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Judgment
In the present case, show cause notice was issued by the Assistant Commissioner, Excise to the Respondent No. 1 on two grounds, namely, (i) there was clandestine removal of goods to avoid excise duty and (ii) the value of the goods which were removed was shown much lesser than the price at which those goods were sold to the customers and in this manner it was undervalued resulting into lesser payment of excise duty.
The adjudicating authority by its final order dated 09.05.2000 confirmed the demand of Rs. 12,71,177/- for clandestine removal of goods and a sum of Rs. 10,88,498/- on account of undervaluation. The Commissioner also imposed a penalty of Rs. 25,00,000/- on Respondent No. 1 Under Rule 173Q (1) of the Central Excise Rules.
However, a penalty in the sum of Rs. 2,50,000/- was imposed on Respondent No. 2 to 7 Under Rule 209A of the said Rules. The Commissioner also ordered for confiscation of land, building, plant and machinery of the Respondent No. 1 Under Rule 173Q (2) of the Rules with an option to redeem the same on payment of redemption fine of Rs. 5,00,000/-. This order-in-original passed by the Commissioner was challenged in appeal before the CESTAT. The CESTAT by the impugned order dated 04.03.2005 has allowed both the appeals filed by the Respondent No. 1 and the appeal filed by the Revenue was dismissed. This is how the Revenue is before this Court by way of these appeals challenging the correctness of the order passed by the CESTAT.
Insofar as the issue of clandestine removal of goods by Respondent No. 1 is concerned, we find that on the statement of Respondent No. 5 given earlier, the adjudicating authority had dropped the proceedings accepting the explanation furnished. In view thereof, the CESTAT has held that there could not have been second show cause notice on the same cause of action. In this behalf we do not find any error in the order passed by the CESTAT.
Coming to the issue of under-valuation, the order of the CESTAT has given the reasons for setting aside the order of the adjudicating authority stating that the adjudicating authority has not recorded any findings or discussed any evidence in support of the confirmation of demand. Mr. Arjit Prasad, learned Counsel appearing for the Appellants has taken us through the order passed by the adjudicating authority on the aforesaid issue. Following discussion is contained in the order of the adjudicating authority:
The second issue for determination before me is of under valuation of goods by M/s. PGL. I agree with the version of department in Order-in-Original passed by brother commissioner K.D. Tayal. Since nothing has been said in defence by the party about under valuation of goods. In view of the evidences discussed in the show notice, I find that M/s. PGL have recovered more net price, and hence, I confirm the demand of excise duty, on account of under valuation of excisable goods.
It is clear from the above that the adjudicating authority had studied not only the evidence but also discussed the same in the show cause notice. He found that even when those particulars and materials which are against the Respondent No. 1 as disclosed in the show cause notice, the Respondent No. 1 said nothing in defence. This is precisely the reason given by the adjudicating authority in confirming the demand. Thus, we do not agree with the findings of the CESTAT that adjudicating authority has not given any reasons or discussed the evidence. When there was no repetition of the material and the evidence mentioned in the show cause notice by the Respondent No. 1 it was not necessary to discuss the same on that account and this course was adopted by the adjudicating authority, and rightly so, to avoid repetition. Thus, insofar as the issue of under-valuation is concerned, we find substance in these appeals and to that extent order of the CESTAT is contrary to law and is accordingly set aside. The demand which was made and confirmed by the adjudicating authority in its order-in-original in respect of under-valuation is dismissed.
These appeals are allowed to the extent indicated above.