4) M/s. Decowood Interiors, Kerala; (5) M/s. Arihant Marketing, Coimbatore; and (6) M/s. Krishna Agencies, Tamil Nadu are liable for confiscation. He had imposed redemption fine in respect of each of these items. He had also imposed penalties on these parties, the details of which are also given in the tabular column.

4. The assessee M/s. CERA Boards & Doors are the manufacturers of Plywood and Plywood goods, which are excisable commodities. They have a factory at Kannur in Kerala and they have a depot in Bangalore. They have dealers in Kerala, Karnataka and Tamil Nadu. In 2001, they established a Depot at Bangalore to cater to the dealers in Karnataka. The Director-General of Central Excise Intelligence carried out certain investigations in October, 2002. Very elaborate investigations had been carried out and on the basis of the investigations, prima facie, it was found that the assessee had been undervaluing the goods cleared by them.

5. The gist of the allegation is that the assessee pays duty only on ¹/₃ rd of the actual value of the goods sold by them. The balance amount of the value of the goods is received by them by cash on which no duty has been paid. This is all the gist of the allegations. They have searched various premises in connection with the investigation. They had seized a large number of incriminating records. They had also taken the statements of 11 dealers. The statements of various persons concerned with the appellant’s unit, factory and depot had been taken and on the basis of that, Show Cause Notices had been issued. In fact, there are two Show Cause Notices. Certain goods had been seized at six premises in connection with the investigation on the ground that they had been cleared without paying the correct rate of duty on account of undervaluation. Therefore, one Show Cause Notice dated 9-4-2003 had been issued proposing confiscation of seized goods. On the basis of the investigation, the Revenue came to the conclusion that the assessee had evaded Central Excise duty from the year 1998 to 2002, to be precise, up to 5-12-2002. The allegation is that they had paid duty only in respect of 30% of the actual value. Therefore, the second Show Cause Notice dated 22-12-2003 had been issued for the differential duty for this period in respect of all the clearances made by the unit during this period. After issue of the two Show Cause Notices, the Commissioner of Central Excise, Calicut had taken up the adjudication and passed the impugned order.

6. The Commissioner has given elaborate findings from Para 54 to Para 106 and on the basis of his conclusions, he has given his Order in para 107 of the impugned order. His findings starts from Para 54. He has given the gist of the Show Cause Notices in Para 54. As already stated, the Show Cause Notice dated 9-4-2003 proposes confiscation of goods seized at six places in the course of the investigation. The relevant parties, along with the main appellant, are parties to the said Show Cause Notice. The Show Cause Notice dated 22-12-2003 is for a demand of Rs. 4,29,01,384/- being the differential duty on the goods manufactured and removed from the main assessee M/s. CERA Boards & Doors during the period from 1-12-1998 to 5-12-2002. There is a proposal for appropriation of an amount of Rs. 12.5 lakhs voluntarily paid by the assessee towards the liability and also there is a proposal for imposition of penalty under Section 11AC and under Rule 173Q/Rule 25 of the Central Excise Rules.

6.1 The Commissioner, from Para 55, has considered all the evidences, which have been gathered during the investigation. The evidences are :- (i) certain loose slips seized from the custody of Shri Dayanandan, Sales Executive of M/s. CERA Boards; (ii) Computer printouts seized from the Bangalore depot of M/s. CERA Boards; (iii) Price lists seized from the depot of M/s. CERA Boards at Bangalore; (iv) Loose slips seized from the residential premises of Shri Cyril D’Souza; Sales Executive of M/s. CERA Boards; (v) Loose slips seized from the residential premises of Shri T.R. Bhaskar, Manager, M/s. CERA Boards, Bangalore; (vi) Cash statements; (vii) Computer printouts (viii) collection books, note books; (ix) loose slips seized from the residential premises of Shri Cyril D’Souza; (x) A collection book and two receipt books seized from the residence of Dayanandan, (xi) A collection book seized from the premises of Shri T.R. Bhaskar; (xii) Diary of Shri Dayanandan, Sales Executive seized at the depot premises; (xiii) Diary maintained by Shri Deepak Dhiman, Sales Executive, M/s. CERA Boards; (xiv) Documents seized from the premises of M/s. Naveen Glass & Plywoods, a dealer of M/s. CERA Boards; (xv) documents seized from M/s. Standard Plywoods, Bangalore; (xvi) Statements of Shri T.R. Bhaskar, Branch Manager and Shri N. Dayanandan, Sales Executive; (xvii) Statement of Shri Cyril D’Souza; Sales Executive; (xviii) Statement of Shri M.P. Narayanan, Representative; (xix) Statement of Shri K.S. Harris, Managing Partner of M/s. CERA Boards; (xx) Statement of Shri K.S. Mohammad Ali, Partner of M/s. CERA Boards. Then the statements of the following 11 dealers have also been recorded.

(1)     Shri Gajanan K. Kadolkar, Proprietor of M/s. Gajanan Galss and Plywoods;

(2)     Shri K.S. Abdul Basheer, Proprietor of M/s. Woodlands Doors & Plywoods, Bangalore;

(3)     Shri B. Narayana Rao, Proprietor of M/s. Naveen Glass & Plywoods, Bangalore;

(4)     Shri Riyaz Mayalakkare, Partner, M/s. Standard Plywoods;

(5)     Shri Jagdish S. Patel, Proprietor of M/s. Plyhome, Coimbatore;

(6)     Shri G.N. AgarwaJ, M/s. Gee Ply, Erode;

(7)     Shri Sunny John, M/s. Decowood Interiors, Cochin;

(8)     Shri Kailash Kumar, M/s. Arihant Marketing, Coimbatore;

(9)     Shri Arvind L. Patel, M/s. Krishna Agencies, Salem;

(10)  Shri T.V.G. Ganezan, M/s. Jamuna Agencies, Vellore;

(11)  Shri Abdul Khayoom, M/s. Woodlands Doors & Plywoods, Chennai.

In Para 55 of the impugned order, the Commissioner has stated that he had examined all the above statements and the documents thoroughly.

6.2 From Para 56 onwards, the Commissioner is discussing each of the relied on document and which had been enumerated by him in Para 55. We do not think that it is necessary for us to repeat his findings on each of the slips, documents, computer printouts, statements, etc. Suffice it to say that all these documents, printouts, statements etc., point out towards the fact of undervaluation. From the statements and from the facts mentioned in these documents, the Commissioner has come to the conclusion that the assessees had paid duty only on 30% of the actual sales consideration, which is indicated in their invoices. In that case, the balance 70% had escaped assessment of Central Excise Duty. The evidences point out that this balance amount has been collected in the form of cash. There is evidence to show that this amount has been sent back to the assessee at Calicut. In other words, what is shown in the invoice is only ¹/₃ rd of the value of the goods. The Commissioner has made very elaborate comments on each of the document seized. He has also relied on the statements of the 11 dealers and also the officials.

6.3 In Para 81, he has referred to the retraction of the dealers in the course of the cross-examination. Relying on the following case-laws, he had come to the firm conclusion that these retractions cannot be accepted and, therefore, he has ignored the retractions.

(a)     Sony Vallabdas Liladhar v. Assistant Collector of Customs, Jamnagar

(b)     State of Maharashtra v. P.K. Pathak - (S.C.)

(c)     Govind Lal v. CC, Jaipur - (T)

6.4 In Para 82, he gives his conclusion saying that he is convinced that the evidences indicate the undervaluation. Up to Para 82, all the evidences have been weighed by the learned Commissioner.

6.5 Para 83 is the crucial para, where the Commissioner had restricted the demand of duty only in respect of the dealers, who have accepted the undervaluation. In other words, while the Revenue had demanded duty for the period from 1-12-1998 to 5-12-2002 for an amount of Rs. 4,29,01,384/- in respect of all the dealers of the appellant, the Commissioner has given a very categorical finding that “But I find that no evidence has been adduced by the Department to prove that M/s. CERA Boards have shown lesser price in the invoices issued to all these customers while supplying goods to them and collected amount over and above the invoice prices to evade payment of Central Excise Duty. Evidence have been adduced by the department in respect of the aforementioned eleven customers only from whom statements have been recorded, in addition to the clearances made to their Bangalore depot.” However, the Commissioner had stated that 3 more dealers viz. M/s. Shankar Patel, M/s. Jyothi Plywoods; Shri V.S. Solanki, M/s. Jai Ambe Glass and Plywoods; and Shri Ram Naik J. Shah, M/s. Rajesh Saw Mills in the case against M/s. Prestige Boards had accepted that they had paid more than the invoice amount by cash. Therefore, he had included 3 more dealers and in respect of 14 dealers, he had recalculated the differential duty payable by the assessee M/s. CERA Boards. In other words, in respect of all the other dealers, he had dropped the demand, as the investigation had not recorded statements from those dealers admitting that M/s. CERA Boards had supplied goods to them showing lesser price in invoices and collected the differential amounts. While coming to the conclusion, he had relied on the following decision :-

(i)      Sharon Veneers v. CCE, Chennai - (Tri.-Chennai) wherein it is held that price slips recovered from one of several dealers of assessees cannot be relied upon to show that goods have been sold on prices indicated therein to all the other dealers.

(ii)    The decision of the Hon’ble Supreme Court reported in (S.C.) that the department has to investigate all of the 40 dealers of the assessee all over of South India to prove undervaluation and cannot plead that it is difficult to do so.

(iii)   Alfa Ceramics Industries v. CCE, Indore - (Tri.-Del.) wherein it has been held that evidence collected in respect of sales to Madhya Pradesh distributors about collection of part of sale price in cash over and above invoiced price should not lead to reasonable inference that similar was the case in respect of the sales in other areas and thereby the demand under Section 11A of the Central Excise Act in respect of sales in other areas is not sustainable.

(iv)   He had also referred to the decision of Commissioner (Appeals), Cochin vide Order-in-Appeal No. 353/2002-C.E., dated 17-5-2002 in the case of M/s. Malabar Plywood Works wherein the Commissioner (Appeals) allowed the appeal filed by the assessee and when the Revenue appealed to the Tribunal, the Tribunal had rejected it vide Final Order No. 2104/2005, dated 2-12-2005 [ (S.C.)].

6.6 Thus, after discussing the liability of the assessee, the Commissioner, in Para 84, has held that the demand of duty under Section 11A of the Central Excise Act, 1944 in respect of the transactions made during the period from 1-12-1998 to 5-12-2002 with all the customers of M/s. CERA Boards except the 14 dealers, without conducting necessary investigation on the sales made to them is not sustainable.

6.7 From Para 85 onwards, the Commissioner has dealt with the other contentions made by the party against the demand. In this paragraph, he has justified the inference of undervaluation in respect of the demands. He did not accept the contention of the assessee that the entire case of the department has been built on assumptions and vague statements.

6.8 In Para 87, he has stated that the case has been built not on mere paper slips or chits but on authentic documents corroborated by other evidences such as the various documents seized from the dealers’ premises and those from the persons holding responsible positions in the firm, the Managing Partners and employees and also their statements. He had relied on the decision of the Hon’ble Supreme Court in the case of Collector of Customs, Madras v. D. Bhoormull  [ (S.C.) = AIR 1974 (SC) 859] wherein it has been held that prosecution of the department is not required to prove its case with mathematical precision to a demonstrable degree. He had also relied on the following decisions to hold that the Department can sustain the allegation by preponderance of probability.

(i)      Rajasthan Foam Ltd v. CCE, Jaipur - (Tribunal), which has been upheld by the Supreme Court as reported in (S.C.)

(ii)    Beauty Dyers v. CCE, Chennai - (T) wherein it is held that Revenue is required to sustain the allegation only by preponderance of probability.

6.9 In Para 88, he has dealt with the contention of the appellant that the Show Cause Notice ignores the statement of Shri K.S. Harris, Managing Partner that it was possible that sales representatives at Bangalore might have collected extra amount and the implied meaning of the statement of the Managing Partner thereto that such cash collection was done without the knowledge of the factory management/partners. All these contentions have been negatived by the Commissioner on the basis of the available documentary evidences, which have been unearthed. He had also rejected the contention of the appellant that for the period prior to 1-7-2000, the normal price, which was available should be adopted. The Commissioner had held that the assessee was hoodwinking the department by showing lesser amount. Therefore, the normal price would be the value shown in the invoices + the amount collected by them over and above the invoice price. In other words, the normal price as claimed by the party has not been accepted.

6.10 As regards the period after 1-7-2000, he has stated that the transaction value would be only the value shown in the invoice plus the amount collected in excess. He had also rejected the contention of the assessee that the computer printouts cannot be considered as valid, as the conditions laid down in Section 36B of the Central Excise Act, 1944 are not satisfied.

6.11 In Para 101, the Commissioner has given the cum-duty benefit to the assessee relying on the decision of the CEGAT in the case of Srichakra Tyres reported in (T). As regards the seized plywoods in six premises, he had come to the conclusion that they had been cleared on undervaluation by paying lesser duty. Therefore, he has held that these goods are liable to confiscation.

6.12 In Para 105, he has stated that Sharon Veneers case, which has already been stated, is very relevant. As regards the other case-laws, he had stated that that they are not very relevant.

6.13 In Para 106, he has held that the noticees are liable for penalty in terms of the various provisions of the Central Excise Act.

7. The learned Advocate Shri G. Shiva Dass, made the following submissions :-

(i)      The allegation of undervaluation is based on assumptions and presumptions. The Show Cause Notice covers the period 1998-1999 to 2002-2003 (up to 5-12-2002). The Commissioner has quantified the alleged extra collection on the basis of the statement of 14 dealers. Though the Department conducted searches at the factory and residential premises of the partners of the assessees, they could not unearth any evidence, which would corroborate or support the documents seized at Bangalore. Therefore, there is no corroboration.

(ii)    The assessees have a wide dealer network spread over the 3 southern States of Karnataka, Kerala and Tamil Nadu. In respect of sales to dealers in Kerala and Tamil Nadu, the assessee was selling the goods at the factory gate itself. In respect of the dealers in Karnataka also, the assessee was selling the goods from the factory gate itself up to 31-3-2001. The assessee’s Bangalore depot was opened on 1-4-2001 to cater to the dealers in Karnataka exclusively. During the period, 1998-1999 to 2000-2001 (up to 31-3-2001), the assessee had the following number of dealers in each State.

Therefore, with effect from 1-4-2001, there were two streams of clearances from the factory, direct ex-factory sales to dealers in Kerala and Tamil Nadu and clearances to depot at Bangalore from where the goods would be sold to dealers at Karnataka. As far as the ex-factory clearances to dealers in Kerala and Tamil Nadu are concerned, the assessees were raising sale invoice showing the assessable value on which duty was paid and net price to dealers. In respect of goods stock transferred from the assessee’s factories to the Bangalore depot, they were paying duty on the assessable value prevailing at the depot and sales tax was not paid on such clearances from the factory. The Bangalore depot at the time of sale of these goods would raise a sale invoice and pay the applicable sales tax in Karnataka. The Bangalore depot was catering to 149 dealers and 86 dealers in 2001-02 and 2002-03 respectively in Karnataka while the factory gate sales were made to 90 dealers and 63 dealers situated in Kerala, Tamil Nadu and other States in the years 2001-02 and 2002-03 respectively. The Department has recorded the statements of only two dealers in Karnataka as against the total of 153 dealers during 2001-2002 and 3 dealers during 2002-2003 as against 63 dealers. Similarly, in so far as Kerala is concerned, as against 56 dealers, the department had recorded the statement of only one dealer and in respect of Tamil Nadu, the department has conducted investigations with only a few dealers. It was submitted that the percentage of dealers contacted and investigation conducted is miniscule and not representative at all.

(iii)   Shri Shiva Dass indicated by the following tabular column that the percentage of value of clearances made to dealers who have allegedly given implicatory statements vis-a-vis other dealers with respect to whom no investigations were conducted by the department.

(iv)   The above table indicates that the demand is unsustainable, as the number of dealers who have not been investigated is far higher and with respect to whom no investigations have been conducted by the Department. As far as Karnataka is concerned, all the statements given by the dealers relate to clearances made from the depot after 1-4-2001 only. In respect of the dealers in Kerala, only one dealer in the whole of Kerala has tendered a statement against the assessee. As far as the dealers in Tamil Nadu are concerned, no dealer has stated that the clearances from the factory were undervalued to the extent of 70%. As regards Karnataka, the assessee submitted that the investigations have relied on the statements of only four dealers which are also unsustainable.

(v)     It was strongly argued that the demands in the impugned order can be divided into two periods. One prior to 1-7-2000 and the other after 1-7-2000 because on 1-7-2000, the new Section 4 of Central Excise Act came into being. It was urged that the clearances made to other dealers in Karnataka, Kerala and Tamil Nadu, prior to 1-7-2000, should be taken to represent the normal price under Section 4(1)(a) of the Central Excise Act, 1944 as it stood before 1-7-2000. For the period prior to 1-7-2000, since the normal price of excisable goods at the factory gate has been established by the assessee and accepted by the Commissioner, even if the assessee have realized higher price from certain other buyers, the same would be irrelevant for the purpose of payment of excise duty once the normal price in the factory gate has been established. The following case-laws were relied on :-

(a)     Somany-Pilkingtons Ltd. v. B.P. Verma (Director, Publications) - (Del.)

(b)     Indian Oxygen Ltd. v. CCE - (S.C.)

(c)      DCM Ltd. v. Union of India - (Raj.)

(d)     Transpeck Industry Ltd. v. CCE - (Tri.-Del.)

(e)      CCE v. Falcon Tyres Ltd. - - Affirmed by Supreme Court as reported in (S.C.)

(f)      Andaman Timber Industries Ltd. v. CCE - .

(vi)   As far the demand for the period from 1-7-2000 to 31-3-2001 is concerned, the period is governed by the concept of ‘Transaction Value’ introduced w.e.f. 1-7-2000 in the amended Section 4. In so far as this period is concerned, since all the clearances were from the factory gate only, each invoice issued has to be treated as a separate transaction and the assessable value should be arrived at for each such a transaction thereof. There is no evidence to show receipt of exact collection over and above the invoices raised for this period excepting a few vague statements tendered by the dealers in Kerala and Tamil Nadu. In the absence of any evidence to show that any amount in excess of what has been shown in the invoice has been realized by the assessees during this period, it was submitted that for the period from 1-7-2000 to 31-3-2001, the invoice price would represent the actual transaction value and no further addition to the same is permissible.

(vii)  The Show Cause Notice relies upon a few transactions of cash from the depot to the assessee’s factory through Mr. Narayanan or Mr. Xavier to come to a conclusion that the so called cash collection at the Bangalore Depot has in fact being received by the assessee at their factory. Apart from denying that any amount in excess of the invoices raised from the factory were ever collected by the assessees, it was submitted that as far as the evidences showing transmission of cash is concerned, the same represent legitimate sale proceeds and consequently, the same has been separately explained by the appellants. There is no provision in the Central Excise Law that the sale proceeds must be realized in DD/cheque. The assessee had shown that the amounts received in cash as indicated in seized records have been duly accounted in the assessee’s ledgers maintained by the assessee’s factory.

(viii) The allegation that cash is stated to have been transmitted through Shri Xavier is uncorroborated inasmuch as no statement has been recorded either from Shri Xavier or from the Managing Partner of the assessee in this regard. Further, the allegation of cash collections over and above the invoice price is based on the private collection books maintained by the staff of the Bangalore depot. No evidence of such cash collections having been received by the factory and its utilization thereof is forthcoming. It was submitted that the cash allegedly collected according to the Department is to the extent of Rs. 29.62 crores, which itself is a highly fictitious figure. If such a huge amount of cash was collected by the assessee, the same ought to have been reflected at least in some of the documents of the assessee. No such evidence is available to show that the assessee had collected such huge cash.

(ix)   Without prejudice to the various contentions, it was submitted that the demand has been confirmed by the Commissioner only in respect of clearances made to 14 dealers whose statements indicated that they had paid a certain percentage of sale proceeds in cash over and above the invoice prices. Out of the 14 dealers, the statements allegedly recorded from 3 dealers viz. Shri Shankar Patel, Shri V.S. Solanki and Shri Ram Naik J. Shah, were not relied upon in the Show Cause Notice at all and have been suddenly introduced in the Order-in-Original in violation of the principles of natural justice. The Commissioner has further confirmed the demand in respect of clearances made to these three dealers by drawing an inference that since the assessee had allegedly collected amounts in excess of invoice price from the other 11 dealers, they might have collected excess amount from these dealers also. Thus, the duty involved in the clearances made to these 11 dealers by considering the extent of undervaluation stated by them works out to Rs. 17,30,446/-. Reliance was placed on the following decisions :-

(a)     Sharon Veneers v. CCE, Chennai - (Tri.-Chennai)

(b)     CCE, Calicut v. Western Ply Wood - Final Order No. 1159/2005 dated 13-7-2005

(c)      Alfa Ceramic Industries v. CCE - (Tri.-Del.)

(d)     CCE (Appeals) v. M/s. Malabar Plywood Works - (Tribunal) = 2006 (75) RLT 587.

(x)     The demand is based on the various evidences collected by the investigation viz. loose slips, computer printouts, price lists, made-up files seized from S/Shri Cyril D’souza, T.R. Bhaskar, etc., the collection book of Shri Dayanandan, collection book of Shri Deepak Dhiman etc. These have already been enumerated. For all these things, the learned advocate had taken a defence stating that the loose slips are typed and do not indicate the author. They do not contain any signature. The department had not examined the author of the computer printout. It has not examined the concerned dealers to bring out the correct explanation to the computer printout. Mr. K.S. Harrins, on 30-9-2003, denied that the computer printout (price lists) was generated by the appellants. The computer printouts is not authenticated nor does it indicate any relation between the goods manufactured by the appellants and the goods indicated therein. The loose slips are typed and do not indicate the author. They do not contain the signature. Statements indicate that the expenses for the Bangalore Depot were being sent periodically from the factory to Shri T.R. Bhaskar. It would be clear from the entries made in the document bearing No. CI (13) that the money to meet the expenses of Bangalore depot were being sent by both cash and DD by Shri Harris himself or through Shri Narayanan, Shri Xavier, etc. These entries have been conveniently ignored. All the cash has been duly accounted in the books of account as evident from the enclosed copy of the Ledger. Reliance cannot be placed on the made-up file sent through Xavier, as Xavier has not been cross-examined. The private registers have not been seized from the respective individual’s possession to warrant a conclusion that it was being maintained by them. These statements of individuals have not been recorded to bring out their version on the entries of private registers. As regards the collection book maintained by Shri T.R. Bhaskar, Branch Manager, it was submitted that the documents have been maintained for his own purpose and, therefore, the assessee do not have anything to do with the documents.

(xi)   The Commissioner has confiscated the goods valued at Rs. 12,80,926/- lying at the assessee’s depot under Rule 25 of the Central Excise Rules and imposed a redemption fine of Rs. 25,000/-. The confiscation of the goods is not maintainable for the reason that the appellants have conclusively established that no undervaluation as alleged by the department have taken place.

(xii)  Further, in the course of the hearing before the Tribunal, Shri Shiva Dass emphasized the following propositions :

He stated that for the period prior to 30-6-2000, 88% of the sales were made through dealers from whom statements have not been recorded. The Commissioner, in his OIO, dropped the demand for all the dealers excepting the 11 dealers on the ground that there is no evidence to prove undervaluation and the demand is based on presumptions and assumptions. In the appeal filed before the Tribunal, there is no challenge to this finding of the Commissioner. There is not even an averment that the said finding of the Commissioner is wrong. Further, the appellants have produced affidavits from major dealers purchasing almost 30% of the turnover and who were not investigated. Ipso facto, the conclusion could only be, as accepted by the Department, the sale price made to 88%o of the dealers is not undervalued. Consequently, the factory gate price under Section 4(1)(a) is established and has to be the basis for payment of duty.

(xiii) Revenue should prove undervaluation in each case and cannot plead inability to do so. It is a settled law that in case of undervaluation, the burden is on the Revenue to prove that the undervaluation has taken place and the additional consideration has flown in. It is settled by various judicial fora that the Revenue cannot plead inability to undertake complete investigation but still seek the confirmation of demand based on the principles of preponderance of probability on the presumption that the pattern would have been the same for other areas or other periods based on a few evidences available especially when it is possible to undertake further investigations in respect of all the dealers whose names are available on record. The following decisions were relied on :

(a)     B.G. Plywood India (P) Ltd. v. CCE - 2001 (96) ECR 709

(b)     Sharon Veneers v. CCE, Chennai - (Tri.-Chennai)

(c)      Alfa Ceramics Industries v. CCE, Indore - (Tri.-Del.) - Affirmed by Supreme Court as reported in (S.C.)

(d)     CCE v. Western Ply Woods - Final Order No. 1159/2005, dated 13-7-2005

(e)      CCE & C (Appeals), Calicut v. Malabar Plywood Works - (Tribunal) = 2006 (75) RLT 587 (CESTAT-Bang.)

(f)      Hunsur Plywood Works Pvt. Ltd. v. CCE, Mysore - (Tri.-Bang.)

(g)     Vidarbha Veneer Industries Ltd. v. CCE - (Tri.-Mumbai).

(xiv) Further, Shri Shiva Dass invited our attention to the following observations of the Hon’ble Supreme Court in the case of State Of Kerala v. C. Velukutty - 1966 (17) STC 465 (SC). Paras 12 and 13.

“Under Section 12(2)(b) of the Act, power is conferred on the assessing authority in the circumstances mentioned thereunder to assess the dealer to the best of his judgment The limits of the power are implicit in the expression “best of his judgment”. Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a “best judgment assessment”, it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case. Though sub-section (2) of Section 12 of the Act provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard for the available material.

Can it be said that in the instant case the impugned assessment satisfied the said tests?

From the discovery of secret accounts in the head office, it does not necessarily follow that a corresponding set of secret accounts were maintained in the branch office, though it is probable that such accounts were maintained. But, as the accounts were secret, it is also not improbable that the branch office might not have kept parallel accounts, as duplication of false accounts would facilitate discovery of fraud and, it would have been thought advisable to maintain only one set of false accounts in the head office. Be that as it may, the maintenance of secret accounts in the branch office cannot be assumed in the circumstances of the case. That apart, the maintenance of secret accounts in the branch office might lead to an inference that the accounts disclosed did not comprehend all the transactions of the branch office. But that does not establish or even probabilise the finding that 135 per cent or 200 per cent or 500 per cent of the disclosed turnover was suppressed. That could have been ascertained from other materials. The branch office had dealings with other customers. Their names were disclosed in the accounts. The accounts of those customers or their statements could have afforded a basis for the best judgment assessment. There must also have been other surrounding circumstances, such as those mentioned in the Privy Council’s decision cited supra. But in this case there was no material before the assessing authority relevant to the assessment and the impugned assessments were arbitrarily made by applying a ratio between disclosed and concealed turnover in one shop to another shop of the assessee. It was only a capricious surmise unsupported by any relevant material. The High Court, therefore, rightly set aside the orders of the Tribunal”.

(xv)  It is a well settled law that unless there are compelling reasons to depart, decision of the Court and Tribunal on identical issues are binding on coordinate Benches. The court and tribunal have been consistently holding for almost 19 years right from 1989 to 2007 that in such cases of undervaluation, the Revenue has to take efforts to prove undervaluation and flow back of additional consideration in either all or in substantial number of cases. In this case, the department having not done so, now requires this Tribunal to overlook all the above decisions and do what the Revenue has failed to do, to fill in the gaps, which the Revenue has not filled in. Reliance is placed on the decision of the Supreme Court in the case of Jayaswals Neco Ltd. v. CCE, Nagpur - (S.C.) = (S.C.) wherein it is held In Paras 9 and 10 that a Bench of coordinate jurisdiction must not disregard the decision of the same strength on its own on an identical question and the rationale of this rule is the need for consistency, certainty and predictability in the administration of justice.

(xvi) Identical issue having been obtained finality, the Department is not permitted to raise the same dispute for other assessees. The Revenue has accepted that the investigations done in respect of M/s. CERA Boards and M/s. Prestige Boards are identical. In this regard, it is pertinent to note that the department has accepted the Order-in-Original 10/2006, dated 27-3-2006/5-5-2006 in the case of M/s. Prestige Boards Pvt. Ltd. Since no appeal has been filed and the period to file an appeal has elapsed, the Order-in-Original has become final. Having accepted the Commissioner’s order and findings therein, the Department cannot raise, the same dispute in other similarly placed cases. Reliance was placed on the following decisions :

(a)     Birla Corporation Ltd. v. CCE - (S.C.)

(b)     Indian Oil Corporation Ltd. v. CCE, Baroda - (S.C.)

(c)      CCE, Navi Mumbai v. Amar Bitumen & Allied Products Pvt. Ltd. - (S.C.)

(d)     CCE, Mumbai v. Bigen Industries Ltd. - (S.C.)

(e)      Boving Fouress Ltd. v. CCE, Chennai - (S.C.).

(xvii) It was submitted that the entire case of the department is argued on the principle of preponderance of probability. This theory is advanced even after the Commissioner has found as a matter of evidence that the department has not proved undervaluation in case of substantial numbers of dealer and against which findings, there is no challenge by the department. This new case cannot be advanced at the stage of tribunal. Reliance was placed on the following decisions :

(a)     Gujarat State Fertilizers Co. v. CCE - (S.C.).

(b)     Hindustan Polymers Co. Ltd. v. CCE, Guntur - (S.C.).

(c)      SACI Allied Products Ltd. v. CCE, Meerut - (S.C.).

(xviii) The duty liability for the period after 1-7-2000 onwards by adopting the percentage mentioned by the respective dealers in their statements and in line with the method of quantification adopted by the Commissioner is Rs. 12.91 lakhs only as indicated in Annexure-I to the letter dated 26-7-2007 filed by the appellants. The duty liability, if calculated based on evidences whether corroborated or uncorroborated, would be Rs. 17.57 lakhs. (Reply to Show Cause Notice, pg. 791 - Volume 7 and Annexure-47, pg. 982 in Volume 8). This working out of demand would be in line with the decision of the tribunal in the case of Alpha Ceramic Industries v. CCE (cited supra) as confirmed by Supreme Court as reported in (S.C.) and of the Tribunal in the case of Vidarbha Veneer Industries Ltd. v. CCE. (cited supra).

(xix) The duty demand has been reduced substantially from the stage of Show Cause Notice. An amount of Rs. 12.50 lakhs has been paid before the issue of Show Cause Notice. If Rs. 12.91 lakhs is total amount of duty payable, then inasmuch as 12.50 lakhs has been paid before the Show Cause Notice, the balance amount payable would be only Rs. 40,000/- in which case, penalty is not imposable. If Rs. 17.35 lakhs is total duty payable, then inasmuch as 12.50 lakhs has been paid before the Show Cause Notice, the proportionate penalty for the amount as per proviso to Section 11AC would be 25% of the duty i.e. approximately Rs. 3 lakhs. For the remaining amounts only, equal penalty would be attracted. Reliance was placed on the following decisions :-

(a)     K.P Pouches (P) Ltd. v. Union Of India. - (Del.) = 2008 (85) RLT 483 (Del.).

(b)     CCE v. Malbro Appliances P. Ltd. - (Del.) =  (Del.).

8. The Revenue also has filed an appeal against the impugned order of the Commissioner. The grounds of appeal of the Revenue are as follows :-

(A)    The findings of the Adjudicating Authority that Department has not adduced convincing evidences to allege undervaluation in respect of all clearances other than those made to 11 customers from whom statements have been recorded is not correct to the facts and circumstances of the case.

(B)    In Para 83, adjudicating authority remarked that no evidence has been adduced by the Dept. to prove that M/s. CERA Boards have shown lesser price in the invoices issued to all customers except eleven customers from whom private price lists were recovered. But contradicting this stand, the adjudicating authority has included three more dealers by stating that “I find that M/s. CERA Boards also have supplied goods to these dealers and Shri K.S. Mohammed Ali, Managing Director of M/s. Prestige Boards, who used to interact with the dealers of CERA Boards, is the brother of Shri K.S. Harris, Managing Partner of M/s. CERA Boards. In the circumstances I am sure that M/s. CERA Boards have also supplied goods to these dealers showing lesser amount in invoices and collecting differential amount over and above the invoiced price from them and evaded payment of duty. Therefore, while recalculating the differential duty payable by M/s. CERA Boards, the clearances made by M/s. CERA Boards to these three dealers also are taken into account.” In such case the same stand should have been taken with regard to all other dealers. Just because dealer is related to M/s. CERA the duty was confirmed.

(C)    The adjudicating authority in Para 87 cited Hon’ble Supreme Court case of Collector of Customs, Madras v. D. Bhoormull [ (S.C.) = AIR 1974 SC 859] wherein it was held that the department is not required to prove its case with mathematical precision and all that it requires is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the fact in issue, thus, legal proof is not necessarily perfect proof. The adjudicating authority also cited CEGAT case of Rajasthan Foam Ltd. v. CCE, Jaipur - (Tribunal).

(D)    CEGAT in a case (Bom.) held that price under Section 2(10) of the Sale of Goods Act, means money consideration for the sale of goods. CEGAT in a case (Tribunal) also held that additional consideration quantified in terms of money value flowing directly or indirectly from the buyer in any form to be added to the declared price for determining normal price. Hence the stand taken in Para 83 is contradictory to the settled case laws cited in Para 87 of the adjudication order.

(E)    However, the contention of the adjudicating authority in Para 101 to treat sale price as cum-duty price is inconsonance with the settled law in CEGAT case of Srichakra Tyres - (T) and by Hon’ble Supreme Court in Collector v. Electrolux Kelvinator Ltd. -2004 (165) E.L.T. A175 (S.C.).

9. Shri P.R.V. Ramanan, the learned Special Counsel, appeared on behalf of the Revenue. He made the following submissions. He had also filed written submissions and case-laws. The gist of his submissions is as follows :-

9.1 Shri Ramanan referred to the documentary evidence lent by the department in the Show Cause Notice. The list of the documents had already been given elsewhere in this order. Hence, we do not want to repeat. Further, Shri Ramanan stated that several employees of M/s. CERA, Bangalore Office and customers of CERA had given clear statements with regard to the undervaluation and they had not at all retracted. Even when retracted, they were withdrawn. At no point of time, any threat or duress was alleged. Shri K.S. Harris, in his statements dated 24-3-03, 30-9-03 and 28-11-03, had never denied the collection of cash over and above the prices indicated on the invoice. In fact, he admits that such cash is not reflected in the books of account. It is pertinent to note that in their statements S/Shri Dayananadan, Cyril D’Souza and T.R. Bhaskar, all employees of CERA, at the Bangalore office have unanimously observed that the records in question reflected sales transaction of CERA from their Bangalore office. The employees explained the entries made in these books and records, which clearly established the practice adopted by CERA, of collecting additional consideration over and above the invoice prices. The statements of each corroborated the records, documents maintained by others and their correctness and the veracity. None of them contradicted the others. The remittances of cash collections to the top management through Shri Xavier or Shri M.P. Narayanan have also been uniformly confirmed by these three employees, referring to the relevant entries in the aforesaid private records. Many of the dealers have also averred that the said two persons used to visit them and collect the cash payments in excess of the invoice prices, sometimes along with payments in cheque of amounts mentioned in the invoices. Therefore, in sum, as revealed by the documentary evidence, which has been fully corroborated by the employees of CERA, it is seen that with respect to more than 130 dealers in Karnataka, certain amounts over and above the invoice prices were being systematically collected during the period covered in Show Cause Notice. In addition, 11 dealers had admitted the fact of payment made in cash over and above the prices shown on the invoices raised by CERA. The dealers covered thus, numbering more than 140, are from the States of Karnataka, Kerala and Tamil Nadu. Some of the statements of the aforesaid 11 dealers were retracted only at the time of cross-examination during the process of adjudication i.e. more than two years after the issue of the Show Cause Notice, and rightly the adjudicating authority has rejected the retractions as an afterthought. Further, the records recovered from the premises of two dealers namely M/s. Naveen Glass and Plywoods and M/s. Standard Plywoods corroborated the statements of their authorized representatives and confirmed by Shri T.R. Bhaskar in his statement dated 20-3-2003. All these clearly established the fact of undervaluation.

9.2 Shri Ramanan emphasized that investigations were conducted in respect of 4 manufacturing units viz. M/s. CERA Boards, M/s. Prestige Boards Pvt. Ltd.; M/s. Noble Ply and M/s. Hero Ply around the same time and the facts revealed strongly point to the fact that the operations of CERA and other 3 units were combined and fully unified. He stated the, following grounds :-

(a)     The 4 units belong to the same family members.

(b)     The products manufactured by these units were of identical specifications.

(c)     Employees like Mr. Xavier and Mr. M.P. Narayanan were acting on behalf of all the units.

(d)    The brothers in the family too interacted with dealers of any of the Group units and took purchase orders for more than one unit.

Therefore, out of the dealers, whose statements were recorded in the case of M/s. Prestige, 10 were common with that of the case of CERA and 3 were common with that of the case of Noble/Hero. The prices shown on the invoices and the actual prices recovered are closely approximate or same for all the four units. In view of the above points, the operations of the units should, for the purposes of marketing, pricing, invoicing and collection, be regarded as unified operations.

9.3 Shri Ramanan stated that the investigations revealed that the under invoicing and collection of cash over and above the invoice values appears to be a uniform practice and there is enough justification for applying in respect of all the clearances of the unit for the past 5 years. He stated that the correct application of the principle of ‘preponderance of probability’ has considerable significance for the present appeals. The facts and circumstances of the present 4 cases involving evasion of duty through undervaluation, following the same modus operandi, calls for an unified view. Moreover, “preponderance of evidence” is the standard required in most civil cases. The standard is met if the proposition is more likely to be true than not true. Effectively, the standard is satisfied if there is greater than 50% chance that the proposition is true. Lord Denning in Miller v. Minister of Pensions described it simply as “more probable than not”. Effectively, the standard is satisfied if there is more than 50% chance that the proposition is true. He quoted P. Ramanath Aiyar’s Advanced Law Lexicon, 3rd Edition, page 3688, “By preponderance of evidence is not meant a preponderance in point of numbers of witnesses, but a preponderance of facts and circumstances that are convincing to the jury.” He relied on the decision of 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. It is thus well settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal. It is open to the authorities to receive and place on record all the necessary facts though not proved strictly in conformity with the Evidence Act. The evidence must be germane and relevant to the facts in issue. In grave cases like forgery, fraud, conspiracy, misappropriation, etc., seldom direct evidence would be available. Only the circumstantial evidence would furnish the proof. ........ There must be evidence direct or circumstantial to deduce necessary inferences in proof of the facts in issue. There can be no inferences unless there are objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish.......... The standard of proof is not proof beyond reasonable doubt ‘but’ the preponderance of probabilities tending to draw an inference that the fact must be more probable. Standard of proof cannot be put in a strait jacket formula. No mathematical formula could be laid on degree of proof. The probative value could be gauged from facts and circumstances in a given case. The standard of proof is the same both in civil cases and domestic enquiries”.

9.4 In the case of D. Bhoormull, the Apex Court has stated that the law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on that basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof, often it is nothing more than a prudent man’s estimate as to the probabilities of the case. He relied on the following decisions :-

(a)     Shah Guman v. State of Andhra Pradesh - (S.C.).

(b)     Manilal Bhanabhai Patel v. UOI - (Guj.).

9.5 Further, he relied on the decision of the Hon’ble Allahabad High Court in Rishi Kesh Singh v. The State (AIR 1970 All. 51 at 90), wherein it is held” that ‘preponderance of probability’ means ‘outweighing in the process of balancing however slight may be the tilt of the balance or the preponderance’. Further, he relied on the decision of this Bench in the case of Gulabchand Silk Mills Pvt. Ltd. v. CCE, Hyderabad-II - (Tri.-Bang.) wherein it was observed that ‘clandestine activity can at best be established only by circumstantial evidence and it would be humanly impossible to establish every link in the chain of clandestine activity without any break’. As in the said case, in the present cases, incriminating documents/records have been supported by admissions by the employees of the Group and a few dealers, though not all. The expectation that all dealers, who are actually partners in clandestine activity, would have made similar admissions might not fructify simply because they would have apprehended trouble with tax authorities if they did so. The non-recording of the statements of each of the dealers is, therefore, not a sufficient ground for not accepting the view point of the Revenue.

9.6 Shri Ramanan stated that with regard to the question whether in the absence of admissions by all dealers, the liability can be fastened on all the clearances effected by the appellants or not and whether ‘extrapolation’ on the basis of some instances would be proper or not, he stated the following grounds:-

(i)      The unified operations of the four firms of the Group clearly indicate concerted clandestine activity involving large scale undervaluation.

(ii)    The documentary evidence, supported by the statements of some dealers and the concerned employees, proves that the facts sought to be established were true and most probable.

(iii)   Once it is accepted that duty evasion on account of undervaluation is substantially more likely to be true and probable, the allegations stand proved in toto.

(iv)   It was also stated that whether the units belonging to the same Group would have adopted a different pricing method for some units alone at the cost of receiving less than ¹/₃rd of the total sale value or losing business by charging such widely different prices. He brought to our notice that as per documentary evidence, clearances to more than 132 dealers were found to be undervalued and for the Group as a whole, statements recorded of more than 30 dealers revealed that the practice of recovery of additional consideration over and above the invoice price was uniform and universal and not selective.

9.7 The Central Excise and Customs Officers are not Police Officers and the statements recorded by them, even if confessional in nature, are admissible as evidence. In Surjeet Singh Chhabra v. UOI - (S.C.), the Apex Court has ruled that a confessional statement made before a Customs Officer, though retracted within six days, is an admission and binding.

9.8 With regard to the duty demands in respect of clearances made before 1-7-2000, Shri Ramanan said that when a normal price is available, indeed, there is no warrant to apply a different price in respect of transactions with the dealers. However, he stated that in the present case, it cannot be said that the price at which the goods were sold to the dealers were the normal price. In this case, there is an additional consideration also by way of cash. One cannot say that normal price existed. The amounts recovered by CERA over and above the invoice prices, should be regarded as additional consideration and should be added to the invoice price to arrive at the sale price and determination of value done in terms of the Valuation Rules that existed prior to 1-7-2000. He rejected the argument advanced by the appellant saying that it is devoid of any merit. The normal price can be accepted only when such price is the sole consideration of sale. In this case, it is true that it is not the sole consideration.

9.9 Similarly, in respect of the clearances after 1-7-2000 also, the ‘Transaction Value’ should be arrived at only after adding the extra amount received in cash to the invoice value. Therefore, it is fallacious to argue that a transaction value existed at the factory gate for the goods cleared after 1-7-2000 from the CERA since evidences adduced have clearly established that it was incumbent on dealers/customers, who purchased goods from these units to pay substantial part of the actual sale realization by cash over and above the prices indicated on the invoices for each sale. Hence, by no stretch of imagination, it can be said that there existed a transaction value in terms of Section 4(1)(a) at the time and place of removal, in respect of the clearances effected by the units and that the same, that is to say, the invoice price should have been applied for all clearances.

9.10 Shri Ramanan distinguished all the case-laws relied upon by the assessees. With regard to the Sharon Veneers, (supra), which has been relied on by the Commissioner also, Shri Ramanan stated that the evidence presented in the present case is far more detailed, strong and conclusive inasmuch as there are a number of slips, evidencing recovery of extra amounts, corroborated by corresponding entries in the collection books/ledgers maintained by the employees of the assessee, entries/cash statements showing cash remittances to the Head Office at Kannur through employees and others; the confirmatory statements of the employees from whom the said books were recovered and, also the statements from dealers, confirming extra payments made in cash, etc,. Therefore, he said that this case cannot be compared with the facts of the Sharon Veneers case.

9.11 As regards the Somany Pilkington case (cited supra), the department had recorded the statements of 62 dealers. Only 5 of them alleged extra payments made to Shri Vyas, a Sales Executive of the company. They also stated that the payments were made at the instance of Shri Vyas, who had admitted in this statement that he did not share the extra amount with anyone and the company was not aware of it. The facts are patently and totally different from the facts of the present case involving CERA and 3 other Plywood companies of the same Group. Therefore, in the present case, the seized records revealed on 95 occasions that the cash was remitted to the Head Office at Kannur through S/Shri Xavier, Narayanan, MD and others. The amount remitted thus for the said period was Rs. 95,79,096/-. The dealers too have taken the names of S/Shri Xavier, Narayanan as the representatives of the 4 firms, who collected the extra amounts. The argument that the employees involved had recovered the extra amounts on their own and appropriated the same never arose in the course of the proceedings.

9.12 In Alfa Ceramics, (cited supra), the evidence presented clearly established through documents and statements of the two distributors established in Madhya Pradesh that with reference to the transactions effected through the distributors, ‘Alfa’ had realized extra amounts in excess of the invoiced amounts. The tribunal accepted this argument of Revenue. But the Tribunal further held that ‘evidence gathered has convincingly established that part of the sale price from the MP distributors have been collected by cash. Such evidence is lacking in respect of dealers in other areas. In such a situation, evidence obtained in respect of sales to MP distributors cannot lead to the reasonable inference that similar was the case in respect of all sales in other areas also. In the present case, he stated that there is overwhelming evidence of the practice of undervaluation.

9.13 He further distinguished the facts of Malabar Plywood Works (cited supra) and Western Plywoods (cited supra) case also.

10. In view of the above submissions, Shri Ramanan requested the Bench that the appeals filed by M/s. CERA Boards & Doors and seven others should be rejected as devoid of any merit and that the appeal filed by the Revenue should be allowed to confirm the duty demand as set out in the Show Cause Notice issued to M/s. CERA Boards & Doors and others and summed up here.

11. We have gone through the enormous records connected with this case. The facts of this case have already been outlined elsewhere in the beginning of this order. Therefore, we feel that repetition can be avoided. Revenue has collected enormous documents to sustain the charges of under valuation or under invoicing in respect of the clearances made by M/s. CERA Boards & Doors, who are the main party in the appeals. The period involved in these appeals is from 1-12-1998 to 5-12-2002. The Show Cause Notice proposed confirmation of differential duty of Rs. 4,29,01,384/-. Penalties were also proposed. However, the Adjudicating Authority, after considering the evidences available on record, confined the demand of duty in respect of clearances made by 14 dealers only and confirmed a demand of Rs. 79,21,663/-. Equal penalty has been imposed. In these appeals, two Show Cause Notices are involved. One Show Cause Notice relates to the seizure of certain goods recovered from six premises. That issue had also been adjudicated. The goods had been held liable for confiscation. Therefore, redemption fine has been imposed in respect of those goods. Penalties have been imposed on the concerned persons. Anyhow, that is not the main issue in this appeal. The main issue relates to undervaluation.

11.1 Both Revenue and the party are agitated over the impugned order. According to the Revenue, the Commissioner should not have confined the demand only to 14 dealers. On the other hand, he ought to have confirmed the demand for all the clearances made by the assessee from 1-12-1998 to 5-12-2002. However, the assessee is aggrieved over the fact that when there is evidence only in respect of 11 dealers, Commissioner ought not to have confirmed the clearances to 14 dealers. This is one of the contentions of the assessee.

11.2 Now, coming to the various contentions put forth, we find that the learned Counsel for the assessees argued that the evidences available cannot conclusively establish under invoicing. He objected to the legality of the various documents, which have been seized, the statements which have been made, the retractions of the statements, etc. In any case, his point is, if at all the duty has to be confirmed, it should be confined only to 11 dealers.

11.3 Another important point, which the learned Advocate Shri Shiva Dass made was that the total clearances fell under two periods. The period prior to 1-7-2000 when the concept of ‘normal price’ was prevalent. After 1-7-2000, the concept of ‘Transaction Value’ has been imposed. Shri Shiva Dass argued that for all the clearances prior to 1-7-2000, only the normal price should be adopted. He stated even if excess collections had been made in few cases, that should be ignored and the normal price, which, according to him, is the invoice price or the factory gate price, should be adopted. This is his main point.

11.4 As regards the period after 1-7-2000, he stated that the transaction value has to be adopted. That means, you have to go only by the evidence and where there is no evidence, he stated that the duty cannot be demanded only on presumptions and assumptions.

11.5 As regards the allegation of under invoicing is concerned, we find that the investigation done is very extensive. They have confronted the officials of the assessee-company at their depot in Bangalore. They had also contacted certain dealers. They had collected a lot of incriminating documents. We do not want to list them again. They have elsewhere in this order, been enumerated. All these things have been discussed by the Commissioner in his order. Therefore, as far as the evidence for under-invoicing is concerned, we have to say that there is overwhelming evidence for under-invoicing. We cannot accept the learned Advocate’s contention that there is no under invoicing or corroboration and the entire demand is made on presumptions and assumptions. The depot officials themselves have accepted that cash in excess of the invoice value is being separately collected. In fact, according to the Revenue, 30% of the actual value only is mentioned in the invoice and the remaining 70% is collected as cash. This is the main charge. We cannot say that this charge is baseless because the dealers from whom statements have been recorded have accepted that excess cash is being collected. Therefore, one thing is very clear that the price mentioned in the invoice is not the correct price. There is evidence that the appellants had been collecting cash over and above the invoice price.

11.6 The next question is how to quantify the demand for the period from 1-12-1998 to 5-12-2002. According to the Revenue, in view of the overwhelming evidence for this practice of collecting approximately 70% of the real value of the goods by cash, for all the clearances during the said period, the value has to be enhanced and differential duty has to be collected in accordance with the Show Cause Notice.

11.7 The learned Special Counsel, Shri P.R.V. Ramanan, argued for adopting the concept of preponderance of probability. He cited from various decisions to buttress upon his point that in a case like this, it would be practically impossible to get evidence from each and every dealer and, therefore, the duty has to be demanded in respect of all the clearances. Of course, he had given very many reasons for rejecting the invoice value. For example, he staled that it cannot be said that in respect of a few dealers only, the assessee or the party charges a particular value and in respect of all the other dealers, they would be charging only ¹/₃ rd of that value. He stated that it is normally not possible to have such a huge price differential. Therefore, he stated that the probability principle should be adopted and demand should be confirmed. This is the essence of his argument and he distinguished all the case-laws relied on by the learned Advocate for the assessees. For example, there is the case of Sharon Veneers (cited supra). Shri, Ramanan had distinguished it on the ground that the facts and circumstances and the quality of evidence produced in the present case are entirely different from those in the case of Sharon Veneers. As regards the Somany Pilkington Ltd. (supra) case, there, one of the sales executive of the company Mr. Vyas was collecting some excess amount on his own behalf. In this case, there is no evidence that any person collected cash on his own behalf. So, this case-law also .cannot be applied here. He distinguished the other cases also.

11.8 Similarly, the learned Advocate for the assessees produced before us a large number of case-laws to show that the differential duty should be demanded only in respect of the clearances made to dealers, who have been investigated and who had given statement regarding excess collection. At this juncture, we would like to mention that we would not like to discuss each and every case-law, which has been cited by both sides because the fact in one case is not completely same or identical with the facts in the other case. The Hon’ble Supreme Court of India, in the case of CCE, Bangalore v. Srikumar Agencies - (S.C.) = (S.C.) = 2008-TIOL-220-SC-CX-LB, has stated in Para 5 that, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. They have also quoted the words of Lord Denning in this, which is as follows :

“Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.”

Therefore, we are keeping the above observation in mind while deciding the case. We are reiterating that the cases relied on by both the sides cannot be applied in their entirety to these appeals, as then facts are different.

11.9 The whole issue relates to undervaluation. In terms of the Central Excise law, which existed prior to 1-7-2000, normal price concept was prevalent. That means duty has to be paid on the normal price. Conceptually, the normal price is a notional price. It need not be the actual price. However, there are methods of determining the normal price in accordance with the Central Excise law. The learned Advocate for the party Shri Shiva Dass stated that in respect of all the clearances made before 1-7-2000, a factory gate price exists and this factory gate price is the normal price and, therefore, the same should be adopted in spite of the fact that in certain cases, excess collection had been made. We agree with Shri Shiva Dass to the extent that prior to 1-7-2000, the concept of normal price should be adopted in assessing the goods to duty. In the present case, there have been evidences that the assessee had collected cash over and above the invoice prices. Even in respect of clearances prior to 1-7-2000, the evidences are available. We have seen the working sheet with regard to the calculation of differential duty. Therefore, as far as the clearances prior to 1-7-2000 are concerned, the duty should be decided on the basis of the normal price. What is normal price? During the relevant period, Section 4(1)(a) read as follows :

“(4)(1)(a) : the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale.”

11.10 We are of the view that the normal price in respect of the clearances prior to 1-7-2000 should be determined by the Commissioner on the basis of the available evidence in accordance with law. Once the normal price in respect of each variety of goods is decided, then that value should be adopted for calculation of duty. Once that is done, the differential duty can be calculated. Therefore, this cannot be done at the level of the Tribunal. All the evidences have to be examined. We make it clear that on the basis of the available evidence, the normal price should be decided by the Commissioner in respect of the goods cleared during the relevant period. Once that is done, that would be applicable to all clearances. We want to reiterate that even by the party’s own submission, the normal price would be applicable to all the clearances made prior to 1-7-2000. Therefore, we have to remand the matter to the Commissioner for deciding the normal price in respect of each type of goods cleared by the party during the relevant period and compute the differential duty. Needless to say that the normal price would be arrived at in accordance with the law, which prevailed at that time.

11.12 As regards the period after 1-7-2000 for valuation, the concept of ‘transaction value’ has been introduced. In the concept of transaction value, each transaction is important. Therefore, the transaction value is to be determined for the clearances after 1-7-2000. As far as the period after 1-7-2000 is concerned, the value for assessable purpose is the transaction value. The transaction value is the value for each transaction. The concept of transaction value is entirely different from the concept of normal value. While the normal value can be notional, the transaction value is the actual amount transacted in respect of the goods. Of course, under certain circumstances, the transaction value has to be determined in accordance with the Rules. Anyhow, we would not go into that. Suffice it to say that for all the clearances after 1-7-2000, the value has to be determined based on each-transaction. Therefore, the differential duty should be confined only to the evidences available on record. These are our two observations. Therefore, the Revenue’s contention that uniformly for all the clearances, 70% should be added to the invoice value is not accepted. We reiterate our finding to say that for the period prior to 1-7-2000, the Commissioner has to decide’ the normal price for each variety of goods and he can adopt the same for all the clearances. It does not mean that the invoice value has to be accepted. The normal price has to be determined based on the evidence available.

11.13 As regards the period after 1-7-2000, the Commissioner has to go strictly by the transaction value and decide the short levy. After deciding the differential duty leviable on the basis of the above principles, the Commissioner can determine the quantum of penalty, etc.

11.14 With regard to the Show Cause Notice proposing confiscation of seized goods, the Commissioner, in the impugned order in Para 106, has held that the goods seized from (1) M/s. CERA Boards & Doors, Bangalore; (2) M/s. Ply Home, Coimbatore; (3) M/s. Gee Ply, Tamil Nadu; (4) M/s. Decowood Interiors, Kerala; (5) M/s. Arihant Marketing, Coimbatore; and (6) M/s. Krishna Agencies, Tamil Nadu are liable for confiscation. His findings are based on the fact that the documents seized from the Depot of M/s. CERA Boards, residences of their employees and from the premises of their dealers were corroborated by the statements of the persons concerned revealed undervaluation by showing lesser price, namely 30% of the actual price in invoice and collecting amount over and above the invoice price. In view of the overwhelming evidence, we confirm the findings of the Commissioner that the above dealers are liable for penalty under Rule 209A of the erstwhile Central Excise Rules, 1944/Rule 26 of the erstwhile Central Excise (No. 2) Rules, 2001/Rule 26 of the Central Excise Rules, 2002. He had imposed redemption fine in respect of each of these items. He had also imposed penalties on these parties. We uphold the penalties imposed on these six dealers from whom goods have been seized. The confiscation and redemption fine is also upheld, as the Commissioner has justified them.

11.15 As regards the penalties on other persons, Shri K.S. Harris and Shri T.R. Bhaskar, the same can be decided after re-computing the duty liability as decided by us.

11.16 As regards the Revenue’s appeal, we are of the view that it would not be correct to confirm the entire demand as such on the basis of overwhelming probability. We have already stated that the case-laws relied on by both sides cannot be applied in entirety to the present appeals. Even taking into account the submission of the assessees, we have ordered re-computation of the duty liability for the two periods viz. (i) before 1-7-2000 and (ii) after 1-7-2000 in accordance with Section 4 prevailing during the said period. Therefore, we partially allow the Revenue’s appeal in terms of the remand directions.

12. Summing up, the appeals are disposed of in the following manner :-

(Pronounced in open court on 24-3-2009)