ORDER
C.N.B. Nair, Member (T)
1. These appeals are by the Commissioner. They relate to allowing of appeals of the respondent against findings of excess stock in the godown, non-maintenance of production accounts correctly and undervaluation of goods seized from the Depot of one of their buyers namely M/s. DPC.
2. Excess stock involved was 942 Kgs. and accounted stock was 2,31,083 Kgs. With regard to the excess, the Commissioner (Appeals) who allowed the appeal, found that the excess was in the range 0.004%. With regard to valuation, the evidence addused by the Revenue was that a dealer at Coimbatore and Ahmedabad had given statements during investigations that they had made certain cash payments for paper purchased by them over and above the invoiced prices. The Commissioner (Appeals) found with regard to these goods that there were no particulars in the statements or in the show cause notice as to which varities of paper were subject of such cash payment. The goods which had been seized from the godown of DPC had also not been sorted by the Revenue Authorities as to what were the varieties of the goods under seizure and what would be their correct value. Instead, an average price has been applied to goods. On these findings, the Commissioner (Appeals) held in favour of the assessee.
3. The grievance made in the present appeals is that once excess goods were found in the stock they were liable to confiscation and the order setting aside the confiscation is not correct or legal. The appeal also contends that the respondent was violating Central Excise Rules by not entering their daily productions in the RG 1 Register. With regard to valuation, the appeal contends that once evidence regarding cash payments was available, the original clearance price from the factory could not be treated as correct and the differential duty demand of over Rs. 3 Lakhs should have been confirmed.
4. It has been submitted on behalf of the respondents that the allegation of failure to account the goods in the RG 1 Register is not correct at all. The goods could be entered only after they are packed and weighed. The goods found not entered in the RG 1 Register had not been packed or weighed. Therefore, they had not reached the stage of entry in the RG 1 Register. With regard to the excess of about 942 Kgs. the respondent explained that the excess was not ascertained after proper weighment. It was only the result of estimation. The excess was so negligible that it could be merely the result of error in estimation. With regard to valuation, the respondents contention is that the goods seized from M/s. D.P.C. was partly the produce and supply of the respondent and partly of Deep Shikha Paper Mart who are another dealer in paper. The duty demand attributable to the respondent’s supplies was only about Rs. 1.91 Lakhs in the total demand of about Rs. 3 Lakhs. They submit that even this demand is not justified or is based on any evidence. M/s. DPC are only one of the buyers of paper & paper products sold by them to several dealers at the same price. The paper under seizure had not been sorted according to varieties. No effort had been made by the investigating authorities to show what was the undervaluation involved in respect of each variety. Alleged evidence about cash payment by dealers in Gujarat and Tamil Nadu was also not relevant to the allegation in respect of goods seized from M/s. DPC, as no evidence about undervaluing the goods sold to M/s. DPC had came up during the investigations. The respondents had sought cross examination of the dealers at both the places but the same was refused on the ground that the evidence of these people “is not pertinent to the instant show cause notice”, as the show cause notice pertained only to seizure of excisable goods, shortages in stock etc.
5. We have considered the rival submissions. With regard to the charge of failure to account the goods in the RG 1 Register and excess stock we find that the findings of the Commissioner (Appeals) cannot be faulted at all. The goods had not been weighed and packed. Therefore, the appellant could not have known the quantity for entering in the RG 1 Register. The excess stock found is so negligible that with regard to a commodity like paper, one could hardly be sure that there was an excess. The difference could be on account error in stock verification. Therefore, the grievance made in the present appeal has no basis at all. In respect of valuation of the goods under seizure from the godown of M/s. DPC also, it is to be noted that M/s. DPC was only one of the buyers of the respondent’s goods. Even though some indicative evidence was gathered from the dealer of Tamil Nadu and Gujarat that cash payments were taking place for the sale of paper and paper products, the Revenue had not investigated the matter in depth so as to ascertain whether the respondent had a practice of undervaluing paper and paper products manufactured by them, invoicing only part of the products and collecting part of the price in cash. No evidence had been brought on record that the sales to M/s. DPC were made at lower prices. This is particularly relevant as M/s. DPC was only one of the several buyers of the respondent’s products. No demand is also found to have been raised in respect of the clearance to other buyers. The Commissioner (Appeals), therefore, is correct in pointing out that no correlation has been made between the alleged cash payments and the goods under seizure and that the goods had not been sorted according to variety so that the prices mentioned in the price lists relied upon by revenue could be applied to the seized goods. In these circumstances, the Commissioner (Appeals) was correct in holding that the investigation had not established the case. Therefore, we are of the opinion that he could not be faulted for droping the demand on the ground of under-valuation. The appeal fails and is dismissed.