ORDER
Jeet Ram Kait, Member (T)
1. Appeal Nos. E/3118 to 3123/MAS filed by the assessees and Appeal Nos. E/1578, E/1579 & E/1580/1999/MAS filed by the Revenue arise from Order-in-Original No. 8/98 dated 12-8-98 passed by the Commissioner of Central Excise, Madurai and Appeal Nos. E/1027 & 1028/1999 filed by the Revenue arise from Order-in-Original No. 2/98 dated 13-2-98 passed by Commissioner of Central Excise, Madurai-2.
2. The assessee-appellants in Appeal Nos. E/3318 to 3123/1998 are aggrieved by the order of the Commissioner against demand of duty and imposition of penalty while the Revenue in their appeal Nos. E/1578 to E/1580/1999 & E/1027 & 1028/1999 is aggrieved by both the orders of the Commissioner restricting the duty demanded from the assessees as also in not imposing penalty under Section 11AC of the CE Act, 1944.
3. The facts and the issue involved in all these cases are same and are therefore taken up for decision by this common order. Assessees are engaged in the manufacture of Fireworks. On the basis of intelligence gathered, the Central Excise officers visited the premises of the appellants and studied the data stored in the computers and they have taken print out of the same and it was seen that the value shown in the invoices was less than the value found in the corresponding purchase orders. Accordingly investigations were conducted by contacting various dealers situated in various places and it was revealed that there was difference between the value as shown in the purchase order and the invoiced price, and hence the party has allegedly suppressed the fact with regard to the actual value received by the assessees. Substantial amounts deposited in the personal SB accounts of the partners were also noticed. One of the sales representatives viz. Padmanabhan who was acting as collecting agent for the assessees also allegedly admitted that he had periodically remitted the balance amounts by way of cash to the partners. It was in these circumstances show cause notices were issued to all the parties which culminated in the orders of adjudication passed by the adjudicating authority whereby the value as shown in the show cause notice was adopted as the assessable value. Aggrieved by the said orders, the assessees preferred appeals before the Tribunal and the Tribunal vide order Nos. 2574 to 2580/97 dated 23-7-97 and 716 to 721/98 dated 30-3-98 remanded the matters back to the original authority viz. Commissioner with the observations that no enquiry appears to have been made with all the dealers as to whether they have paid any amount more than what was invoiced. It was also observed by the Tribunal in the remand order that the details with regard to the enquiry, if any, made with the other dealers and as to how the additional considerations, if at all, have been collected and remitted to the assessees, have not been brought in the order of adjudication. On remand, the matter was re-adjudicated by the Com missioner. In the adjudication orders passed afresh vide orders in original viz. 2/98 dated 13-2-1998 and 8/98 dated 12-8-1998, the Commissioner has clearly recorded that enquiry has not been made so as to cover all the dealers who have placed purchase orders on the fireworks factories and on the basis of which the difference between the invoice price and the purchase order price has been arrived at. It is also stated in the order-in-original No. 2/98 dated 13-2-1998 that the department had sent summons to about 13 persons and all of them had uniformly stated that they had not paid any extra amount than what was mentioned in the invoice. Therefore, based on the enquiry made with dealers who had been contacted and based on the evidence collected with regard to deposits of money made into the personal accounts the Adjudicating authority re-worked out the demand of duty and imposed penalties of varying amounts under Rule 173Q of the CE Rules, 1944 vide two orders of adjudication. In the de novo proceedings, the Commissioner has not imposed any mandatory penalty under Section 11AC. De novo adjudication order No. 8/98 dated 12-8-98 is challenged by the assessee as well as by the Revenue, while adjudication order No. 2/98 dated 13-2-98 is challenged by the Revenue.
4. The Revenue has filed the appeals against the de novo orders, on the directions of the Board, on the ground that the Commissioner ought to have appreciated the totality of the direct and corroborative evidence available on record and confirmed the duty in entirety and imposed penalty on the assessees under Section 11AC also. The assessees’ challenge against the de novo proceedings is on the ground that there was no corroborative evidence that extra considerations have been received by them, and that there was also absence of cross-examination of persons who had given affidavits and hence the demand should be set aside. This is the second round of litigation before the Tribunal.
5. Learned Counsels representing the assessees have reiterated the grounds of appeal and submitted that the de novo orders have been passed without any corroborative documents to support the allegation of the department. Further, there was absence of cross-examination also of the persons who had given affidavits and the present orders are based on assumptions. They, therefore, prayed for setting aside the impugned orders.
6. Smt. R. Bhagyadevi, learned SDR assisted by Shri A. Jayachandran, JDR referred to the grounds of appeal and submitted that the assessees had invoiced the goods at a price lesser than the price agreed for in the purchase orders and thereby they have evaded payment of duty. About 15 dealers have been contacted and statements were recorded and in their a voluntary statements, they have admitted that the difference amount between the purchase orders and the invoice price has been reimbursed to the assessees. It was contended that the demand originally raised should have been confirmed in entirety based on the evidence such as computer printed bills, statement of the salesmen, payment of the difference amount by means of DD to the accounts of the partners of the assessees. They have also invited our attention to the decision of the Tribunal in the case of Pargat Singh v. CC & CE reported in 1993 (64) E.L.T. 463 wherein it was held that statements of the party concerned during the time of seizure is admissible as evidence even though it may be retracted subsequently. The have also referred to the judgment of the Hon’ble Supreme Court in the case of CC, Madras v. D. Bhoormull reported in AIR 1974 SC 859 to contend that the department is not required to establish the case with mathematical precision.
7. We have carefully considered the submissions made by both the sides and gone through the case records. We note that in the de novo proceedings, the Commissioner has clearly stated that enquiry has not been carried out so as to cover all the dealers who have placed purchase orders on the Fireworks factories on the basis of which the difference between the invoice value and the purchase order price has been arrived at. On appreciation of the evidence, the Commissioner has clearly held that though there has been under valuation of the goods, evidence is only to a limited extent viz. the excess payment received as admitted by some of the dealers as well as DDs received and credited in the personal SB account of the partners. He has also held that so far as the remaining dealers who have not been investigated, benefit of doubt has been extended. Needless to mention that when evidence available is only to a limited extent, demand has to be restricted to that extent where it is supported by evidence and demand cannot be made where it cannot be supported by evidence. This is what exactly the Commissioner has done in the de novo proceedings. Allegation of suppression of fact and under-valuation has to be supported by acceptable and positive evidence on record. We note that the Tribunal in the case of Sharon Veneers v. CC, Chennai reported in 2002 (146) E.L.T. 655 has held that in a case where clearances were made to 49 dealers, the evidence collected from merely three dealers cannot be made applicable to other dealers in the absence of examination of the other dealers. In the present case, the adjudicating authority has clearly brought on record that all the dealers who had placed orders could not be investigated. Therefore, he has restricted the demand where investigation could be done and where there was corroborative evidence to support the allegation, by way of receipt of DDs showing the DD numbers and the amount. Therefore, the assessees also cannot be heard to say that the demand now confirmed is without the support of evidence. We, therefore, reject their plea. Going by the evidence on record which have been re-evaluated by the Commissioner and considering the totality of the facts and circumstances of the case, we are of the considered opinion that the orders of the Commissioner reflect application of mind. Therefore, no fault can be found with the de novo orders passed by Commissioner restricting the demand.
8. So far as the plea of the Revenue for imposing mandatory penalty under Section 11AC is concerned, the period in the present appeals is prior to the introduction of Section 11AC with effect from 28-9-96. It is well settled proposition of law that provisions of Section 11AC cannot be applied retrospectively. Therefore, the Commissioner was perfectly right in not imposing penalty under Section 11AC. In view of our discussion and finding above, and in the facts and circumstances of the case, we uphold the impugned order and confirm the demand of duty and imposition of penalty in terms of the impugned order in entirety. In the result, the appeals filed by the Revenue as well as those filed by the assessees are dismissed.