PLAMA BOARDS PVT. LTD. Vs. CCE, MANGALORE

JUDGEMENT

(1.) M /s. Plama Boards Pvt. Ltd., Baikampady Industrial Area, Mangalore (PBPL for short) are engaged in the manufacture and clearance of plywood and block boards falling under Chapter 44 of the Central Excise Tariff. Following receipt of intelligence to the effect that PBPL were engaged in undervaluing excisable goods manufactured and cleared by it and availed inadmissible SSI exemption, investigation was taken up by the Directorate General of Central Excise Intelligence (DGCEI), Bangalore. During investigation, statements were recorded from Shri PMA Razak, MD, PBPL, employees of the assessee and its various dealers. Incriminating documents were also recovered from the employees and the premises of the dealers. The dealers of PBPL admitted paying around 75% of the sale price of plywood purchased from PBPL in cash and balance as per sale invoices. A pocket planner (diary) recovered from Shri. Ashraf, Accountant, PBPL contained entries showing much higher sale price of commercial plywood compared to those declared in the sale invoices for such varieties of commercial plywood. The diary also showed higher salaries for the employees of PBPL for the month of March, 2004 compared to the accounted salaries paid to the employees. In his statement recorded under the Section 14 of the Central Excise Act, 1944 (the Act), the Managing Director admitted irregularities in the rates shown in the invoices as compared to the actual values collected. PBPL made payment of Rs. 5 lakhs during investigation. In his statement Shri Ashraf stated that the sale invoices showed only 25% of the actual prices collected and the balance was collected from the customers in cash. The unaccounted payments towards salary of employees of PBPL were made from the excess amounts recovered from its buyers. The authorities came to a tentative conclusion that PBPL had willfully evaded payment of full duty due on clearances of commercial plywood made by it during the period 1 -10 -2000 to 28 -4 -2004. A show cause notice was issued on 22 -11 -2005 to PBPL proposing to recover duty evaded along with applicable interest. A show cause notice was issued to Shri PMA Razak, MD, PBPL proposing to penalize him under Rule 209A of the Central Excise Rules, 1944/Rule 26 of Central Excise Rules 2001/2002. The notice issued to PBPL also proposed to penalize the assessee under Section 11AC of the Act and 173Q of Central Excise Rules, 1944 and Rule 25 of Central Excise Rues, 2001/2002. The proposals were contested by the assessee and its MD. It was argued that the case was built on statements recorded from third parties. The appellants examined the witnesses during adjudication when they retracted their initial depositions implicating the assessee in undervaluation. It was argued that in the absence of evidence, the allegations could not be sustained. After due process of law, the Commissioner found that the charges against the appellants were established. Accordingly, he passed the impugned order demanding differential duty of Rs. 1,37,81,152/ -, applicable interest and imposing penalty of equal amount as the duty demanded, under Section 11AC of the Act. He imposed a penalty of Rs. 1 lakh on PBPL under Rule 173Q / Rule 25 of Central Excise Rules, 2001/2002. He also imposed a penalty of Rs. 10 lakhs on Shri PMA Razak and Rs. 10 lakhs on PBPL u/r 209 of Central Excise Rules, 1944/Rule 26 of Central Excise Rules, 2001/2002.

(2.) APPEAL No. E/893/06 and E/894/06 filed by PBPL and Shri PMA Razak respectively challenge the demand and penalty on the assessee and penalty on the MD, PBPL. Appeal No. E/152/07 filed by the Revenue seeks to enhance the demand by treating the suppressed value as 75% in respect of all the dealers instead of reckoning the suppressed value as 75% only in the case of one of the dealers M/s. Shree Shyam Plywoods. Commissioner had treated the suppressed value to be 70% in respect of other dealers.

(3.) IN the appeal filed by PBPL, the following grounds have been raised : -