M/s. Zirconia Cera Tech Glazes, Mehsana v. The Dy.CIT, Mehsana Circle, Mehsana

ITA 376/AHD/2016 | 2007-2008
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 37620514 RSA 2016
Assessee PAN AAAFZ3640D
Bench Ahmedabad
Appeal Number ITA 376/AHD/2016
Duration Of Justice 1 year(s) 9 month(s) 13 day(s)
Appellant M/s. Zirconia Cera Tech Glazes, Mehsana
Respondent The Dy.CIT, Mehsana Circle, Mehsana
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags 376
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 30-11-2017
Assessment Year 2007-2008
Appeal Filed On 16-02-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE SHRIPRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD JUDICIAL MEMBER ./ I.T.A. NOS.376 & 377/AHD/2016 ( / ASSESSMENT YEARS: 2007-08 & 2008-09 RESPECTIVELY) ZIRCONIA CERA TECH GLAZES SURVEY NO.236 AT PALAJ MEHSANA - 383410 / VS. DCIT MEHSANA CIRCLE MEHSANA ./ ./ PAN/GIR NO. : AAAFZ 3640 D ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NOS.988 989 & 990/AHD/2016 ( / ASSESSMENT YEARS:2006-07 2007-08 & 2008-09 RESPECT IVELY) M/S. GROWMORE CERAMICS PVT. LTD. 591 KOTHA TAL : KALOL GANDHINAGAR - 382735 / VS. DCIT MEHSANA CIRCLE MEHSANA ./ ./ PAN/GIR NO. : AABCG 8742 P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI T. P. HEMANI A.R. / RESPONDENTBY : SHRI V.K. SINGH SR. D.R. / DATE OF HEARING 14/11/2017 !'# / DATE OF PRONOUNCEMENT 30/11/2017 $% / O R D E R PER MAHAVIR PRASAD JUDICIAL MEMBER : THESE FIVE APPEALS ARE BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINA GAR AHMEDABAD. TWO APPEALS IN CASE OF ZIRCONIA CERA TEC H GLAZES VIDE ORDER DATED 22/01/2016 FOR ASST. YEAR 2007-08 ANDDA TED 22/01/2016 FOR ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 2 - ASST. YEAR 2008-09. THREE APPEALS IN CASE OF GROWMO RE CERAMICS PVT. LTD. VIDE ORDERS DATED 11/03/2016FOR ASST. YEAR 200 6-07 14/03/2016 FOR ASST. YEAR 2007-08 AND 15/03/2016 FOR ASST. YEAR 20 08-09.SINCE ISSUES ARE COMMON IN BOTH THESE GROUPS AND SAME WERE HEARD TOGETHER SO THEY ARE BEING DISPOSED OFF BY WAY OF A COMMON ORDER FOR SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEALS OF M/S. ZIRCONIA C ERA TECH GIAZES IN ITA NO.376 & 377/AHD/2016 FOR ASST. YEARS 2007-08 & 2008-09. ASSESSEE HAS TAKEN FOLLOWING GROUNDS: 2.1 FOR ASST. YEAR 2007-08: 1. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FA CTS IN HOLDING THAT THE REASONS RECORDED BY THE ASSESSING OFFICER ARE PROPER AND THAT THE PROCEEDINGS U/S.147 OF THE ACT ARE VALID A ND THEREBY REJECTING THE APPELLANT'S GROUND AGAINST THE REASSE SSMENT PROCEEDINGS. 2. THE LEARNED C.I.T.(A) HAS FURTHER ERRED IN LAW A ND ON FACTS IN UPHOLDING THE ADDITION OF RS.88 03 348/- ON THE GRO UND OF ALLEGED UNDERVALUATION OF SALE AND OF RS.2 08 00 92 4/- BEING THE ESTIMATED G.P. ON ALLEGED CLANDESTINE REMOVAL OF GO ODS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED C.I.T.(A) OUGHT TO HAVE QUASHED THE PROCEED INGS U/S.147 OF THE ACT BEING INVALID AND OUGHT TO HAVE ANNULLED THE ASSESSMENT MADE IN PURSUANCE OF INVALID PROCEEDINGS AND OUGHT TO HAVE DELETED THE ADDITION OF RS.88 03 348/- AND 2 08 00 924/-. 4. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS U/S. 147 MAY BE QUASHED BEING ASSESSMENT MADE IN PURSUANCE THEREOF MAY BE ANNULLED AND THE ADDITION OF RS. 88 03 348/- AND RS . 2 08 00 924/- MAY BE DELETED. 5. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER OR AME ND ANY GROUND OF HEARING. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 3 - 2.2 FOR ASST. YEAR 2008-09: 1. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FA CTS IN HOLDING THAT THE REASONS RECORDED BY THE ASSESSING OFFICER ARE PROPER AND THAT THE PROCEEDINGS U/S.147 OF THE ACT ARE VALID A ND THEREBY REJECTING THE APPELLANT'S GROUND AGAINST THE REASSE SSMENT PROCEEDINGS. 2. THE LEARNED C.I.T.(A) HAS FURTHER ERRED IN LAW A ND ON FACTS IN UPHOLDING THE ADDITION OF RS.93 30 925/- ON THE GRO UND OF ALLEGED UNDERVALUATION OF SALE AND OF RS.2 53 46 16 3/- BEING THE ESTIMATED G.P. ON ALLEGED CLANDESTINE REMOVAL OF GO ODS AND WITHDRAWAL OF SET OFF OF LOSS OF RS.8 57 147/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED C.I.T.(A) OUGHT TO HAVE QUASHED THE PROCEED INGS U/S.147 OF THE ACT BEING INVALID AND OUGHT TO HAVE ANNULLED THE ASSESSMENT MADE IN PURSUANCE OF INVALID PROCEEDINGS AND OUGHT TO HAVE DELETED THE ADDITION OF RS.92 30 925/- AND 2 53 46 163/- AND ALLOWED SET OFF OF LOSS OF RS.8 57 147/-. 4. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS U/S. 147 MAY BE QUASHED BEING INVALID AND THE ASSESSMENT MADE IN PU RSUANCE THEREOF MAY BE ANNULLED AND THE ADDITION OF RS.92 3 0 925/- AND OF RS.2 53 46 163/- MAY BE DELETED. 5. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER OR AME ND ANY GROUND OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENG AGED IN BUSINESS OF CERAMIC TILES ETC. ASSESSEE HAS FILED RETURN OF INC OME ON 30/01/2007 DECLARING TOTAL INCOME AT NIL. ASSESSMENT U/S.143(3 ) OF THE ACT WAS MADE ON RETURN INCOME SO FILED ON 25/05/2009 DETER MINING TOTAL INCOME AT NIL. 4. ASSESSING OFFICER STATED THAT HE RECEIVED LETTER DTD.14/02/2013 FROM DY. DIRECTOR OF INCOME TAX(INV.) UNIT-II AHM EDABAD FORWARDING ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 4 - THE SHOW-CAUSE NOTICE ISSUED BY THE DIRECTORATE GEN ERAL OF CENTRAL EXCISE INTELLIGENCE AHMEDABAD(HERE-IN-AFTER CALLED IN SHORT DGCEI). 5. THE ASSESSING OFFICER NOTICED FROM SHOW-CAUSE NO TICE REGARDINGUNDER VALUATION RESULTING THE ESCAPEMENT O F INCOME FOR THE YEAR UNDER CONSIDERATION. ASSESSING OFFICER HAS MENTIONE D THAT BASED ON SHOW-CAUSE NOTICE HEREINAFTER CALLED (SCN) ISSUED BY DGCEI. THE ASSESSMENT WAS REOPENED U/S.147 OF THE ACT AND NOTI CE U/S.148 WAS ISSUED ON 21/03/2013. ASSESSEE CHALLENGED THE REOPE NING AND ASSESSMENT THEREOF BUT SAME WAS NOT ACCEPTED BY THE ASSESSING OFFICER. SAME WAS UPHELD BY THE CIT(A). AT THE OUTSET OF HEARING LD.A UTHORISED REPRESENTATIVE DID NOT PRESS ISSUE OF RE-OPENING. S O SAME IS DISMISSED US AS NOT PRESSED. 6. COMING TO THE FACTS OF THE CASE ON MERIT WE FIN D THAT ASSESSING OFFICER REFERRED TO THE ALLEGATIONS CONTAINED IN SH OW-CAUSE NOTICE ISSUED BY DGCEI AND CALLED UPON ASSESSEE TO EXPLAIN AS TO WHY ALLEGED UNDER VALUATION OF SALES AND ALLEGED VALUE OF CLANDESTINE PRODUCTION SHOULD NOT BE CONSIDERED FOR ADDITION IN COMPUTATION OF INCOME FOR YEAR UNDER CONSIDERATION. FOR THE SAKE OF CONVENIENCE THE CONT ENTS OF SAID NOTICE ARE REPRODUCED AS UNDER: 1. AN INVESTIGATION HAS BEEN CARRIED OUT BY DGCEI ZO NAL UNIT AHMEDABAD IN RESPECT OF UNDER-VALUATION AND CLANDES TINE MANUFACTURE/CLEARANCE OF CERAMIC GLAZE MIXTURE(FRIT ) BY MANUFACTURES OF FRIT IN GUJARAT. THE SHOW-CAUSE NOTICE (SCN) ISS UED BY THE OFFICE OF THE DGCEI HAS BEEN OBTAINED IN THE CASE OF M/S. ZIR CONIA CERA TECH GLAZES. AS PER THE SCN ISSUED BY THE DGCEI THE ASS ESSEEI.E M/S. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 5 - ZIRCONIA CERA TECH GLAZES HAD GLAZES HAD EVADED CEN TRAL EXCISE DUTY DURING THE PERIOD FROM 01/04/2006 TO 31/03/2007 BY WAY OF FOLLOWING ACTIVITIES. A. UNDERVALUATION (I.E. NOT DECLARING THE ACTUAL AS SESSABLE VALUE OF EXCISABLE GOODS MANUFACTURED) AND B. CLANDESTINE REMOVAL I.E. REMOVING THE FRIT MANUF ACTURED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUTY UNDER PARALLEL INVOICES. THE VALUE OF CLANDESTINELY CLEARED FRIT AS WELL AS THE DIFFERENTIAL VALUE OF UNDERVALUED FRITS OVER AND ABOVE THE VALU E DECLARED IN THE INVOICES WAS COLLECT BY M/S. ZIRCONIA CERA TEC H GLAZES FROM ITS BUYERS (DEALERS) IN CASH. AS PER THE SCN THE TOTAL AMOUNT OF CENTRAL EXCISE DUTY EVADED BY M/S. ZIRCON IA CERA TECH GLAZES DURING THE F.Y. 2006-07 TOWARDS UNDERVALUATI ON AND CLANDESTINE REMOVAL AS CALCULATED IN THE ANNEXURE C.1 AND C.2 OF SCN IS WORKED OUT AT RS.5 79 93 067/-. 2. ON VERIFICATION OF THE ABOVE DETAILS IT IS FOUND TH AT THE AMOUNT OF RS.5 79 93 067/- IS THE DIFFERENCE OF TOTAL ASSESSA BLE VALUE OF RS.3 60 10 500/- AS SHOWN BY THE ASSESSEE AND THE A SSESSABLE VALUE OF RS.9 49 75 427/- AS PER ACTUAL RATE AS WORKED OUT B Y EXCISE AUTHORITY. VIDE THIS OFFICE LETTER DATED 11/12/2013 YOU HAD BE EN SHOW-CAUSED AS WHY AMOUNT OF RS.5 79 93 067/- SHOULD NOT BE ADDED TO YOUR TOTAL INCOME TREATING THE SAME AS INCOME FROM UNDISCLOSED SOURCES. 3. YOU ARE ONCE AGAIN REQUESTED TO SHOW CAUSE AS TO WH Y AMOUNT OF RS.5 79 93 067/- SHOULD NOT BE ADDED TO YOUR TOTAL INCOME. 4. YOU ARE REQUESTED TO SUBMIT YOUR EXPLANATION AND AT TEND THE OFFICE OF THE UNDERSIGNED ON 21/02/2014 AT 11:00 AM. IF NO RE PLY IS FURNISHED OR REPLY FURNISHED IS FOUND UNSATISFACTORY/UNACCEPTABL E NECESSARY ADJUSTMENT/ADDITION WILL BE MADE WITH THE MATERIAL RECORD AVAILABLE TO THIS OFFICE AND ISSUE WILL BE DECIDED ON MERITS. 7. THE SAID SHOW-CAUSE NOTICE WAS REPLIED BY THE AS SESSEE AS UNDER: WITH REFERENCE TO THE ABOVE MENTION SUBJECT WE BEG TO STATE THAT THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI IS MERELY BAS ED ON ASSUMPTIONS ONLY AND THEY ARE NOT HOLDING ANY DOCUM ENTARY EVIDENCES ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 6 - TO SUPPORT THE DEMAND RAISED IN SCN. WE HAVE BRIEFL Y SUMMARIZED THE FACTS / CONTENTIONS AS SHOWN BELOW: I. THE DGCEI IN THE COURSE OF ITS INVESTIGATION AT THE COMPANY'S PREMISES COULD NOT FIND ANY MATERIAL/DOCUMENTS SHOW ING CLANDESTINE RECEIPT OF RAW MATERIAL OR PRODUCTION O R REMOVAL OF FRIT. II. THE DGCEI GOT HOLD OF 12 CUSTOMERS/BUYERS OF 'FRIT' AND THEIR STATEMENTS TO THE EFFECT THAT THEY PAID SOMETHING O VER AND ABOVE THE INVOICE PRICE FOR THE PURCHASE SO AS TO USE THE SE STATEMENTS TO ALLEGE SUPPRESSION OF SALES PRICE IN OUR CASE. THE FACT OF THE MATTER IS THAT SUCH STATEMENTS ARE RECORDED AT THE INSTANCE OF THE OFFICERS AND ARE NOT FREE AND FAIR IN NATURE. SUCH ORAL STATEMENTS HAVE NO EVIDENTIARY VALUE AS THE SAME ARE NOT CORR OBORATED BY ANY INDEPENDENT MATERIAL PARTICULARS. WE RELY ON TH E JUDGMENT OF MADRAS HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX VS. VIGNESHKUMARJEWELLERS. III. THE STATEMENTS OF BUYERS WOULD ALSO REVEAL T HAT THEY ARE ALSO ALMOST SAME WORD TO WORD. FURTHER THE NAME OF ANY REPRESENTATIVE WHO COLLECTED CASH AMOUNT HAS NOT BEEN REVEALED IT IS UNIMAGINABLE THAT SUCH HUGE AMOUNT OF CASH COULD BE PAID TO AN UNKNOWN PERSON. IV. THE DGCEI DURING THE COURSE OF FRAMING SCN H OWEVER IGNORED THESE FACTS AND PROCEEDED TO USE THE STATEMENTS AN D ESTIMATED THE ALLEGED ASSESSABLE VALUE OF THE ENTIRE PRODUCTI ON OF 'FRIT' OF THE WHOLE YEAR WORKING OUT THE HUGE DIFFERENCE OF RS.5 79 93 067/- TREATED AS SUPPRESSION OF SALES FO R THE F.Y.2006- 07 RELATABLE TO A.Y. 2007-08. FURTHER IN SCN THE DG CEI HAS ESTIMATED THE ENTIRE SALE AT FLAT RATE WITHOUT CONS IDERING THE FACT THAT SALE RATE TO DIFFERENT PARTIES MAY DIFFER AT D IFFERENT TIMES. V. IT WAS ALSO POINTED OUT THAT OUT OF THE 12 PARTI ES THREE PARTIES NAMELY ANMOL CERAMICS LEO CERAMICS &OMSON CERAMICS HAD NOT MADE ANY TRANSACTION AT ALL WITH US DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY IT WAS SHOWN THAT THE WO RKING OF DIFFERENCE RELATABLE TO THE OTHER PARTIES (OTHER TH AN 9 PARTIES) IS BASED ON NO MATERIAL RATHER ENTIRELY BASED ON SURM ISES AND CONJECTURES. VI. WITHOUT PREJUDICE TO THE ABOVE STATED IT MAY ALSO BE SUBMITTED THAT IF ADDITION OUGHT TO BE MADE THEN ALSO IT SHOU LD BE RESTRICTED TO THE ELEMENT OF GROSS PROFIT THEREON. G.P. RATIO IN OUR PRODUCT ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 7 - RANGES FROM 6% TO 7%. IN THIS REGARD WE RELY ON JUD GEMENT OF HON'BLE GUJARAT HIGH COURT REPORTED IN 258 ITR 654 AND 326 1TR 410. VII. WE FURTHER WOULD LIKE TO DRAW YOUR ATTENTION T O THE MATTER THAT WE DO NOT AGREE WITH THE CONTENTIONS RAISED BY DGCE I IN SCN AND THE SAID MATTER IS STILL SUBJUDICE. WE THEREFOR E STATE THAT SUCH HUGE ADDITION SHOULD NOT BE MADE MERELY ON THE BASI S OF SHOW- CAUSE NOTICE OF DGCEI. WE REQUEST YOU TO DROP RE-OP EN PROCEEDINGS U/S.148 OF THE INCOME TAX ACT. 8. THE ASSESSEE ALSO MADE VARIOUS SUBMISSIONS IN RE SPONSE TO RELEVANT QUARRIES RAISED BY THE ASSESSING OFFICER HOWEVER ASSESSING OFFICER REJECTING THE CONTENTION OF THE ASSESSEE MA DE ADDITION OF RS.88 03 348/- ON ACCOUNT OF ALLEGED UNDER VALUATIO N OF SALES AND RS.2 08 00 924/- ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS WAS MADE FOR ASST. YEAR 2007-08. SIMILAR ADDITIONS OF R S.92 30 925/- ON ACCOUNT OF ALLEGED UNDER VALUATION OF SALES AND RS. 2 53 46 163/- ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS WAS MADE FOR ASST. YEAR 2008-09. 9. MATTER WAS CARRIED OUT BEFORE THE FIRST APPELLAT E AUTHORITY WHEREIN LD.AUTHORISED REPRESENTATIVEFOR ASSESSEE RETREATED SUBMISSION AS RAISED BEFORE THE ASSESSING OFFICERAND SUBMITTED THAT ASSE SSING OFFICER HAS NOT CONSIDERED THE FACT THAT IN CASE OF M/S. ZIRCONIA C ERA TECH GLAZES 3 RD PARTY STATEMENT OBTAINED IN COERCIVE MANNER BY THE DGCEI WERE RETRACTED AT RELEVANT POINT OF TIME. THEREFORE ALLE GATIONS CONTAINED IN SHOW-CAUSE NOTICE WERE NOT SOUND BASIS OF MAKING AD DITIONS IN QUESTION. HOWEVER REJECTING THE CONTENTION ON BEHALF OF THE A SSESSEE LD. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 8 - CIT(A)CONFIRMED THE ORDER OF THE LD. ASSESSING OFFI CER ON MERIT AS WELL. THE OPERATIVE PORTION OF CIT(A) ORDER IS REPRODUCED AS UNDER : 5.6 I HAVE CONSIDERED THE FACTS OF THE CASE ASSES SMENT ORDER SUBMISSION MADE BY THE APPELLANT REMAND REPORT AND REJOINDER FILED BY THE APPELLANT. FROM THE ASSESSMENT ORDER IT IS PERUSED THAT APPELL ANT HAD FILED RETURN OF INCOME ON 30/10/2007 DECLARING TOTAL INCO ME AT NIL WHICH WAS FINALIZED U/S.143(3) AND ORDER WAS PASSED ON 25 /03/2009 DETERMINING TOTAL INCOME AT NIL/-. THEREAFTER A LE TTER WAS RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INV.) UNIT -II AHMEDABAD ALONG WITH SHOW CAUSE NOTICE ISSUED TO THE APPELLAN T BY DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE AHMEDABAD ( DGCEI). FROM THE SHOW CAUSE NOTICE IT WAS NOTICED THAT APPELLANT WA S ENGAGED IN VARIOUS TYPES OF MODES & METHODS OF TAX EVASION WHICH RESUL TED INTO ESCAPEMENT OF HUGE TAX FOR THE YEAR UNDER CONSIDERA TION. IN SUCH FACTS CASE OF THE APPELLANT FOR THE YEAR UNDER APPEAL WAS REOPENED U/S.147 OF THE IT ACT. AFTER RECORDING THE REASONS FOR REOPENI NG NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 21/03/2013. IN RESPONSE TO TH E NOTICE ISSUED APPELLANT REQUESTED TO TREAT THE ORIGINAL RETURN FI LED ON 30/10/2007 AS RETURN FILED IN RESPONSE TO NOTICE U/S.148. FURTHER STATUTORY NOTICES U/S.143(2) AND U/S.142(1) WERE ISSUED AND SERVED TO THE APPELLANT. TO ELABORATE THE MATTER IT IS PERUSED THAT IN THIS CA SE ON THE BASIS OF INTELLIGENCE GATHERED BY DGCEI AS WELL ASTHE DOCUME NTARY EVIDENCES RECOVERED FROM THE PREMISES A SEARCHOPERATION W AS CONDUCTED AT THE PREMISES OF THE APPELLANT ON 28/08/2008.INVESTIGATI ON CONDUCTED BY DGCEI AGAINST THE APPELLANT REVEALED THATTHEY HAD N OT DECLARED THE ACTUAL ASSESSABLE VALUE OF GOODS MANUFACTUREDAND CL EARED FROM THEIR REGISTERED FACTORY PREMISES. THE DOCUMENTARY ASWELL AS ORAL EVIDENCES COLLECTED BY DGCEI FROM VARIOUS BUYERS CLEARLYINDIC ATED THAT APPELLANT WAS DECLARING IN THEIR CENTRAL EXCISE INVOICES ONLY A PART OF THE ACTUAL TRANSACTION VALUE MANUFACTURED AND CLEARED FROMTHEI R FACTORY. DIFFERENTIAL VALUE OF 1 FRIT OVER AND ABOVE THE VA LUEDECLARED IN THE INVOICES WAS COLLECTED BY THEM FROM THEIR BUYERS I N CASH.THE OBSERVATION AND FINDING GIVEN IN SHOW CAUSE NOTICE WAS ON THE BASISOF INVESTIGATIONS AND EVIDENCES GATHERED BY THE OFFICIALS OF EXCISEDEPARTMENT WHICH CLEARLY PROVED THAT APPELLAN T HAD SUPPRESSED THE SALEVALUE BYWAY OF UNDERVALUATION OF INVOICES A S WELL AS CLANDESTINE REMOVALOF GOODS FROM THEIR PREMISES. THE SUPPRESSIO N WAS REVEALED ON THE BASISOF FINDING DURING THE COURSE OF INVESTIGAT IONS BY THE DGCEI ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 9 - AND ASMENTIONED IN DETAIL IN THE SHOW CAUSE NOTICE CONTAINED IN LETTER F. NO.DGCEI/AZU/36(4) 130/2008-09/1836 TO 1842 DATE D 19.04.2010. IT WAS REVEALED FROM THE SHOW CAUSE NOTICE OF THE D GCEI THAT APPELLANT WASSHOWING SALE VALUE OF FRIT AT RS 10/- PER KG WHEREAS THE ACTUAL PRICE WASAT KS.20/- TO 30/- PER KG. THE AMOU NT SHOWN IN THE INVOICES WERE BEINGCOLLECTED THROUGH CHEQUES WHEREA S THE REMAINING AMOUNT WAS BEINGCOLLECTED BY CASH. FURTHER IT WAS A LSO FOUND THAT APPELLANT WAS DECLARINGLESS PRODUCTION THAN THE ACT UAL PRODUCTION. THE COMPANY WAS SHOWING CONSUMPTION OF 2414.14 SCM OF N ATURAL GAS FOR MANUFACTURING OF 1 MT OFFRIT WHEREAS ON VERIFICATI ON BASED ON THE FIGURES OF AVERAGE GASCONSUMPTION AGAINST ONE MT OF FRIT MANUFACTURED DURING THE PERIOD FROMAPRIL'2008 TO DECEMBER 2009; WHEN APPELLANT HAD SHOWN-HIGHERPRODUCTION AN D ALSO IN VIEW OF THE STATEMENT OF SH. PRAVINBHAI N. PATEL PARTNER AND P RODUCTION IN-CHARGE IT WAS FOUND THAT 400-500 SCM OF NATURAL GAS WAS CO NSUMED FOR MANUFACTURING OF 1 MT OF FRIT IT WAS PROVED BEYOND DOUBT THAT APPELLANT WAS INVOLVED IN UNDERVALUATION OF SALE IN VOICES THEREBY SUPPRESSING THE SALES AND ALSO HAD UNDERSTATED THE PRODUCTION AND ITS UNACCOUNTED SALE OF SUCH CLANDESTINE PRODUCTION FO R THE YEAR UNDER APPEAL THE AMOUNT OF UNDER VALUATION HAS BEEN WORK ED OUT AT RS.5 79 93 067/- [AS MENTIONED IN ANNEXURE C-1 (SR. NO. 1 TO 124) OF SCN ISSUED BY DGCEI AND THE AMOUNT OF CLANDESTINE R EMOVAL GOODS HAS BEEN WORKED OUT AT RS.13 70 28 488/- AS MENTION ED IN ANNEXURE C- 2 (APR-06 TO MAR-07) OF SCN ISSUED BY DGCEI. AO HAS CONCLUDED THAT APPELLANT HAD SHOWN G.P. AT A RATE OF 15.18% FOR TH E YEAR UNDER APPEAL HENCE FOR THE PURPOSE 15.18% G.P RATE ADOPTED AT 15.18%. ACCORDINGLY 15.18% OF TOTAL UNDERVALUED SALES IS W ORKED OUT AT RS.88 03 348/- (15.18% OF RS.5 79 93 067/-) IS ADDE D TO THE TOTAL INCOME OF THE APPELLANT. SIMILARLY 15.18% OF THE VA LUE OF CLANDESTINE REMOVAL GOODS FOR THE YEAR UNDER CONSIDERATION IS W ORKED OUT AT RS.2 08 00 924/- (15.18% OF RS.13 70 28 488/-) AND IS ADDED TO TOTAL INCOME OF THE APPELLANT. APPELLANT BEFORE ME CONTENDED THAT AO IN MAKING ADD ITION OF RS.88 03 348/- BEING ELEMENT OF PROFIT ON THE ALLEG ED UNDERVALUED SALES OF RS.5 79 93 067/-AND OF RS.2 08 00 924/- BEING EL EMENT OF PROFIT ON THE ALLEGED VALUE OF AALLEGED CLANDESTINE REMOVAL O F GOODS OF RS.13 70 28 488/- HAS ENTIRELY RELIED UPON THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI FOR PROPOSING THE ADDITIONS IN HIS SHOW CAUSE NOTICE DTD. 10/03/2014 REPRODUCED IN PARAGRAPH 4 (P AGES 3 & 4) OF THE ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 10 - ORDER UNDER APPEAL AND ALSO IN MAKING THE IMPUGNED ADDITIONS. FURTHER APPELLANT HAS ALSO CONTENDED THAT AO HAS NOT DEALT WITH THE CONTENTIONS MADE IN THE WRITTEN SUBMISSIONS DATED DT.23/12/2013 20/02/2014 AND REPLY DATED 18/03/2014 TO THE SHOW CAUSE NOTICE OF THE AO AND AO HAD PROCEEDED EXTENSIVELY REPRODUCE THE PARAGRAPHS FROM THE SCN ISSUED BY THE DGCEI AND RELYING UPON THE SAME HAS PROCEEDE D TO MAKE THE ADDITIONS REFERRED TO ABOVE. FURTHER IT IS CONTEND ED THAT EXCISE DEPARTMENT HAD PASSED THE ADJUDICATION ORDER ON DIE BASIS OF THE SCN OF THE DGCEI DETERMINING THE ADDITIONAL EXCISE DUTY PAYABLE ON THE VALUES AS DETERMINED AND HAD BEEN SUBJECT MATTER OF APPEAL BEFORE THE HON. CENTRAL EXCISE &. SERVICE TAX TRIBUNAL WZB A HMEDABAD. IT IS STATED THAT THE HON'BLE CESTAT HAS DECIDED THE SAID APPEALS IN FAVOUR OF THE APPELLANTS BY A COMMON APPELLATE ORDER DTD. 12/05/2015. THE HON. CESTAT HAS HELD THAT NO CASE OF UNDERVALUATION OF SALES OR OF CLANDESTINE REMOVAL OF FRIT HAS BEEN MADE OUT AND A CCORDINGLY QUASHED THE ADJUDICATION ORDERS PASSED BY THE CENTRAL EXCIS E AUTHORITIES ON THE BASIS OF THE SHOW CAUSE NOTICE OF THE DGCEI. IT IS ALSO STATED BY THE APPELLANT THAT THE PROCEEDINGS UNDER VAT ACT WERE A LSO INITIATED BASED ON THE SHOW CAUSE NOTICE OF THE DGCEI WHICH WERE Q UASHED AND SET ASIDE BY THE HON'BLE GUJARAT HIGH COURT BY ITS BY J UDGMENT DATED 13/11/2013. FURTHER VIDE LETTER DATED 23/07/2015 A PPELLANT HAS CONTENDED AND RELIED ON THE DECISION OF THE HON'BLE ITAT BENCH DECISION IN THE CASE OF PRIMA CERAMICS PVT. LTD IN VOLVING FACTS SIMILAR TO THE APPELLANT'S CASE THAT THE APPEAL SHOULD BE D ECIDED IN THE LIGHT OF THE ORDER OF THE EXCISE AND CUSTOM TRIBUNAL. IT IS CONTENDED THAT HON'BLE ITAT HAD FOLLOWED THE ABOVE REFERRED ORDER IN ANOTHER CASE INVOLVING IDENTICAL FACTS M/S. WELSUIT GLASS & CER AMICS PVT. LTD. WHILE DECIDING CROSS APPEALS BY THE DEPARTMENT VIDE ORDER DATED 20/06/2014. HAVING CONSIDERED THE FACTS OF THE CASE AND SUBMISS IONS MADE AND REPORT SUBMITTED BY THE AO. IT IS SEEN FROM THE COMMON ORDER PASSED BY CESTAT IT IS HIGHLY TECHNICAL AND RELIEF IS GIVEN TO THE APPELLANT AND OTHER 22 APPELLANTS ON THE BASIS OF T ECHNICAL GROUNDS LIKE- WHETHER THE APPELLANTS HAD INDULGED IN CLANDESTINE MANUFACTURE AND CLEARANCE OF CERAMIC GLAZED MIXTURE (FRIT) IN VIEW OF THE ADJUDICATION ORDERS PASSED ON THE BASIS OF NATURAL GAS CONSUMPTION NORMS PER METRIC TON? WHETHER THE APPELLANTS HAD INDULGED IN UNDERVALUATI ON OF FRIT AND ALSO CLANDESTINELY CLEARED FRIT AS PER PERSONAL LED GERS RETRIEVED FROM ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 11 - A PEN-DRIVE RECOVERED AND OTHER PERSONAL RECORDS RE AD WITH THEIR STATEMENTS? WHETHER THE ADJUDICATING AUTHORITIES WERE JUSTIFIED IN DENYING CROSS- EXAMINATION OF WITNESS UNDER THE PROVISIONS OF SECT ION 9D OF THE CENTRAL EXCISE ACT 1944 READ WITH THE JUDICIAL PRO NOUNCEMENTS ON THE ISSUE. IT IS PERUSED FROM THE COMMON ORDER OF CESTAT THAT CLANDESTINE MANUFACTURE ARID CLEARANCE OF FRIT BY T HE APPELLANT HAVE BEEN ESTIMATED BY TAKING DIFFERENT GAS CONSUMPTION NORMS WHICH EITHER GOT SUGGESTED BY THE APPELLANT OR WORKED OUT BY THE INVESTIGATION AVERAGE GAS CONSUMPTION FROM 263 SCMS TO 484 SCMS W ERE FIXED FOR DIFFERENT APPELLANTS AND WERE CONSIDERED BY THE ADJ UDICATING AUTHORITIES FOR CALCULATING/CONFIRMING THE DEMANDS AND IMPOSING PENALTIES. ON THE ABOVE LINES HON'BLE CESTAT HAS CONCLUDED IN PARAS. 8 9 & 10 THAT THE METHODOLOGY ADOPTED BY THE ADJUDICATING AUTHORI TIES IN ESTIMATING AND DEMANDING DUTY FROM THE APPELLANTS; BASED ON CO NSUMPTION OF NATURAL GAS ELECTRICITY CONSUMED AND PACKING TIME T AKEN AS NOT ACCEPTABLE AND REQUIRED TO BE REJECTED. THE PARAS ARE REPRODUCED HEREUNDER: 8. IN VIEW OF THE ABOVE OBSERVATIONS AND JUDICIAL PRONOUNCEMENTS METHODOLOGY ADOPTED BY THE ADJUDICA TING AUTHORITIES IN ESTIMATING AND DEMANDING DUTY FROM T HE APPELLANTS; BASED ON CONSUMPTION OF NATURAL GAS ELECTRICITY CO NSUMED AND PACKING TIME TAKEN; IS NOT ACCEPTABLE AND IS REQUIR ED TO BE REJECTED. 9. SO FAR AS POINTS MENTIONED AT PARA 6(II) AND 6(I II) ARE CONCERNED IT HAS BEEN HELD BY THE ADJUDICATING AUT HORITIES THAT UNDERVALUATION AND CLANDESTINE REMOVAL STAND PROVID ED IN VIEW OF THE PEN-DRIVES AJTAK XYZ OF SANYO PERSONAL LEDGER OF COMET PRIVATE DIARIES/ WRITING PADS AND THE STATEMENTS OF CERAMIC TILE MANUFACTURERS. APPELLANTS HAVE ARGUED THAT THE PRI NT-OUT TAKEN FROM THE PEN-DRIVE AJTAK XYZ ARE NOT ADMISSIBLE AS A PIE CE OF EVIDENCE AS THE SAME ARE NOT THE DOCUMENTS ADMISSIBLE AS EVI DENCE UNDER THE RELEVANT SECTION OF THE CENTRAL EXCISE ACT 1944. IT WAS ALSO ARGUED BY THE APPELLANTS THAT THE NUMBER OF PANCHNAMAS REC ORDED AND THE OPENING OF THE SAID PEN-DRIVE CLEARLY SUGGEST THAT THE DATA RECOVERED FROM THE PEN-DRIVE IS HIGHLY OBJECTIONABLE SUSPICI OUS AND NOT ACCEPTABLE. IT IS OBSERVED FROM THE CASE RECORDS O F WELLSUIT GLASS & CERAMIC PVT. LIMITED [E/13720/2014] THAT SEIZURE OF THE SAID PEN- DRIVE WAS EFFECTED ON 17.7.2008 UNDER A PANCHNAMA A ND IT WAS NOT ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 12 - STATED IN THIS PANCHNAMA THAT THE PEN-DRIVE WAS PUT INSIDE A SEALED COVER. IT HAS BEEN ADMITTED BY SHRI V.N. THAKKAR ( SUPERINTENDENT) DGCEI IN THE CROSS-EXAMINATION BEFORE THE ADJUDICAT ING AUTHORITY THAT WHEN AN ARTICLE IS SEIZED THE SAME IS PLACED IN A SEALED COVER AND MENTION OF THE SAME IS MADE IN THE PANCHNAMA. IT I S ALSO ADMITTED BY SHRI THAKKAR THAT AS HE REMEMBERS THE SEIZED PEN-DR IVE WAS PLACED IN A PAPER COVER AND SEALED WITH ADHESIVE TAPES. IT I S THE CLAIM OF THE APPELLANTS THAT THE WAY THE SAID PEN-DRIVE WAS HAND LED IT IS POSSIBLE THAT THE SAME COULD BE TEMPERED WITH AS THE SAME WA S KEPT IN THE PAPER COVER SEALED WITH ADHESIVE TAPES. A SECOND P ANCHNAMA WAS MADE ON 30.8.2008 WHERE THE SAID PEN-DRIVE WAS MENT IONED TO HAVE BEEN TAKEN OUT OF A SEALED COVER WHEN THE FIRST PAN CHNAMA NEVER MENTIONED KEEPING THE SAID PEN-DRIVE IN A SEALED CO VER. IT IS ALSO OBSERVED THAT ON 30.8.2008 THE SEALED COVER WAS OPE NED BUT CONTENTS OF THE SILVER PEN-DRIVE WERE NOT OPENED ON 30.8.300 8 BUT INSTEAD ANOTHER BLACK COLOUR PEN-DRIVE WAS OPENED. ON 06.9 .2008 UNDER A PANCHNAMA THE SAID SILVER PEN-DRIVE TAKEN OUT OF TH E SEALED COVER AND ON OPENING THIS PEN DRIVE IN THE TALLY FOLDER NO D ATA WAS FOUND TO BE AVAILABLE. HOWEVER UNDER ANOTHER PANCHNAMA DATED 12.09.2008 WHEN THE SAID SILVER PEN-DRIVE WAS OPENED DATA WAS FOUND IN TALLY FOLDER WHICH IS THE RELIED UPON AS AAJTAK XYZ. THE RE IS A STRONG FORCE IN THE ARGUMENTS MADE BY THE APPELLANTS THAT WHEN NO DATA WAS FOUND IN TALLY FOLDER ON 06.9.2008 HOW THE RELIED UPON DOCUMENTS GOT GENERATED ON 12.09.2008. SHRI V.N. THAKKAR SUPERI NTENDENT IN HIS CROSS-EXAMINATION EXPLAINED THE REASON FOR NON RETR IEVAL OF DATA ON 06.9.2008 TO BE DUE TO OPERATIONAL LACK BUT HE ADM ITTED THAT NO MENTION OF ANY OPERATIONAL LACK IS MADE IN THE PANC HNAMA DATED 06.9.2008. FURTHER IT IS OBSERVED THAT IN PANCHNA MA DATED 12.09.2008 THE PRINT OUT OF ACCOUNT AJTAK TAKEN CO NTAINED 52 PAGES AND ACCOUNT OF APPELLANT WELLSUIT APPEARED AT PAGE 30 OUT OF 52 PAGES. ANOTHER PANCHNAMA DATED 24.09.2008 INDICATE IN ANNE XURE A3 THAT THE NUMBER OF PAGES OF ACCOUNT AAJTAKWERE 94 AND TH E NAME OF APPELLANT EXISTED AT PAGE 43 AS AGAINST PAGE 30 MEN TIONED IN PANCHNAMA DATED 12.09.2008. APPELLANTS HAVE ALSO R AISED THE ISSUE REGARDING DISCREPANCIES IN THE NAME OF THE PANCH WI TNESSES. IT IS ALSO CONTENDED THAT REVENUE HAD NOT FOLLOWED THE PROCEDU RE AS STIPULATED IN SECTION 36B OF THE CENTRAL EXCISE ACT 1944. IN VIEW OF THE ABOVE DISCREPANCIES THE AUTHENTICITY AND VERACITY OF DATA RETRIEVED BY INVESTIGATION FROM THE SILVER PEN-DRIVE IS NOT RELI ABLE AND CAN NOT BE ACCEPTED AS A PIECE OF EVIDENCE IN DECIDING THE CAS E OF UNDERVALUATION AND CLANDESTINE REMOVAL AGAINST THE PRESENT APPELLA NTS WITH RESPECT TO POINT MENTIONED IN PARA 6 (II). ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 13 - 10. SO FAR AS THE QUESTION MENTIONED AT PARA 6(III) REGARDING DENYING CROSS-EXAMINATION OF WITNESSES WHOSE STATEM ENTS WERE USED FOR ESTABLISHING UNDERVALUATION/ CLANDESTINE REMOVA L OF FRIT BASED ON THE PRIVATE RECORDS THE STATEMENTS OF TILE MANUFAC TURERS AND SHROFF/ ANGADIAS IS CONCERNED; IT IS ARGUED BY THE APPELLAN TS THAT THE ENTIRE EXERCISE OF SUCH QUANTIFICATION HAS BEEN MADE AS PE R THE STATEMENTS OF THE WITNESSES WHOSE CROSS-EXAMINATION HAS NOT BEEN ALLOWED BY THE ADJUDICATING AUTHORITY AS PER SECTION 9D OF THE CEN TRAL EXCISE ACT 1944. FROM THE ABOVE IT IS PERUSED THAT THE HON'BLE CETAT FINDING ONTHE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE-I II AHMEDABAD IS ON HIGHLY TECHNICAL GROUNDS CITING VARIOUS DECISION S OF TRIBUNALS AND VARIOUSJUDICIAL PRONOUNCEMENTS REGARDING UNDER VALU ATION OF GOODS AND ONACCOUNT OF CLANDESTINE REMOVAL OF GOODS AND A LSO APPELLANT WAS NOTGIVEN OPPORTUNITY OF CROSS EXAMINATION ON THE ST ATEMENTS RECORDED OF VARIOUS PERSONS RELATED TO THE APPELLANT FOR THE PR ODUCTION OF THEIR GOODS.HOWEVER WITH DUE RESPECT TO HON'BLE CESTAT'S DECISION IT IS SEEN THATNOWHERE HON'BLE CESTAT HAS DEALT THE EVIDE NCES COLLECTED BY THEINVESTIGATING AUTHORITIES OF CENTRAL EXCISE T HOUGH MENTIONED IN THE BODYOF THE ORDER BY WAY OF ANNEXURES BY THE COM MISSIONER OF CENTRAL EXCISE-III AHMEDABAD WHICH ARE STILL IN TH E POSSESSION OF CENTRAL EXCISEDEPARTMENT LIKE INVOICES WHICH WERE PREPARED BY THE APPELLANT IN TWOFOLDS UNDER VALUATION OF GOODS WHI CH WERE COLLECTED AND ON THAT BASISACDL. DGCE HAD SHOW-CAUSED THE APP ELLANT. VARIOUS STATEMENTS WERERECORDED OF THE PARTNERS AND THE TEC HNICAL PERSONS OF VARIOUS CONCERNSFROM WHOM APPELLANT USED TO PURCHAS E OR SOLD THE PRODUCTS WHICH AREALSO NOT CROSS EXAMINED AS STATED BY THE HON'BLE CESTAT. THE HON'BLEJURISDICTIONAL TRIBUNAL HAS DEC IDED ONE M/S. PRIMA CERAMICS PVT LTD IN ITANO. 453/AHD/2013 WHIC H IS ONE OF THE 22 CASES INVOLVED HAVING IDENTICALISSUE. HON'BLE TRIBUNAL HAS GIVEN THE DIRECTIONS TO DECIDE THIS CASE ASUNDER: '......TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW ON MERIT IN THE LIGHT OFTHE ORDER OF THE EXCISE AND CUSTOM TRIBUNAL TO BE PASSED IN THIS CASE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. WE DIRECT ACCORDINGLY.' FOLLOWING THE ABOVE DIRECTIONS OF THE HON'BLE ITAT THE CASE OF THE APPELLANT WAS REMANDED TO ASSESSING OFFICER AND DIRECTED TO GIVE FRESH OPPORTUNITY TO TH E APPELLANT TO PRODUCE BOOKS OF ACCOUNTS AND TO ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 14 - PROVIDE OPPORTUNITY TO CROSS-EXAMINE OF VARIOUS STA TEMENTS RECORDED AND EVIDENCES COLLECTED DURING THE ACTION CONDUCTED BY THE EXCISE DEPARTMENT AND THE DETAILED SHOW CAUSE NOTICE PREPA RED BY THE DGCEI AND FOLLOWED BY THE ASSESSING OFFICER. ASSESS ING OFFICER HAS SUBMITTED A DETAILED REMAND REPORT THE RELEVANT PAR T IS AGAIN REPRODUCED HEREUNDER: (8) NOW COMING TO THE ISSUES WHICH WERE RAISED BY THE ASSESSEE DURING THE APPELLANT STAGE FIRST ISSUE REGARDING THE DELETION OF ALL THE ADDITION BY THE HON'BLE CENTRAL EXCISE AND CUSTOM T RIBUNAL WEST ZONAL BENCH AHMEDABAD VIDE ITS ORDER DATED 12/05/2 015 WHEREIN THE APPEAL OF THE APPELLANT WERE ALLOWED. IN THIS RESPE CT IT IS TO STATE THAT ALTHOUGH THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWE D AT THE TRIBUNAL STAGE ON THE BASIS OF THE INFORMATION GATHERED FRO M CUSTOM EXCISE AND SALES TAX DEPARTMENT VIDE THEIR LETTER NO.CCE- III/LEGAL/SLP/08/2015/1296 DATED 26/10/2015 AS UNDE R (COPY OF THE LETTER ENCLOSED FOR READY REFERENCE) IN THE CASE IT MAY KINDLY BE NOTED THAT IN THE CA SE OF M/S. ZIRCONIA CERA TECH GLAZES PALAJ MEHSANA OF THE FINAL ORDER NO.A/10541- 10571/2015 DATED 12.05.2015 OF CESTAT AHMEDABAD I S BEING APPEALED AGAINST IN THE HONBLE APEX COURT THT PROPOSAL FOR APPEAL HAS BEEN ACCEPTED BY THE CH IEF COMMISSIONER CENTRAL EXCISE AHMEDABAD ZONE AND HAS BEEN SENT TO THE BOARD FOR FILING APPEAL IN THE MATTER THUS IT IS CLEAR THAT THE ISSUE IS STILL ALIVE AS PER THE ABOVE INFORMATION RECEIVED FROM THE CUSTOMER & EXCISE DEPARTMENT. (9) REGARDING THE REJECTION OF BOOKS OF ACCOUNT IT IS PERTINENT TO MENTION THAT IN HIS ORDER THE THEN A.O. CLEARLY ME NTIONED THAT THE BOOKS OF THE ASSESSEE COULD NOT BE RELIED UPON AS THE ASSESSEE WAS ENGAGED IN SUPPRESSION OF SALES BY WAY OF UNDER VAR IATION OF SALES INVOICES AS WELL AS CLANDESTINE REMOVAL OF UNACCOUN TED PRODUCTION AND ITS CONSEQUENT UNACCOUNTED SALES. THE THEN A.O ALS O MENTIONED THAT IN THE CASE OF ASSESSES A SUBSTANTIAL PART OF EXPE NSES WITH RESPECT TO THE SUPPRESSED SALES WERE ALSO NOT CLAIMED TO KEEP THE G.P. AT ALOWER RATE. AND THE ASSESSEE HIMSELF SHOWN G.P. AT A RATE AT 15.18% FOR THE PRECEDING YEAR TO THE UNDER CONSIDERATION. AND ON T HIS BASIS ONLY THE THEN A.O. TAKE THE G.P. AT A RATE OF 15.18% FOR THE PURPOSE. CONSIDERING TOTAL UNDERVALUED SALES FOR A.Y.2007-08 AT RS.5 79 93 067/- THE ASSESSING OFFICER ASSES RS.88 03 345/- BEING 15.18% AS UNDERVALUATION OF SALE AND CLANDESTINE RE MOVAL GOODS ADDITION OF RS.2 08 00 924/- WAS MADE TAKING THE GR OSS FIGURE OF RS.13 70 28 488/ . SIMILARLY FOR A.Y.2008-09 CONS IDERING THE UNDERVALUATION OF SALE AT RS.6 08 09 785/- THE THEN A.O ADDED TO THE ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 15 - TOTAL INCOME OF THE ASSESSEERS.92 30 925/- ON ACCOU NT OF UNDER VALUATION. AND SIMILARLY ADDITION ON ACCOUNT OF CLA NDESTINE REMOVAL WHICH CORNER TO RS.2 53 46 163/- (I.E. 15.18% OF RS .16 69 70 770/-) WAS MADE TO THE TOTAL INCOME OF THE ASSESSES. (10) FURTHER REGARDING THE CONTENTION OF THE ASSES SEE THAT NO OPPORTUNITY OF CROSS EXAMINATION OF DETAILS WAS ACC ORDED TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS IT IS T O STATE THAT DURING THE REMAND PROCEEDINGS VIDE THIS OFFICE ORDER SHOR T ENTRY DATED 24/09/2015 THE A.R. OF THE ASSESSEE WAS GIVEN THE O PPORTUNITY FOR CROSS EXAMINATION OF RECORD. HOWEVER IN RESPONSE THE AR STATED THAT SINCE THEY HAVE ALREADY RECEIVED THE RELEVANT DOCUM ENTS DURING THE ASSESSMENT PROCEEDINGS. THUS THERE WAS NO NEED FOR FURTHER CROSS VERIFICATION AS THE ASSESSEE HAS RECEIVED THE RELEV ANT DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS. HOWEVER THE AR ON THAT DAY ONLY SUBMITTED THE COPY OF ORDER PASSED BY THE APPELLATE TRIBUNAL OF CENTRAL EXCISE IN WHICH THE ISSUE IN QUESTION WAS A LLOWED IN FAVOUR OF THE ASSESSEE IN COMPLIANCE TO CIT(A) LETTER DATED 0 8/05/2015 IN WHICH THE ASSESSEE HAS BEEN ASKED TO FURNISH ALL TH E RELEVANT PAPER/DETAILS AS DIRECTED BY CLT(A) FURTHER AS DIRE CTED BY HON'BLE CIT(A) THAT ATE THE DETAILS AND BOOKS OF ACCOUNT OF THEASSESSEE TO BE CALLED FOR THEREFORE IN COMPLIANCE TO THE ABOVE DIR ECTION VARIOUS DOCUMENTS WERE CALLED FOR BOTH THE YEARS FROM THE A SSESSEE VIDE THIS OFFICE LETTER DATED 12/10/2015. IN RESPONSE THE ASSESSEE SUBMITTED THE SAME SUBMISS ION SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. NO ORIGINAL BILL S/VOUCHES WERE PRODUCED BY THE ASSESSEE. THEREFORE IT IS PRESUMED THAT THE ASSESSEE DO NOT HAVE ANY MATERIAL EVIDENCE ON RECORD WHICH I T CAN RELY. IN VIEW OF THE ABOVE FACTUAL AND LEGAL ASPECTS OF T HE CASE AND TAKING INTO ACCOUNT THE FACT ON RECORD THAT THE IMPUGNED I SSUE UNDER CONSIDERATION WITH CENTRAL EXCISE DEPARTMENT IS ALI VE AT THEIR LEVEL AND ALSO THE FACTS EMERGED DURING THE ASSESSMENT PR OCEEDINGS VIZ. REJECTION OF BOOKS OF ACCOUNTS ETC. ITAN SAFELY BE SAID (HAT THE ASSESSEE CANNOT FOUND TO FAN ELIGIBLE TO GET ANY RELIEF WITH RESPECT TO TIN: IMPUGNED ADDITIONS AT THIS JUNCTURE. ACCORDINGLY I T IS REQUESTED TO KINDLY DECIDE THE ISSUE IN FAVOUR OF THE REVENUE TA KING COGNIZANCE OF TIE CASE AS DISCUSSED ABOVE. APPELLANT WAS PROVIDED OPPORTUNITY TO FILE REJOINDE R AND A COPY OF THE REMAND REPORT OF THE ASSESSING OFFICER WAS P ROVIDED TO THE APPELLANT. APPELLANT HAS FILED REJOINDER DATED 12/1 2/2015 WHICH READ AS UNDER: IN THIS REGARD OUR PARA-WISE SUBMISSIONS ARE AS UN DER: ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 16 - PARAGRAPH 2(1) TO 2(7). THE LEARNED ASSESSING OFFICER HAS STATED THAT THE I SSUES EMERGING FROM THE APPRAISAL REPORT OF THE DGCEI ARC REITERATED IN THESE PARAGRAPHS THESE HAVE BEEN DULY INCORPORATED IN THE ASSESSMEN T ORDER FOR THESE YEARS DID DULY DEALT WITH OUR WRITTEN SUBMISSIONS HENCE NO COMMENTS. PARAGRAPH 2(8). AS WE UNDERSTAND NO SUCH APPEAL HAS BEEN FILED BEFO RE THE HON. APEX COURT AS YET. EVEN IF AN APPEAL IS FILED LATER ON UNLESS THE ORDER OF THE HON. CESTAT IS STAYED IT REMAINS OPERATIVE AND EFFE CTIVE. THE EXCISE DEPARTMENT HAS ALREADY GIVEN EFFECT TO THE SAID ORD ER AND ISSUED REFUND OF THE TAXES COLLECTED. PARAGRAPH 2(9). AS REGARDS THE AOS OBSERVATION ABOUT THE AO MAKING ASSESSMENTS UNDER APPEAL HAVING MENTIONED THAT THE BOOKS OF THE ASSESSEE COULD NOT BE RELIED UPON WE HAVE TO SUBMIT THAT THIS OBSE RVATION IS NOT RELEVANT KEEPING IN VIEW THEFACT THAT THE AO HAS CO MPUTED THE TOTAL INCOME ON THE BASIS OF THE PROFIT AS PER BOOKS OF A CCOUNTS. THIS WOULD SHOW THAT THE BOOKS OF ACCOUNTS AND THE BOOK RESULT HAS BEEN ACCEPTED. PARAGRAPH 2(10) THE ASSESSING OFFICER HAS MENTIONED THAT OPPORTUNIT Y FOR 'CROSS EXAMINATION OF RECORD' WAS GIVEN IN REMAND PROCEEDI NGS AND THAT THE AR REPLIED THAT THE RELEVANT DOCUMENTS HAVE TEEN RE CEIVED DURING THE ASSESSMENT PROCEEDINGS AND THEREFORE THERE WASNO NE ED FOR 'CROSS VERIFICATION OF RECORD'. AS IS EVIDENT FROM THE ABOVE AS PER THE DIRECTION OF THE HON'BLE ITAT VIDE ORDER DATED 05/09/2013 IN THE CASE OF PRI MA CERAMICS PVT LTD AND OTHER 22 CASES INCLUDING APPELLANT A REASO NABLE OPPORTUNITY OF BEING HEARD AND OPPORTUNITY OF CROSS EXAMINATION ON THE BASIS OF EVIDENCES COLLECTED BY DGCEI AND RELIED UPON BY THE ASSESSING OFFICER WAS GRANTED TO THE APPELLANT BY THE ASSESSING OFFIC ER. THE OPPORTUNITY GRANTED WAS DENIED BY THE APPELLANT SIMPLY STATING IN HIS LETTER THAT SINCE THEY ALREADY RECEIVED THE RELEVANT DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS THERE WAS NO NEED FOR FURTH ER CROSS VERIFICATION AS THE APPELLANT HAD RECEIVED THE RELEVANT DOCUMENT S DURING THE ASSESSMENT PROCEEDINGS. HOWEVER THE AR ON THAT DAY ONLY SUBMITTED THE COPY OF ORDER PASSED BY THE APPELLATE TRIBUNAL OF CENTRAL EXCISE IN WHICH THE ISSUE IN QUESTION WAS ALLOWED IN FAVOUR O F THE ASSESSEE. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 17 - ASSESSING OFFICERHAS FURTHER REQUESTED THE APPELLAN T TO PRODUCE THE BOOKS OF ACCOUNTS AND RELEVANT DOCUMENTS TO VERIFY AND EX AMINE THE ISSUES RAISED BY THE ADDL. DGCEI IN HIS SHOW CAUSE NOTICE FOR DETERMINING THE UNDER VALUATION OF GOODS AND CLANDESTINE REMOVAL. I N RESPONSE THERETO APPELLANT SUBMITTED THE SAME SUBMISSION SUBMITTED D URING THE ASSESSMENT PROCEEDINGS AND NO ORIGINAL BILLS/VOUCHE RS WERE PRODUCED BEFORE THE ASSESSING OFFICER. ASSESSING OFFICERTHER EFORE WAS OF THE VIEW THAT APPELLANT DO NOT HAVE ANY MATERIAL EVIDENCE ON RECORD WHICH IT CAN RELY. APPELLANT VIDE LETTER DATED 12/12/2015 BEFORE THE UNDERSIGNED IN ITS WRITTEN SUBMISSION IN PARA.2(1) HAS STATED AS U NDER: 'THE AO HAS MENTIONED THAT OPPORTUNITY FOR 'CROSS E XAMINATION OF RECORD WAS GIVEN IN REMAND PROCEEDINGAND THAT THE AR REPLIED THAT THE RELEVANT DOCUMENTS HAVE BEEN RECEIVED DURING TH E ASSESSMENT PROCEEDING AND THEREFORE THERE WAS NO NEED FOR CROSS VERIFICATION OF RECORD.' THE ABOVE PLEA OF THE APPELLANT CANNOT BE ACCEPTED IN THE LIGHT OF THE DIRECTIONS OF THE HON'BLE TRIBUNAL WHEREIN IT I S VERY SPECIFICALLY MENTIONED THAT 'CIT(A) TO DECIDE THE SAME AFRESH IN ACCORDANCE TO LAW ON MERITS IN LIGHT OF THE ORDER OF EXCISE & CUSTOM TRIBUNAL TO BE PASSED IN THIS CASE AFTER ALLOWING REASONABLE OPPORTUNITY TO BOTH THE PARTIES'. CONSIDERING THE DIRECTIONS AS WELL AS AFTER CONSIDE RING ISSUES INVOLVED ON THE BASIS OF FACTS COVERED AND SHOW CAU SE ISSUED THE FOLLOWING FACTS ARE REVEALED: 1) THE REASONS FOR PROVIDING THE OPPORTUNITY OF BEING HEARD AND CROSS EXAMINATION TO THE APPELLANT WAS AS PER THE D IRECTIONS OF THE HON'BLE 1TAT AND ALSO TO VERIFY AND EXAMINE VARIOUS EVIDENCES WHICH WAS MENTIONED IN THE SHOW CAUSE LET TER ISSUED TO THE APPELLANT BY ADDL DGCEI LIKE THE EVI DENCES OF UNDER VALUATION OF GOODS UNDER VALUATION OF FREIGHT AND EVIDENCES MENTIONED ON PAGE NO.8 9 & 10 IN ORDER D ATED 29/3/2014 OF COMMISSIONER OF CENTRAL EXCISE AHMEDA BAD. 2) ALSO ONE OF THE ISSUE LIKE STATEMENT RECORDED OF P ARTNERS WHEREIN THE PARTNERS HAVE ACCEPTED MODUS OPERANDS O F TAX EVASION BY UNDERVALUATION OF GOODS AND FREIGHT AND UNACCOUNTED PRODUCTION. IT IS NOT OUT OF PLACE TO M ENTION THAT THESE FACTS WERE NOT DEALT BY THE HON'BLE ITAT IN T HE ORDER ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 18 - PASSED CESTAT HAS GIVEN RELIEF ON THE BASIS OF 7 TECHNICAL GROUND BUT INCOME-TAX DEPARTMENT HAS NOT EXAMINED T HE PARTNERS OF THE COMPANY AND OTHER PERSONS WHOSE STA TEMENTS WERE RECORDED ON OATH DURING THE SEARCH ACTION BY T HE EXCISE DEPARTMENT AS WELL AS ON THOSE EVIDENCES WHICH WAS COLLECTED AND WAS IN POSSESSION OF EXCISE DEPARTMEN T WHICH WERE VERY WELL MENTIONED IN THE SHOW CAUSE LETTER O F ADDL. DGCEI AND ORDER PASSED BY THE COMMISSIONER OF CENTR AL EXCISE-III AHMEDABAD IN THE CASE OF THE APPELLANT. THE CASE WAS REMANDED TO THE AO TO CONFRONT THE APP ELLANT ON THESE ISSUES AS WELL AS TO GIVE OPPORTUNITY TO THE APPELLANT TO PRODUCE THE BOOKS IN SUPPORT OF THE CLAIM WHICH WAS NOT REL IED UPON BY THE AO AND THE BOOKS WERE REJECTED. APPELLANT HAS NOT AVAI LED THE OPPORTUNITY WITH THE PLEA THAT THE AO HAS TO FOLLOW THE ORDER O F THE HON'BLE CESTAT AND DIRECTIONS OF HON'BLE JURISDICTIONAL ITA T WHICH IS WELL DISCUSSED IN ABOVE PARAGRAPHS. THE DENIAL OF OPPORT UNITY BY THE APPELLANT INDICATES THAT THE ISSUE IS STILL VERY LI VE IN THE CASE OF THE APPELLANT AS REPORTED BY THE AO ALSO AS CENTRAL EXC ISE DEPARTMENT HAS FURTHER PREFERRED APPEAL BEFORE THE APEX COURT AGAI NST THE ORDER OF CESTAT WHICH WAS DECIDED ON THE BASIS OF TECHNICALI TIES AND JUDICIAL PRONOUNCEMENTS. THE CASE WAS REMANDED TO THE AO WIT H A SPECIFIC DIRECTION TO GIVE OPPORTUNITY OF BEING HEARD AND OP PORTUNITY OF CROSS EXAMINATION ON THE BASIS OF FACTS FINDINGS GIVEN I N SHOW CAUSE NOTICES ISSUED BY THE BY THE ADDL. DGCEI AHMEDABAD BUT APP ELLANT VOLUNTARILY DENIED TO AVAIL THE OPPORTUNITIES AND D ID NOT PRODUCE THE BOOKS OF ACCOUNTS AND ON SUCH FACTS THE APPEAL IS DECIDED ON THE BASIS OF EVIDENCES GATHERED BY THE EXCISE DEPARTMENT WHIC H WAS FOLLOWED BY THE AO AND MADE THE DISALLOWANCE AND ADDITION TO TH E TOTAL INCOME OF THE APPELLANT ON THE GROUNDS THAT PARTNERS OF THE A PPELLANT COMPANY AND OTHERS IN THEIR STATEMENTS HAD ACCEPTED AND STATED HOW THE MODUS MODUS OPERANDI WAS CARRIED OUT BY THEM FOR UNDER-VALUATIO N OF GOODS AND CLANDESTINE REMOVAL; THE STATEMENT RECORDED WITH REGARD TO FRIT AND SHOW CAUSE LETTER REGARDING BOOKS WHICH WAS REJECTED BY THE AO . DURING THE COURSE OF INVESTIGATION A STATEMENT OF S HRI PRAVINBHAINARSHIBHAI PATEL PARTNER OF M/S ZIRCON IA WAS RECORDED ON OATH ON31/3/2010 BY THE CENTRAL EXCISE AUTHORIS ES AND DURING THE SEARCHOPERATION HE HAS VERY CATEGORICALLY ADMITTED IN HIS STATEMENT THAT DURINGTHE PERIOD 2006-07 AND 2007-03 THEY WERE SHOW ING ASSESSABLE ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 19 - VALUE OFFRIT AT RS.10/- WHEREAS DURING THE YEAR 200 9-10- THEY HAVE SUBSTANTIALLYINCREASED THE VALUE OF FRIT UPTO 27.50 PER KG. ALL THE BUYERS OF FRIT WHOSESTATEMENTS WERE RECORDED HAD CONFIRMED THAT THE QUALITY OF FRIT BEGINNINGFROM 2006-07 TO 2009-10 WERE SIMILAR AND THUS APPELLANT UNDERVALUED THEGOODS. SIMILARLY 8 TO 10 PER SONS STATEMENTS WERE RECORDED WHICH CONFIRMS THIS FACT. IN THE STATEMEN T RECORDED OF SHRI PIYUSHBHAICHANDULALSHAH PARTNER OF M/S ANMOL CERAM ICS KALOL WHICH WAS RECORDED ON13/01/2010 HAS ADMITTED THAT T HEY WERE PURCHASING CERAMIC FRIT FROM THEAPPELLANT AND IN TH E INVOICES THEY WERE SHOWING ABOUT RS.7/- TO RS.12/-PER KG AND FROM 2008 -09 INCREASED THE PRICES FROM RS.20/- TO RS.30/-PER KG WHICH WERE THE ACTUAL VALUE AND HENCE IN THE PAST PERIOD OVERAND ABOVE THE INVOIC E AMOUNT THEY WERE PAYING REMAINING AMOUNT IN CASH DIRECTLY TO THE FR IT MANUFACTURERS. SIMILARLY IN THE STATEMENTRECORDED OF SHRI JAYENDRABHAIKABABHAIKALARIA PARTNER OF M/S.ATLASIN DUSTRIES MORBI HE HAS ADMITTED THAT THEY HAD PURCHASED OPAQUEQUALITY FRITS AND SOMETIMES TRANSPARENT QUALITY ALSO. HOWEVER THE QUALITYOF B OTH THE OPAQUE AND TRANSPARENT FRIT RECEIVED WERE THE SAME. HE ALSOCO NFIRMED THAT THERE WAS UNDERVALUATION OF CERAMIC FRIT AS THEY WEREGETT ING INVOICES FROM THE SUPPLIERS @ 7/- TO RS.12/- PER KG WHICH WASPAI D IN CHEQUE. THE BALANCE WAS COLLECTED IN CASH AND WAS ALSO NOT SHOW N IN THE INVOICES RAISED. IN THE STATEMENT RECORDED OF SHRI JAGDISHBH AIGOVINDBHAI PATEL PARTNER OF M/S SATYAM CERAMIC LAKHDIRPUR ROAD MOR BI HE HAS ADMITTED THAT THERE WAS UNDERVALUATION OF CERMIC FR IT AS THEY WERE GETTING INVOICES FROM THE SUPPLIERS @ 7/- TO RS.12/ - WHICH WAS PAID THROUGH CHEQUES HOWEVER FOR THE DIFFERENCE IN VALU E OF FRIT WHICH WAS RS.20/- TO RS.30/- PER KG THE BALANCE WAS PAID IN CASH. SIMILAR STATEMENT; HAS BEEN GIVEN BY SHRI BALUBHAIAMARSINHB HAI PATEL PARTNER OF M/S. LEO CERAMIC MORBI; SHRI KISHOREBHAIRAGHAVJ IBHAI PATEL PARTNER OF M/S PRIYA GOLD CERAMICS MORBI; SHRI SURESHBHAIKARSANBHAIFEFAR PARTNER OF M/S OMSON CER AMIC MORBI; SHRI LALJIBHAIVISHRARNBHYAI PATEL PARTNER OF AM/S SWAGAT CERAMIC MORBI; SHRI JITENDRABHAIPURCHOTTAMDASROJMALA PARTN ER OF M/S. SILK CERAMICS MORBI; SHRI CHHAGANBHAIVALJIBHAI PATEL D IRECTOR OF M/S SACMI CERAMIC PVT LTD MORBI; SHRI CHAMANBHAIJIRRAJ BHAI PATEL DIRECTOR OF M/S SQUARE CERAMIC PVT LTD MORBI AND V ARIOUS OTHER PERSONS TO WHOM APPELLANT HAD BUSINESS WITH. FROM T HE ABOVE IT IS VERY CLEAR THAT APPELLANT WAS ENGAGED IN UNDER VALUATION OF GOODS AND CLANDESTINE REMOVAL OF FRITS. IT WAS FOR THE APPELL ANT TO PROVE THAT THE ALLEGATIONS MADE AGAINST IT ARE NOT CORRECT BY PROD UCING BOOKS OF ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 20 - ACCOUNTS AND THE FACTS AGAINST EVIDENCES COLLECTED DURING THE SEARCH OPERATION BY THE EXCISE DEPARTMENT WHICH WAS NOT DO NE BY THE APPELLANT AND HENCE THE ONLY CONCLUSION THAT CAN BE DRAWN IS THAT APPELLANT WAS INVOLVED IN THE PRACTICE OF UNDERVALU ATION OF GOODS AND REMOVAL OF CLANDESTINE OF GOODS. IN VIEW OF THE ABO VE ACTION OF THE AO IN MAKING THE ADDITION OF RS 88 03 348/- ON ACCOUNT OF UNDER VALUATION AID ADDITION OF RS.2 08 00 924/- ON ACCOUNT OF CLAN DESTINE REMOVAL OF FRITS TO THE TOTAL INCOME OF THE APPELLANT IS HELD JUSTIFIED AND IS HEREBY CONFIRMED. RELEVANT GROUNDS OF APPEAL ARE THEREFORE REJECTED. 5. IN THE RESULT APPEAL IS DISMISSED. CIT(A) ALSO CONFIRMED THE ADDITION MADE BY THE ASSE SSING OFFICER IN ASST. YEAR 2008-09. 10. NOW ASSESSEE HAS FILED APPEAL BEFORE US ON THE GROUND RAISED BY ASSESSEE AS ALREADY REPRODUCED IN PARA 2. THE STAND OF THE LD. AUTHORIZED REPRESENTATIVE ON BEHALF OF ASSESSEE IS THAT ADDITI ONS HAVEBEEN SOLELY MADE ON THE BASIS OF SHOW-CAUSE NOTICE ISSUED BY TH E DGCEI WHEREIN IT WAS OBSERVED THAT ASSESSEE IS ENGAGED IN UNDER VALU ATION OF SALES AND CLANDESTINE REMOVAL OF GOODS. THUS ASSESSING OFFIC ER HAS REOPENED ASSESSMENT SOLELY ON THE BASIS OF SCN ISSUED BY DGC EI AND ULTIMATELY MADE ADDITIONS OF ESTIMATED GROSS PROFIT ON UNDER VALUATION OF SALES AND CLANDESTINE REMOVAL OF GOODS WITHOUT INDEPENDENT AP PLICATION OF MIND.LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTE D THAT UNDER EXCISE PROCEEDINGS ADJUDICATING AUTHORITY PASSED THE ORDE R WHICH WAS ULTIMATELY CARRIED IN APPEAL UPTO HONBLE CESTAT. H ONBLE CESTAT VIDE ORDER DATED 12.02.2015 HAS DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE BY HOLDING THAT DEPARTMENT CANNOT ESTIMATE VALUE OF ALLEGED ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 21 - SUPPRESSION OF SALES AS WELL AS CLANDESTINE REMOVAL OF GOODS MERELY ON THE BASIS OF ASSUMPTION AND SURMISES. THE OPERATIVE PORTION OF CESTAT ORDER IS REPRODUCED HERE AS UNDER: 6. IN THESE PROCEEDINGS THE FOLLOWING ISSUES ARE R EQUIRED TO BE DELIBERATED UPON:- (I) WHETHER THE APPELLANTS MENTIONED IN PARA 5.1 AB OVE HAVE INDULGED IN CLANDESTINE MANUFACTURE AND CLEARANCE O F CERAMIC GLAZED MIXTURE (FRIT) IN VIEW OF THE ADJUDICATION ORDERS PASSED THE ADJUDICATING AUTHORITIES ON THE BASIS OF NATURA L GAS CONSUMPTION NORMS PER METRIC TON? (II) WHETHER THE APPELLANTS MENTIONED IN PARA 5.1 A ND 5.2 HAVE INDULGED IN UNDERVALUATION OF FRIT AND ALSO CLANDES TINELY CLEARED FRIT AS PER A PERSONAL LEDGERS RETRIEVED FROM A PEN -DRIVE RECOVERED FROM SANYO AND OTHER PERSONAL RECORDS AND PEN-DRIVE S FROM THE CERAMIC TILE MANUFACTURERS READ WITH THEIR STAT EMENTS ? (III) WHETHER THE ADJUDICATING AUTHORITIES WERE JUS TIFIED IN DENYING CROSS-EXAMINATION OF WITNESS UNDER THE PROVISIONS O F SECTION 9D OF THE CENTRAL EXCISE ACT 1944 READ WITH THE JUDIC IAL PRONOUNCEMENTS ON THE ISSUE? 7. FOR THE PURPOSE OF POINT NO. 6(I) ABOVE AND CLAN DESTINE REMOVAL OF FRIT BY THE FRIT MANUFACTURERS ADJUDICATING AUTH ORITIES HAVE MAINLY RELIED UPON AVERAGE CONSUMPTION OF NATURAL GAS FOR MANUFACTURERS ONE MT OF FRIT BY TAKING DATA EITHER FROM THE APPELLANT S OR BY CONDUCTING SOME GAS CONSUMPTION STUDIES. BESIDES CERTAIN STUD IES/ DATA WITH RESPECT TO AVERAGE PACKING TIME TAKING FOR FILLING OF FINISHED GOODS (FRIT) IN THE PLASTIC BAGS AND CONSUMPTION OF ELECT RICITY UNITS PER MT OF FRIT ON THE BASIS OF APPELLANTS RECORDS HAVE ALSO BEEN USED TO SUPPORT THAT CLANDESTINE MANUFACTURE AND CLEARANCES HAVE BE EN EFFECTED BY THE CONCERNED APPELLANTS. 8. AS PER PARA 3.5 ABOVE CLANDESTINE MANUFACTURE A ND CLEARANCE OF FRITS BY THE APPELLANTS HAVE BEEN ESTIMATED BY TAKI NG DIFFERENT GAS CONSUMPTION NORMS WHICH EITHER GOT SUGGESTED BY THE APPELLANT OR WORKED OUT BY THE INVESTIGATION. AVERAGE GAS CONSU MPTION FROM 263 SCMS TO 484 SCMS WERE FIXED FOR DIFFERENT APPELLANT S AND WERE CONSIDERED BY THE ADJUDICATING AUTHORITIES FOR CALC ULATING/ CONFIRMING THE DEMANDS AND IMPOSING PENALTIES. FOLLOWING OBSE RVATIONS HAVE BEEN ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 22 - MADE BY THE ADJUDICATING AUTHORITY IN THE CASE OF B ELGIUM GLASS & CERAMICS PVT. LIMITED (APPEAL NOS. 796 TO 798/2011) IN PARAS 24.4.4 24.5.4 AND 24.5.5 WHILE PASSING OIO NO. 05/VRC-1/MP /2011 DATED 23.03.2011 AND JUSTIFYING THE CALCULATIONS/ ESTIMAT IONS MADE BY REVENUE:- 24.4.4. THUS EVEN BY CONSIDERING THAT 5 NOS. OF K ILN OPERATED BY M/S. BELGIUM DURING THE ENTIRE PAST PERIOD WERE OF LOWEST SIZE VIZ. 146X6 EACH ONE OF WHICH IS HAVING 4000 SCMS O F NATURAL GAS CONSUMPTION PER DAY OF 24 HOURS THE NET OUTPUT OF CERAMIC FRIT PER KILN PER DAY BY CONSUMING 450 SCMS OF GAS WOULD NOT BE LESS THAN 8.888 MTS. IN OTHER WORDS THE MINIMU M MONTHLY PRODUCTION OF FRIT PER KILN WOULD BE AT LEAST 266.6 40 NTS AND THE TOTAL MINIMUM MONTHLY PRODUCTION FOR ALL THE 5 KILN S WOULD NOT BE LESS THAN 1333.200 MTS. 24.4.5. THE ABOVE PRODUCTION OF M/S. BELGIUM IS FUL LY SUBSTANTIATED FROM THE ANNEXURE F REFERRED SUPRA W HEREIN IT IS OBSERVED THAT DURING A PERIOD OF 18 MONTHS OUT OF T HE TOTAL 65 MONTHS COVERED THEREIN THEY HAVE REPORTED PRODUCTI ON OF FRIT EXCEEDING THE QUANTITY OF 1300 MTS. IN FACT DURIN G THE MONTH OF JULY 2005 THE RECORDED PRODUCTION QUANTITY WAS 2574.500 MTS WITH A TOTAL GAS CONSUMPTION RATE OF 370.557 SC M PER MT WHICH CLEARLY REVEALS THAT THE AFORESAID CALCULATED CAPACITY OF 1333 MTS IS THE BAREST MINIMUM. SCRUTINY OF THE CH ART HOWEVER REVEALS THAT DURING 15 MONTHS THEY HAVE DECLARED P RODUCTION QUANTITY LESS THAN 1000 MTS PER MONTH EVEN WITH MUC H HIGHER RATE OF GAS CONSUMPTION. DURING 32 MONTHS THE TOT AL QUANTITY DECLARED BY THEM IN THEIR STATUTORY RECORDS WAS LES S THAN 1275MTS WHEREIN ALSO THE GAS CONSUMPTION WAS EXCEED ING THE AVERAGE REQUIREMENT OF 450SCM PER MT. 24.5.4. THUS THE ABOVE PANCHNAMA PROCEEDINGS UNAMB IGUOUSLY REVEALED THAT THE NORMAL TIME REQUIRED FOR MANUFACT URING 50 KGS OF FRIT WAS 8 MINUTES I.E. 100 KGS IN 16 MINUTES A ND 1 MT IN 2 HOURS 40 MINUTES. THIS REVEALS THAT ONE KILN CAN M ANUFACTURE 10 MT OF FRIT PER DAY OF 24 HOURS WHICH MEANS THAT TH E TOTAL QUANTITY OF FRIT PRODUCED BY M/S. BELGIUM WITH THEI R 5 KILNS IS 50MTS PER DAY. THUS IT IS OBSERVED THAT NORMAL QU ANTITY OF FRIT WHICH COULD BE PRODUCED IN THE FACTORY OF M/S. BELG IUM BY USING 5 KILNS AT A TIME WOULD BE 1500MT PER MONTH. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 23 - 24.5.5 COMPARISON OF THE MONTHLY PRODUCTION OF FRIT ACCOUNTED FOR BY M/S. BELGIUM IN THEIR STATUTORY RECORDS AS A PPEARING IN COL. NO. 2 OF THE ANNEXURE-F VIS-A-VIS THE ACTUAL Q UANTITY WHICH WOULD HAVE PRODUCED BY THEM IN THEIR FACTORY AS DIS CUSSED ABOVE FULLY SUBSTANTIATES LARGE SCALE SUPPRESSION OF PRODUCTION BY THEM. THE FACT THAT THE QUANTITY RECORDED IN TH EIR STATUTORY RECORDS DURING SOME MONTHS EXCEEDS THE AFORESAID A VERAGE QUANTITY OF 1500MT PER MONTH INDICATES THAT THE PH YSICAL VERIFICATION CONDUCTED AT THE FACTORY AND INFERENCE DRAWN IN RESPECT OF THEIR PRODUCTION CAPACITY IS FACTUAL. I N ORDER TO HAVE AN IDEA ON THE QUANTUM OF THE SUPPRESSION OF PRODUC TION BY M/S. BELGIUM COL. NO. 7 HAS BEEN ADDED TO THE ANNEXURE-F WHICH INDICATES THE DIFFERENCE OF QUANTITY ACCOUNTED FOR IN THE OFFICIAL RECORDS AS AGAINST THE AVERAGE PRODUCTION OF 1500MT PER MONTH. THE CHART INDICATES THAT EXCEPT DURING A PERIOD OF 7 MONTHS THE MONTHLY AVERAGE PRODUCTION NOTICED DURING THE AFORE SAID PANCHNAMA DATED 26.09.2009 EXCEEDED THE QUANTITY AC COUNTED FOR BY M/S. BELGIUM IN THEIR STATUTORY RECORDS. 8.1 FROM THE ABOVE FINDINGS OF THE ADJUDICATING AUT HORITY GAS CONSUMPTION OF 450 SCM PER MT OF FRIT MANUFACTURE H AS BEEN ARRIVED AT FOR M/S. BELGIUM GLASS & CERAMICS PVT. LIMITED W HICH ACCORDING TO REVENUE WILL GAVE A CAPACITY OF 1333.2 MTS PER MONT H TO THAT APPELLANT. IN PARA 24.5.4 AND 24.5.5 THE ADJUDICA TING AUTHORITY OBSERVED THAT THE NORMAL QUANTITY OF FRIT THAT COUL D BE MANUFACTURED BY THIS APPELLANT WILL BE 1500MTS PER MONTH. IT HAS A LSO BEEN FAIRLY MENTIONED BY THE ADJUDICATING AUTHORITY THAT IN CER TAIN MONTHS THE PRODUCTION OF THIS APPELLANT WAS ALSO MORE THAN 150 0MT. ADJUDICATING AUTHORITY HAS ONLY SEEN ONE SIDE OF THE COIN THAT A PRODUCTION OF MORE THAN 1500MT IS POSSIBLE THEREFORE A CAPACITY OF AR OUND 1300MTS IS JUSTIFIED. THE OTHER SIDE OF COIN WILL BE THAT APP ELLANT HAS ALSO REFLECTED A QUANTITY OF MORE THAN 1500MTS OF FRIT MANUFACTURE D PER MONTH IN THE RECORDS. SUCH A DEPICTION IN THE BOOKS OF ACCOUNTS GIVES A CERTIFICATION TO THE CORRECTNESS OF THE DATA MAINTAINED BY THE AP PELLANT. THE VERY FACT THAT USING GAS CONSUMPTION METHOD AND TIME TAKEN FO R PACKING FINISHED GOODS ADOPTED BY THE LOWER AUTHORITIES GIVES DIFFER ENT ESTIMATIONS OF MANUFACTURE AND CLEARANCES BY THIS APPELLANT THE S AME CANNOT BE TAKEN AS A CORRECT/ DEPENDABLE METHOD FOR CALCULATING CLE ARANCES AND IS ALSO NOT PRESCRIBED. IN THE CASE OF BELGIUM GLASS & CER AMIC PVT. LIMITED ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 24 - AS PER ANNEXURE-F TO THE SHOW CAUSE NOTICE DATED 08 .10.2009 GAS CONSUMPTIONS OF 383.715SCM AND 321.959 SCM FOR MANU FACTURING ONE MT HAVE ALSO BEEN INDICATED IN THE RECORDS OF THE A PPELLANTSALONGWITH HIGHER CONSUMPTION OF GAS. IT IS NOT UNDERSTOOD AS TO WHY AN ARBITRARY FIGURE OF 450SCM PER MT IS REQUIRED TO BE TAKEN FOR ESTIMATING THE PRODUCTION/ CLEARANCE OF FINISHED GOODS FRITS. IN THE SAME ANNEXURE-F THE UNITS OF ELECTRICITY CONSUMED IN CERTAIN MONTHS IS LESS THAN 55 UNITS AND IS EVEN AS LOW AS 40.153 UNITS. THE ABOVE DATA OF THE APPELLANT CONTAINED IN ANNEXURE-F TO THE SHOW CAUSE NOTICE DA TED 08.10.2009 REFLECTS THAT RECORDS MAINTAINED BY THIS APPELLANT ARE GENUINE AND CORRECT. THERE IS NO CORROBORATING EVIDENCE OF EXC ESS/ SHORT RAW MATERIALS OF FRIT PROCURED CLANDESTINELY BY THIS AP PELLANT OR ANY OF THE OTHER APPELLANTS. THERE IS NO SEIZURE OF CLANDESTI NELY REMOVED GOODS FROM ANY OF THE APPELLANTS OR ANY EXCESS STOCK OF F INISHED GOODS. NO CASH HAS BEEN SEIZED FROM ANY OF THE PREMISES SEARC HED BY THE REVENUE WHEN CRORES OF CASH HAS BEEN ALLEGED TO HAVE BEEN T RANSFERRED TO THE APPELLANTS ACROSS THE COUNTRY. THERE IS ALSO NO E VIDENCE OF EXCESS PROCUREMENT OF RAW MATERIALS. IT IS ALSO CLAIMED B Y THE APPELLANTS THAT CALORIFIC VALUE OF THE GAS SUPPLIED BY GAIL VARY IN GCV (GROSS CALORIFIC VALUE) AND NCV (NET CALORIFIC VALUE) WHIC H ALSO EFFECT CONSUMPTION OF GAS ALONGWITH THE TYPE OF FRIT GRADE MANUFACTURED. IT IS OBSERVED FROM THE GROUND (D) OF THE GROUNDS OF APP EAL FILED BY M/S. BELGIUM GLASS & CERAMIC PVT. LIMITED IN THE CASE O F BELGIUM THAT SUCH DOCUMENTARY EVIDENCES OF GAS HAVING DIFFERENT GCV AND HCV EXIST ON RECORDS. THIS ARGUMENT HAS BEEN BRUSHED A SIDE BY THE ADJUDICATING AUTHORITY THAT SHRI PIYUSHMAKADIA DIR ECTOR OF THE APPELLANT HAS AGREED TO CONSUMPTION OF 450SCM/PMT ( PLUS/MINUS) 10% GAS CONSUMPTION. THE ABOVE CALCULATIONS ARE TH US BASED ON STATEMENT OF SHRI PIYUSHMAKADIA DIRECTOR REPRODUCE D IN OIO DATED 23.03.2011 AT PARAS 53 & 54. HOWEVER SUCH STATEM ENTS CAN NOT BE RELIED UPON UNLESS THE CROSS-EXAMINATION OF THE WIT NESSES IS EXTENDED TO THE APPELLANTS. 8.2 IN THE REMAINING CASES ALSO WHERE CLANDESTINE C LEARANCES HAVE BEEN ESTIMATED ON THE BASIS OF NATURAL GAS CONSUMPT ION THERE IS NO EVIDENCE OF EXCESS RAW MATERIAL PURCHASED BY THE AP PELLANTS. NO SHORTAGES/ EXCESS OF RAW MATERIALS OR FINISHED GOOD S HAVE BEEN DETECTED ANY WHERE DURING THE INVESTIGATIONS. IN NONE OF TH E CASES THERE IS ANY SEIZED CASH OR SEIZURE OF CLANDESTINELY REMOVED FIN ISHED GOODS DURING TRANSPORTATION FROM THE FACTORY PREMISES OF THE APP ELLANTS. IN THIS ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 25 - REGARD APPELLANTS HAVE RELIED UPON THE CASE LAWS OF ARYA FIBERS PVT. LIMITED VS. CCE AHMEDABAD-II [2014 (311) ELT 529 ( TRI. AHMD.)]AND GUPTA SYNTHETICS LIMITED VS. CCE AHMEDA BAD II [2014 (312) ELT 225 (TRI. AHMD.)]. PARA 38 AND 40 OF THE CASE LAW OF ARYA FIBERS PVT. LIMITED VS. CCE AHMEDABAD-II IS RELEVAN T AND IS REPRODUCED BELOW:- 38. IT WAS THEREFORE THE SUBMISSION OF THE LD. S ENIOR ADVOCATE THAT IN THREE CASES CITED BY THE LD. SPECIAL COUNS EL FOR THE REVENUE THIS TRIBUNAL AND HONBLE HIGH COURT OF GUJARAT HAD TAKEN A VIEW THAT THERE WAS NO NEED TO PROVE SUCH CLANDESTINE CLEARAN CE WITH MATHEMATICAL PRECISION. THESE WERE CASES WHERE EVID ENCE WAS AVAILABLE REGARDING UNACCOUNTED DUTY PAID GOODS BEI NG FOUND SHORTAGE OF FINISHED GOODS FOUND AND EVIDENCE REGAR DING SUPPLY OF RAW MATERIALS AND RECEIPT OF COMMISSION BY BROKERS WHICH WERE ALL TANGIBLE EVIDENCE OF CLANDESTINE CLEARANCES. IT WAS FURTHER SUBMITTED BY THE LD. SENIOR ADVOCATE THAT THE CASES CITED BY HIM WERE CASES WHERE NO SUCH EVIDENCE WAS AVAILABLE AT ALL AND THE LAW LAID DOWN AS APPLICABLE TO SUCH CASES TO WHICH CATEGORY THE PRE SENT CASE BELONGS. 40. AFTER HAVING VERY CAREFULLY CONSIDERED THE LAW LAID DOWN BY THIS TRIBUNAL IN THE MATTER OF CLANDESTINE MANUFACT URE AND CLEARANCE AND THE SUBMISSIONS MADE BEFORE US IT IS CLEAR THA T THE LAW IS WELL- SETTLED THAT IN CASES OF CLANDESTINE MANUFACTURE A ND CLEARANCES CERTAIN FUNDAMENTAL CRITERIA HAVE TO BE ESTABLISHED BY REVE NUE WHICH MAINLY ARE THE FOLLOWING : (I) THERE SHOULD BE TANGIBLE EVIDENCE OF CLANDESTINE MA NUFACTURE AND CLEARANCE AND NOT MERELY INFERENCES OR UNWARRAN TED ASSUMPTIONS; (II) EVIDENCE IN SUPPORT THEREOF SHOULD BE OF : (A) RAW MATERIALS IN EXCESS OF THAT CONTAINED AS P ER THE STATUTORY RECORDS; (B) INSTANCES OF ACTUAL REMOVAL OF UNACCOUNTED FINI SHED GOODS (NOT INFERENTIAL OR ASSUMED) FROM THE FACTORY WITHOUT PAYMENT OF DUTY; (C) DISCOVERY OF SUCH FINISHED GOODS OUTSIDE THE FA CTORY; (D) INSTANCES OF SALE OF SUCH GOODS TO IDENTIFIED P ARTIES; (E) RECEIPT OF SALE PROCEEDS WHETHER BY CHEQUE OR BY CASH OF SUCH GOODS BY THE MANUFACTURERS OR PERSONS AUTHORIZED BY HIM; ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 26 - (F) USE OF ELECTRICITY FAR IN EXCESS OF WHAT IS NEC ESSARY FOR MANUFACTURE OF GOODS OTHERWISE MANUFACTURED AND VALIDLY CLEARED ON PAYMENT OF DUTY; (G) STATEMENTS OF BUYERS WITH SOME DETAILS OF ILLIC IT MANUFACTURE AND CLEARANCE; (H) PROOF OF ACTUAL TRANSPORTATION OF GOODS CLEARE D WITHOUT PAYMENT OF DUTY; (I) LINKS BETWEEN THE DOCUMENTS RECOVERED DURING TH E SEARCH AND ACTIVITIES BEING CARRIED ON IN THE FACTO RY OF PRODUCTION; ETC. NEEDLESS TO SAY A PRECISE ENUMERATION OF ALL SITUA TIONS IN WHICH ONE COULD HOLD WITH ACTIVITY THAT THERE HAVE BEEN CLANDESTINE MANUFACTURE AND CLEARANCES WOULD NOT BE POSSIBLE. AS HELD BY THIS TRIBUNAL AND SUPERIOR COURTS IT WOULD DEPEND ON TH E FACTS OF EACH CASE. WHAT ONE COULD HOWEVER SAY WITH SOME CERTAI NTY IS THAT INFERENCES CANNOT BE DRAWN ABOUT SUCH CLEARANCES ME RELY ON THE BASIS OF NOTE BOOKS OR DIARIES PRIVATELY MAINTAINED OR ON MERE STATEMENTS OF SOME PERSONS MAY EVEN BE RESPONSIBLE OFFICIALS OF THE MANUFACTURER OR EVEN OF ITS DIRECTORS/PARTNERS WHO ARE NOT EVEN PERMITTED TO BE CROSS-EXAMINED AS IN THE PRESENT CASE WITHOUT ONE OR MORE OF THE EVIDENCES REFERRED TO ABOVE BEING PRESENT. IN FACT THIS BENCH HAS CONSIDERED SOME OF THE CASE-LAW ON THE SUBJECT IN C ENTURIAN LABORATORIES V. CCE VADODARA [2013 (293) E.L.T. 68 9]. IT WOULD APPEAR THAT THE DECISION THOUGH RENDERED ON 3-5-20 13 WAS REPORTED IN THE ISSUE OF THE E.L.T. DATED 29-7-2013 WHEN THE PRESENT CASE WAS BEING ARGUED BEFORE US PERHAPS NOT AVAILABLE TO T HE PARTIES. HOWEVER WE HAVE IN THAT DECISION APPLIED THE LAW AS LAID DOWN IN THE EARLIER CASES SOME OF WHICH NOW HAVE BEEN PLACED BEFORE US . THE CRUX OF THE DECISION IS THAT RELIANCE ON PRIVATE/INTERNAL RECOR DS MAINTAINED FOR INTERNAL CONTROL CANNOT BE THE SOLE BASIS FOR DEMAN D. THERE SHOULD BE CORROBORATIVE EVIDENCE BY WAY OF STATEMENTS OF PURC HASERS DISTRIBUTORS OR DEALERS RECORD OF UNACCOUNTED RAW MATERIAL PURCHASED OR CONSUMED AND NOT MERELY THE RECORDING OF CONFESS IONAL STATEMENTS. A CO-ORDINATE BENCH OF THIS TRIBUNAL HAS IN ANOTHE R DECISION REPORTED IN THE E.L.T. ISSUE OF 5-8-2013 (AFTER HEARINGS IN THE PRESENT APPEALS WERE CONCLUDED) ONCE AGAIN REITERATED THE SAME PRI NCIPLES AFTER CONSIDERING THE ENTIRE CASE-LAW ON THE SUBJECT [HIN DUSTAN MACHINES V. CCE [2013 (294) E.L.T. 43]. MEMBERS OF BENCH HAVING HEARING INITIALLY DIFFERED THE MATTER WAS REFERRED TO A TH IRD MEMBER WHO HELD THAT CLANDESTINE MANUFACTURE AND CLEARANCES WERE NO T ESTABLISHED BY THE REVENUE. WE ARE NOT GOING INTO IT IN DETAIL SI NCE THE LEARNED COUNSELS ON EITHER SIDE MAY NOT HAVE HAD THE OPPORT UNITY OF EXAMINING THE DECISION IN THE LIGHT OF THE FACTS OF THE PRESENT CASE. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 27 - SUFFICE IT TO SAY THAT THE SAID DECISION HAS ALSO T ABULATED THE ENTIRE CASE-LAW INCLUDING MOST OF THE DECISIONS CITED BEF ORE US NOW CONSIDERED THEM AND COME TO THE ABOVE CONCLUSION. IN YET ANOTHER DECISION OF A CO-ORDINATE BENCH OF THE TRIBUNAL [PA N PARAG INDIA V. CCE 2013 (291) E.L.T. 81] IT HAS BEEN HELD THAT T HE THEORY OF PREPONDERANCE OF PROBABILITY WOULD BE APPLICABLE ON LY WHEN THERE ARE STRONG EVIDENCES HEADING ONLY TO ONE AND ONLY ONE C ONCLUSION OF CLANDESTINE ACTIVITIES. THE SAID THEORY CANNOT BE ADOPTED IN CASES OF WEAK EVIDENCES OF A DOUBTFUL NATURE. WHERE TO MANUF ACTURE HUGE QUANTITIES OF FINAL PRODUCTS THE ASSESSEE REQUIRE A LL THE RAW MATERIALS THERE SHOULD BE SOME EVIDENCE OF HUGE QUANTITIES OF RAW MATERIALS BEING PURCHASED. THE DEMAND WAS SET ASIDE IN THAT C ASE BY THIS TRIBUNAL. 8.3 APPELLANTS HAVE ALSO RELIED INTER-ALIA ON THE JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CCE MEERUT-I V S. RA CASTINGS PVT. LIMITED [2012 (26) STR 262 (ALL.)] WHICH IS U PHELD BY THE HON'BLE SUPREME COURT AS REPORTED IN 2011 (269 ELT A108. THE FACTS OF THIS CASE AND THE ORDERS OF THE ALLAHABAD HIGH C OURT IS AS FOLLOWS:- [ORDER]- THESE APPEALS UNDER SECTION 35-G OF THE C ENTRAL EXCISE ACT 1944 (HEREINAFTER REFERRED TO AS THE ACT) ARE AGAIN ST THE ORDER OF THE TRIBUNAL DATED 19-6-2008 [2009 (237) E.L.T. 674 (TR I. - DEL.)] BY WHICH THE TRIBUNAL HAS ALLOWED THE APPEALS OF THE R ESPONDENTS AND QUASHED THE ORDER PASSED BY THE ADJUDICATING AUTHOR ITY. 2. THE RESPONDENT NOS. 1 AND 2 WERE INVOLVED IN THE MANUFACTURING OF MS INGOTS AND IN RESPECT THEREOF HAD MAINTAINED THE BOOKS OF ACCOUNT AS PROVIDED UNDER THE CENTRAL EXCISE RULES AND WERE FURNISHING THE RETURNS AND PAYING THE CENTRAL EXCISE DUTIES. THE S UPERINTENDENT ISSUED THE SHOW CAUSE NOTICES DATED 1-12-2006 ASKING THE R ESPONDENT TO SHOW CAUSE WHY THE DEMAND TOWARDS CENTRAL EXCISE DUTY MA Y NOT BE CONFIRMED FOR THE PERIOD FROM 2001-02 TO 2004-05 BY INVOKING THE PROVISO TO SECTION 11A(1) OF THE ACT AND WHY THE PE NALTY SHOULD NOT BE IMPOSED UNDER RULE 25(1) OF THE CENTRAL EXCISE R ULES 2002 READ WITH SECTION 11AC OF THE ACT. VARIOUS ALLEGATIONS H AVE BEEN MADE IN THE SHOW CAUSE NOTICES AND FROM THE PERUSAL OF THE SHOW CAUSE NOTICES IT APPEARS THAT THE EXCESS PRODUCTION HAS BEEN ESTI MATED ON THE BASIS OF THE HIGHER ELECTRICITY CONSUMPTION. THE RESPONDENTS FILED THEIR REPLY. THE COMMISSIONER OF CENTRAL EXCISE MEERUT-I VIDE ITS ORDER DATED 30-7-2007 HAS CONFIRMED THE DEMAND AGAINST THE RESP ONDENT NOS. 1 AND 2 AND ALSO IMPOSED THE PENALTY ON THE RESPONDEN T NOS. 1 AND 2 AND ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 28 - ON OTHER RESPONDENTS ALLEGED TO HAVE BEEN INVOLVED IN THE CLANDESTINE REMOVAL OF THE GOODS. 3. BEING AGGRIEVED BY THE IMPUGNED ORDERS THE RESP ONDENTS FILED APPEALS BEFORE THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI. THE TRIBUNAL OBSERVED THAT IT IS SETTLED PRI NCIPLE OF LAW THAT THE ELECTRICITY CONSUMPTION CAN NOT BE THE ONLY FACTOR OR BASIS FOR DETERMINING THE DUTY LIABILITY THAT TOO ON IMAGINA RY BASIS ESPECIALLY WHEN RULES 173E MANDATORILY REQUIRES THE COMMISSION ER TO PRESCRIBE/FIX NORM FOR ELECTRICITY CONSUMPTION FIRS T AND NOTIFY THE SAME TO THE MANUFACTURERS AND THEREAFTER ASCERTAIN THE REASONS FOR DEVIATIONS IF ANY TAKING ALSO INTO ACCOUNT THE CO NSUMPTION OF VARIOUS INPUTS REQUIREMENTS OF LABOUR MATERIAL POWER SUP PLY AND THE CONDITIONS FOR RUNNING THE PLANT TOGETHER WITH THE ATTENDANT FACTS AND CIRCUMSTANCES. THE TRIBUNAL FURTHER OBSERVED THAT N O EXPERIMENT HAVE BEEN CONDUCTED IN THE FACTORIES OF THE APPELLANTS F OR DEVISING THE CONSUMPTION NORMS OF ELECTRICITY FOR PRODUCING ON M T OF STEEL INGOTS. TRIBUNAL ALSO OBSERVED THAT THE ELECTRICITY CONSUMP TION VARIES FROM ONE HEAT TO ANOTHER AND FROM ONE DATE TO ANOTHER AN D EVEN FROM ONE HEAT TO ANOTHER WITHIN THE SAME DATE. THEREFORE NO UNIVERSAL AND UNIFORMLY ACCEPTABLE STANDARD OF ELECTRICITY CONSUM PTION CAN BE ADOPTED FOR DETERMINING THE EXCISE DUTY LIABILITY T HAT TOO ON THE BASIS OF IMAGINARY PRODUCTION ASSUMED BY THE REVENUE WITH NO OTHER SUPPORTING RECORD EVIDENCE OR DOCUMENT TO JUSTIFY ITS ALLEGATIONS. THE TRIBUNAL HAS ALSO CONSIDERED THE REPORT OF DR. BATR A WHICH HAS BEEN RELIED UPON FOR MAKING THE ALLEGATIONS THAT THERE W AS HIGHER ELECTRICITY CONSUMPTION. IT APPEARS THAT DR. BATRA IN HIS REPOR T HAS OBSERVED THAT FOR THE PRODUCTION OF 1 MT OF STEEL INGOTS 1046 UN ITS ELECTRICITY REQUIRED. 8.4 IN VIEW OF THE SETTLED PROPOSITION OF LAW LAID DOWN ABOVE ESTIMATION OF QUANTITY OF GOODS MANUFACTURED AND CL ANDESTINE REMOVAL OF GOODS BY THE APPELLANTS CANNOT BE SLAPPED ON THE BASIS OF AVERAGES ARRIVED AND CALCULATED BASED ON NORMS OF GAS CONSUM PTION IN MANUFACTURE OF 1 MT OF FRIT. IT IS RIGHTLY CONTEST ED BY THE APPELLANTS THAT FRIT MANUFACTURED IS NOT COVERED BY ANY NOTIFI CATION ISSUED UNDER SECTION 3A OF THE CENTRAL EXCISE ACT 1944 WHERE CO MPOUNDED LEVY HAS BEEN PRESCRIBED AND CAPACITY OF THE UNIT IS REQ UIRED TO BE FIXED ON GAS CONSUMPTION BASIS AS DONE BY THE REVENUE. IT IS OBSERVED THAT REVENUE HAS ATTEMPTED TO ADOPT AN ESTIMATION METHOD FOR DEMANDING DUTY AND PROVING CLANDESTINE REMOVAL WHICH IS NOT P RESCRIBED BY LAW. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 29 - 8.5 IN THE CASE OF APPELLANT M/S. WELLSUIT GLASS & CERAMICS PVT. LIMITED - [2014 (304) ELT 618 (TRI. AHMD.)] THIS B ENCH REMANDED THE CASE TO THE ADJUDICATING AUTHORITY TO GET INTER-AL IA SOME MORE STUDIES DONE ON THE GAS CONSUMPTION PER METRIC TONNE OF DIF FERENT GRADES. IT HAS BEEN ARGUED BY THE REVENUE THAT THE STUDIES SUG GESTED BY THE BENCH ARE NOT POSSIBLE NOW AND SUCH STUDIES ARE ALSO NOT POSSIBLE WITH RESPECT TO THE OTHER APPELLANTS. PARA 3.2 AND 6 OF THE ORD ER PASSED BY THIS BENCH IN THE CASE OF M/S. WELLSUIT GLASS & CERAMICS LIMIT ED (SUPRA) ARE REPRODUCED BELOW:- 3.2 WITH REGARD TO CONSUMPTION OF GAS LEARNED ADV OCATE RELIED UPON THE STATEMENTS OF SHRI BALKRISHNA M. THAKKAR MANAG ING DIRECTOR THAT THE CONSUMPTION OF GAS WOULD VARY ON THE QUALITY OF FRIT RAW MATERIAL USED CONDITION OF KILN GAS PRESSURE FLUXES USED ETC. IT WAS THUS ARGUED THAT THERE ARE VARIOUS FACTORS WHICH AFFECT THE CONSUMPTION OF GAS AND THERE CANNOT BE A FIXED RATIO OF CONSUMPTIO N OF GAS FOR A SPECIFIC FRIT OUTPUT. HE ALSO ARGUED THAT IN OCTOBE R 2007 THERE WAS A CHANGE IN THE MANAGEMENT AND THE NEW MANAGEMENT TOO K A SERIES OF STEPS TO IMPROVE QUALITY OF FRIT AND MADE THE GAS C ONSUMPTION EFFICIENT. THEY ALSO INSTALLED THREE NEW REFRACTORY KILN WITH GREATER PRODUCTION CAPACITY AND USED SUPERIOR REFRACTORIES WHICH WERE BETTER MAINTAINED FROM TIME TO TIME. HE DREW ATTENTION OF THE BENCH TO THE FACT THAT SERVICES OF A CERAMIC CONSULTANT WAS ENGA GED TO GET BETTER YIELD. HE RELIED UPON THE SUBMISSIONS AND RECORDS T O SHOW THE PURCHASE OF NEW KILN AND GENERATING SET. IT WAS DUE TO THESE EFFORTS THAT THE RATIO OF GAS CONSUMPTION FROM 2008-09 ONWA RDS WENT DOWN FROM 844 SCM/MT TO 286 SCM/MT AS INDICATED IN PARA 13.2 OF ORDER-IN-ORIGINAL DATED 10-5-2011. THAT BEFORE 2008 THERE WAS NO GENERATOR AVAILABLE WITH APPELLANT AND EVERY TIME T HERE WAS A POWER FAILURE LARGE QUANTITIES OF GAS WAS USED IN RE-FIR ING THE KILN. HE PRODUCED DOCUMENTS RELATING TO INSTALLATION OF DG S ET. HE REFERRED TO THE PURCHASE BILLS TO SHOW SUPERIOR QUALITY OF REFR ACTORIES REPLACED IN THE KILNS AFTER 2008-09. HE ARGUED THAT AS PER THE STATEMENT OF SHRI BALKRISHNA THAKKAR HIMSELF WHICH IS RECORDED BY TH E DEPARTMENT THERE CANNOT BE ANY FIXED RATIO OF GAS CONSUMPTION AND THAT AFTER THE NEW MANAGEMENT TOOK OVER THEY HAVE IMPROVED THE EF FICIENCY OF THE UNIT AND THAT MERE GAS CONSUMPTION CANNOT BE USED A S A FACTOR FOR CLANDESTINE MANUFACTURE AND REMOVAL. HE EXPLAINED T HAT FRIT CONSISTS OF TWO COMPONENTS I.E. GLASS AND SILICONE DIOXIDE. THAT THE MELTING POINT OF GLASS IS VERY HIGH AND OTHER MATERIALS CAL LED FLUXES ARE ADDED AS PER EXPERT CONSULTATIONS TO LOWER MELTING POINT SUCH AS BORAX BORIC ACID AND ZINC OXIDE ETC. THAT WHEN FLUXES ARE USED THE MELTING POINT REQUIRED FOR MANUFACTURE OF FRIT IS REDUCED. LEARNE D ADVOCATE REFERRED ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 30 - TO EXTRACTS FROM THE BOOK INDUSTRIAL CERAMICS BY F ELIX SINGER AND THE BOOK GLASSING AND DECORATION OF CERAMICS TILES BY A UTORIVARI AND EXTRACTS FROM THE JOURNAL. CERAMIC INDUSTRY JANUAR Y 2000 AS WELL AS VARIOUS EXTRACTS DOWNLOADED FROM INTERNET TO SUPPOR T HIS CASE. HE REFERRED TO THE FOLLOWING DECISIONS TO SUBMIT THAT GAS CONSUMPTION ALONE CANNOT BE THE SOLE BASIS OF CLANDESTINE MANUF ACTURE AND REMOVAL OF THE FINISHED PRODUCT :- (I) VISHWA TRADERS PVT. LIMITED V. CCE- [2012 (278 ) E.L.T. 362] (II) CCE V. VISHWA TRADERS PVT. LIMITED - [2013 (28 7) E.L.T. 243] (III) MUKESH DYE WORK V. CCE - [2006 (196) E.L.T. 237] (IV) SOUTHERN ISPAT LIMITED V. CCE - [2009 (248) E .L.T. 270] (V) SVM CERA TEA LIMITED V. CCE - [2013 (292) E.L.T . 580] 4 .. 5 .. 6. ON THE ISSUE OF CLANDESTINE REMOVAL OF FRIT BAS ED ON THE GAS CONSUMPTION OF THE MAIN APPELLANT IT IS OBSERVED F ROM PARA 13.2 OF THE ORDER-IN-ORIGINAL DATED 10-5-2011 THAT RECORDS MAINTAINED BY MAIN APPELLANT SHOW THE GAS CONSUMPTION FOR MAKING 1 MT OF FRIT FROM 844 SCM TO 286 SCM. IT HAS BEEN CONTESTED BY THE APPELL ANT THAT GAS CONSUMPTION VARIED FROM SEASON TO SEASON FROM ONE QUALITY OF FRIT TO OTHER QUALITY OF FRIT USE OF BETTER TECHNOLOGY ET C. IT HAS ALSO BEEN BROUGHT ON RECORD THAT AFTER CHANGE IN THE MANAGEME NT IN OCT. 2007 AND INSTALLATION OF NEW FURNACES AND NEW REFRACTORI ES THE GAS CONSUMPTION HAS REDUCED. FURTHER APPELLANT HAS ALSO BROUGHT ON RECORD THAT DUE TO EXPERT CONSULTATIONS AND USE OF CERTAIN FLUXES ALSO THE GAS CONSUMPTIONS PER MT OF FRIT HAVE COME DOWN. EVIDENC ES WERE ALSO BROUGHT ON RECORD DURING THE COURSE OF HEARING REGA RDING INSTALLATION OF AN ELECTRICITY GENERATOR AND REPLACEMENT OF BETT ER QUALITY REFRACTORIES IN THE KILNS BY THE MAIN APPELLANT. UN DER THE ABOVE FACTUAL MATRIX THE METHOD USED BY THE INVESTIGATION CANNOT BE A SOUND METHOD TO DEMAND DUTY ON ASSUMING 318 SCM OF GAS RE QUIRED FOR MANUFACTURING ONE MT OF ANY QUALITY OF FRIT. THE IM PROPER METHOD ADOPTED BY THE REVENUE FOR CALCULATING DUTY WAS AGI TATED BY THE APPELLANTS BEFORE THE ADJUDICATING AUTHORITY AS PER PARA 4(XI) TO (XXXIII) OF THE ORDER-IN-ORIGINAL DATED 10-5-2011. IT IS OBSERVED THAT DURING CONDUCTING OF GAS CONSUMPTION STUDIES ON 23/ 24-2-2010 BY INVESTIGATION ONLY FRIT PRODUCT CODE OP 202WAS BEIN G MANUFACTURED. IT HAS BEEN CONTESTED BY THE APPELLANT THAT DIFFERENT FRIT PRODUCT CODES MAY CONSUME DIFFERENT QUANTITIES OF GAS. AS THE APP ELLANT IS NOT UNDERTAKING THE MANUFACTURE OF ONE STANDARD PRODUCT IN THE INTEREST OF JUSTICE IT WILL BE APPROPRIATE TO CONDUCT A FEW MO RE REPRESENTATIVE STUDIES OF DIFFERENT FRIT PRODUCT CODES IN ORDER TO ARRIVE AT A MORE REALISTIC GAS CONSUMPTION PMT OF FRIT MANUFACTURED. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 31 - 8.6 IN VIEW OF THE ABOVE OBSERVATIONS MADE BY THIS BENCH IT HAS ALREADY BEEN HELD THAT METHOD ADOPTED BY THE INVEST IGATION TO ESTIMATE CLANDESTINE REMOVAL OF FINISHED GOODS IS NOT SOUND AND HAS TO BE DISCARDED. HOWEVER REVENUE WAS GIVEN AN OPPORTUNI TY TO STRENGTHEN THEIR CASE BY CORROBORATING EVIDENCE WITH SOME MORE FACTUAL DATA FROM ADDITIONAL STUDIES. NO APPEAL HAS BEEN FILED BY TH E REVENUE AGAINST THE ABOVE ORDER PASSED BY THIS BENCH. IT IS ALSO OBSER VED FROM 3.2 OF THE REMAND ORDER THAT APPELLANT HAS MADE CERTAIN CHANGE S IN THE PLANT AND MACHINERY AND OTHER METHODOLOGIES TO REDUCE GAS CON SUMPTION. EVEN IN THE REMAND PROCEEDINGS ALSO ADJUDICATING AUTHORI TY HAS NOT COUNTERED THE ARGUMENTS TAKEN BY THE APPELLANT AS TO WHY THE STEPS TAKEN BY THEM FROM TIME TO TIME DOES NOT EFFECT GAS CONSUMPTION. ON A SPECIFIC QUERY FROM THE BENCH THE LEARNED SENIOR ADVOCATE ALSO AR GUED THAT SIMILAR MODERNIZATION IN PROCESSES OF MANUFACTURE AS UNDER TAKEN BY M/S. WELLSUIT GLASS IN THE MANUFACTURE OF FRIT HAVE ALS O BEEN UNDERTAKEN BY OTHER APPELLANTS. NO FINDINGS HAVE BEEN GIVEN BY T HE ADJUDICATING AUTHORITIES IN COUNTERING THE CLAIMS OF THE APPELLA NTS JUSTIFYING THE MODERNIZATION DONE TO REDUCE CONSUMPTION OF GAS FRO M TIME TO TIME. NO EXPERT OPINION HAS BEEN OBTAINED BY THE REVENUE TO CHALLENGE THE GAS CONSUMPTION PATTERN ADOPTED BY THE APPELLANTS T O INDICATE THAT CLAIM OF THE APPELLANTS WAS WRONG. 8. IN VIEW OF THE ABOVE OBSERVATIONS AND JUDICIAL P RONOUNCEMENTS METHODOLOGY ADOPTED BY THE ADJUDICATING AUTHORITIES IN ESTIMATING AND DEMANDING DUTY FROM THE APPELLANTS; BASED ON CONSUM PTION OF NATURAL GAS ELECTRICITY CONSUMED AND PACKING TIME TAKEN; I S NOT ACCEPTABLE AND IS REQUIRED TO BE REJECTED. 9. SO FAR AS POINTS MENTIONED AT PARA 6(II) AND 6(I II) ARE CONCERNED IT HAS BEEN HELD BY THE ADJUDICATING AUTHORITIES TH AT UNDERVALUATION AND CLANDESTINE REMOVAL STAND PROVIDED IN VIEW OF THE P EN-DRIVES AJTAK XYZ OF SANYO PERSONAL LEDGER OF COMET PRIVATE DIA RIES/ WRITING PADS AND THE STATEMENTS OF CERAMIC TILE MANUFACTURE RS. APPELLANTS HAVE ARGUED THAT THE PRINT-OUT TAKEN FROM THE PEN-DRIVE AJTAK XYZ ARE NOT ADMISSIBLE AS A PIECE OF EVIDENCE AS THE SAME ARE N OT THE DOCUMENTS ADMISSIBLE AS EVIDENCE UNDER THE RELEVANT SECTION O F THE CENTRAL EXCISE ACT 1944. IT WAS ALSO ARGUED BY THE APPELLANTS TH AT THE NUMBER OF PANCHNAMAS RECORDED AND THE OPENING OF THE SAID PEN -DRIVE CLEARLY SUGGEST THAT THE DATA RECOVERED FROM THE PEN-DRIVE IS HIGHLY ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 32 - OBJECTIONABLE SUSPICIOUS AND NOT ACCEPTABLE. IT I S OBSERVED FROM THE CASE RECORDS OF WELLSUIT GLASS & CERAMIC PVT. LIMIT ED [E/13720/2014] THAT SEIZURE OF THE SAID PEN-DRIVE WAS EFFECTED ON 17.7.2008 UNDER A PANCHNAMA AND IT WAS NOT STATED IN THIS PANCHNAMA T HAT THE PEN-DRIVE WAS PUT INSIDE A SEALED COVER. IT HAS BEEN ADMITTE D BY SHRI V.N. THAKKAR (SUPERINTENDENT) DGCEI IN THE CROSS-EXAMINA TION BEFORE THE ADJUDICATING AUTHORITY THAT WHEN AN ARTICLE IS SEIZ ED THE SAME IS PLACED IN A SEALED COVER AND MENTION OF THE SAME IS MADE I N THE PANCHNAMA. IT IS ALSO ADMITTED BY SHRI THAKKAR THAT AS HE REMEMBE RS THE SEIZED PEN- DRIVE WAS PLACED IN A PAPER COVER AND SEALED WITH A DHESIVE TAPES. IT IS THE CLAIM OF THE APPELLANTS THAT THE WAY THE SAID P EN-DRIVE WAS HANDLED IT IS POSSIBLE THAT THE SAME COULD BE TEMPERED WITH AS THE SAME WAS KEPT IN THE PAPER COVER SEALED WITH ADHESIVE TAPES. A S ECOND PANCHNAMA WAS MADE ON 30.8.2008 WHERE THE SAID PEN-DRIVE WAS MENTIONED TO HAVE BEEN TAKEN OUT OF A SEALED COVER WHEN THE FIRST PAN CHNAMA NEVER MENTIONED KEEPING THE SAID PEN-DRIVE IN A SEALED CO VER. IT IS ALSO OBSERVED THAT ON 30.8.2008 THE SEALED COVER WAS OPE NED BUT CONTENTS OF THE SILVER PEN-DRIVE WERE NOT OPENED ON 30.8.3008 B UT INSTEAD ANOTHER BLACK COLOUR PEN-DRIVE WAS OPENED. ON 06.9.2008 UN DER A PANCHNAMA THE SAID SILVER PEN-DRIVE TAKEN OUT OF THE SEALED C OVER AND ON OPENING THIS PEN DRIVE IN THE TALLY FOLDER NO DATA WAS FOU ND TO BE AVAILABLE. HOWEVER UNDER ANOTHER PANCHNAMA DATED 12.09.2008 WHEN THE SAID SILVER PEN-DRIVE WAS OPENED DATA WAS FOUND IN TALLY FOLDER WHICH IS THE RELIED UPON AS AAJTAK XYZ. THERE IS A STRONG FORCE IN THE ARGUMENTS MADE BY THE APPELLANTS THAT WHEN NO DATA WAS FOUND IN TALLY FOLDER ON 06.9.2008 HOW THE RELIED UPON DOCUMENTS GOT GENERA TED ON 12.09.2008. SHRI V.N. THAKKAR SUPERINTENDENT IN HIS CROSS-EXAM INATION EXPLAINED THE REASON FOR NON RETRIEVAL OF DATA ON 06.9.2008 T O BE DUE TO OPERATIONAL LACK BUT HE ADMITTED THAT NO MENTION OF ANY OPERAT IONAL LACK IS MADE IN THE PANCHNAMA DATED 06.9.2008. FURTHER IT IS OBSE RVED THAT IN PANCHNAMA DATED 12.09.2008 THE PRINT OUT OF ACCOUN T AJTAK TAKEN CONTAINED 52 PAGES AND ACCOUNT OF APPELLANT WELLSUI T APPEARED AT PAGE 30 OUT OF 52 PAGES. ANOTHER PANCHNAMA DATED 24.09. 2008 INDICATE IN ANNEXURE A3 THAT THE NUMBER OF PAGES OF ACCOUNT AAJ TAKWERE 94 AND THE NAME OF APPELLANT EXISTED AT PAGE 43 AS AGAINST PAGE 30 MENTIONED IN PANCHNAMA DATED 12.09.2008. APPELLANTS HAVE ALS O RAISED THE ISSUE REGARDING DISCREPANCIES IN THE NAME OF THE PANCH WI TNESSES. IT IS ALSO CONTENDED THAT REVENUE HAD NOT FOLLOWED THE PROCEDU RE AS STIPULATED IN SECTION 36B OF THE CENTRAL EXCISE ACT 1944. IN VIE W OF THE ABOVE DISCREPANCIES THE AUTHENTICITY AND VERACITY OF DATA RETRIEVED BY ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 33 - INVESTIGATION FROM THE SILVER PEN-DRIVE IS NOT RELI ABLE AND CAN NOT BE ACCEPTED AS A PIECE OF EVIDENCE IN DECIDING THE CAS E OF UNDERVALUATION AND CLANDESTINE REMOVAL AGAINST THE PRESENT APPELLA NTS WITH RESPECT TO POINT MENTIONED IN PARA 6 (II). 10. SO FAR AS THE QUESTION MENTIONED AT PARA 6(III) REGARDING DENYING CROSS-EXAMINATION OF WITNESSES WHOSE STATEMENTS WER E USED FOR ESTABLISHING UNDERVALUATION/ CLANDESTINE REMOVAL OF FRIT BASED ON THE PRIVATE RECORDS THE STATEMENTS OF TILE MANUFACTURE RS AND SHROFF/ ANGADIAS IS CONCERNED; IT IS ARGUED BY THE APPELLAN TS THAT THE ENTIRE EXERCISE OF SUCH QUANTIFICATION HAS BEEN MADE AS PE R THE STATEMENTS OF THE WITNESSES WHOSE CROSS-EXAMINATION HAS NOT BEEN ALLOWED BY THE ADJUDICATING AUTHORITY AS PER SECTION 9D OF THE CEN TRAL EXCISE ACT 1944. APPELLANTS RELIED UPON THE FOLLOWING CASE LA WS:- (I) J.K. CIGARETTES LIMITED VS. CCE [2009 (242) ELT 189 (DEL.)] (II) CCE ALLAHABAD VS. GOVIND MILLS LIMITED - [20 13 (294) ELT 361 (ALL.)] (III) BASUDEV GARG VS. CC [2013 (294) ELT 353 (DEL. )] (IV) SWIBER OFFSHORE CONSTRUCTION PVT. LIMITED VS. COMMISSIONER OF CUSTOMS KANDLA [2014 (301) ELT 119 (TRI. AHMD.)] 10.1 SECTION 9D OF THE CENTRAL EXCISE ACT 1944 IS REPRODUCED BELOW:- 9-D. RELEVANCY OF STATEMENTS UNDER CERTAIN CIRCUMST ANCES (1) A STATEMENT MADE AND SIGNED BY A PERSON BEFORE ANY CENTRAL EXCISE OFFICER OF A GAZETTED RANK DURING THE COURSE OF ANY INQUIRY OR PROCEEDING UNDER THIS ACT SHALL BE RELEVANT FOR TH E PURPOSE OF PROVING IN ANY PROSECUTION FOR AN OFFENCE UNDER THIS ACT T HE TRUTH OF THE FACTS WHICH IT CONTAINS - (A) WHEN THE PERSON WHO MADE THE STATEMENT IS DEAD OR CANNOT BE FOUND OR IS INCAPABLE OF GIVING EVIDENCE OR IS KEPT OUT OF THE WAY BY THE ADVERSE PARTY OR WHOSE PRESE NCE CANNOT BE OBTAINED WITHOUT AN AMOUNT OF DELAY OR EXPENSE W HICH UNDER THE CIRCUMSTANCES OF THE CASE THE COURT CONS IDERS UNREASONABLE; OR (B) WHEN THE PERSON WHO MADE THE STATEMENT IS EXA MINED AS A WITNESS IN THE CASE BEFORE THE COURT AND THE COURT IS OF THE OPINION THAT HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 34 - THE STATEMENT SHOULD BE ADMITTED IN EVIDENCE IN THE INTERESTS OF JUSTICE. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL SO FAR AS MAY BE APPLY IN RELATION TO ANY PROCEEDINGS UNDER THIS ACT OTHE R THAN A PROCEEDING BEFORE A COURT AS THEY APPLY IN RELATION TO A PROC EEDING BEFORE A COURT. 10.2 IN THE CASE OF J.K. CIGARETTES LIMITED VS. CCE (SUPRA) FOLLOWING CONCLUSIONS WERE DRAWN BY THE DELHI HIGH COURT IN PARA 32:- 32. THUS WE SUMMARIZE OUR CONCLUSIONS AS UNDER:- (I) WE ARE OF THE OPINION THAT THE PROVISIONS OF SE CTION 9D (2) OF THE ACT ARE NOT UNCONSTITUTIONAL OR ULTRA VIRES; (II) WHILE INVOKING SECTION 9D OF THE ACT THE CONC ERNED AUTHORITY IS TO FORM AN OPINION ON THE BASIS OF MATERIAL ON R ECORD THAT A PARTICULAR GROUND AS STIPULATED IN THE SAID SECTIO N EXISTS AND IS ESTABLISHED; (III) SUCH AN OPINION HAS TO BE SUPPORTED WITH REAS ONS; (IV) BEFORE ARRIVING AT THIS OPINION THE AUTHORITY WOULD GIVE OPPORTUNITY TO THE AFFECTED PARTY TO MAKE SUBMISSIO NS ON THE AVAILABLE MATERIAL ON THE BASIS OF WHICH THE AUTHOR ITY INTENDS TO ARRIVE AT THE SAID OPINION; AND (V) IT IS ALWAYS OPEN TO THE AFFECTED PARTY TO CHAL LENGE THE INVOCATION OF PROVISIONS OF SECTION 9D OF THE ACT I N A PARTICULAR CASE BY FILING STATUTORY APPEAL WHICH P ROVIDES FOR JUDICIAL REVIEW. 10.3 IN THE ADJUDICATING PROCEEDINGS A LIST OF WIT NESSES TO BE RELIED UPON BY THE REVENUE IS DISCLOSED TO THE APPELLANTSA LONGWITH THE SHOW CAUSE NOTICE. THE REASONS FOR RELYING UPON THE STA TEMENTS ARE ALSO AVAILABLE FROM THE FACTS NARRATED IN THE SHOW CAUSE NOTICE. IT IS NOT NECESSARY THAT ALL THE WITNESSES SHOULD BE CALLED B Y THE ADJUDICATING AUTHORITY SUO-MOTO FOR EXAMINATION IN A QUASI-JUDIC IAL PROCEEDINGS FOR CROSS-EXAMINATION. HOWEVER AS PER THE PROVISIONS OF SECTION 9D (1)(B) OF THE CENTRAL EXCISE ACT 1944 READ WITH THE JUDI CIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT EVERY ADJUDICATING AUT HORITY SHOULD CALL THE WITNESSES WHEN REQUESTED BY THE PARTY AGAINST WHOM THOSE STATEMENTS ARE TO BE USED. IF BY MAKING EFFORTS FOR A FEW OCC ASIONS THE WITNESSES SUMMONED DO NOT APPEAR THAN AUTOMATICALLY THE CASE COULD BE MATURE FOR ACCEPTING THE STATEMENTS AS ADMISSIBLE EVIDENCE S UNDER SECTION 9(D)(1)(A) OF THE CENTRAL EXCISE ACT 1944. HOWEVE R IT WAS NOT OPEN TO THE ADJUDICATING AUTHORITIES TO STRAIGHTAWAY REJ ECT THE REQUEST FOR ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 35 - CROSS-EXAMINATION IN VIEW OF THE LAW LAID DOWN BY T HE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANTS. THE REASONS FOR REJECTING THE APPELLANTS REQUEST FOR NOT ALLOWING A RE ALSO REQUIRED TO BE INTIMATED TO THE APPELLANTS AS PER THE CASE LAW OF J.K. CIGARETTES LIMITED (SUPRA) SO THAT APPELLANT MAY EXPLORE THE POSSIBILI TY OF FILING APPEAL AGAINST SUCH REJECTIONS. THE RATIO LAID DOWN BY TH E J.K. CIGARETTES CASE (SUPRA) HAS ALSO BEEN FOLLOWED IN SERIES OF OTHER J UDGMENTS. NO SUCH REJECTION ORDERS WERE GIVEN BY THE ADJUDICATING AUT HORITIES SEPARATELY. HON'BLE SUPREME COURT IN THE CASE OF UOI &ANR.VS. GTC INDIA AND ORS IN ORDER DATED 03.01.1995 ARISING OUT OF SLP (C ) NO. 218131/1994 HAS ALREADY LAID THE FOLLOWING RATIO: SPECIAL LEAVE GRANTED. HEARD. THE IMPUGNED ORDER DATED 05.9.94 HAS TO BE READ ALO NGWITH SECTION 9D OF THE CENTRAL EXCISE AND SALT ACT 1944. SO RE AD THERE IS NO INFIRMITY IN THE IMPUGNED ORDER. IT MAY HOWEVER BE CLARIFIED THAT IN CASE RELIANCE IS PLACED ON THE PROVISIONS OF SECTION 9D OF THE ACT IN RESPECT OF A NY PARTICULAR WITNESS INTIMATION OF THE SAME IS REQUIRED TO BE G IVEN TO THE RESPONDENTS AND IT WOULD BE OPEN TO THE RESPONDENTS TO APPROACH THE HIGH COURT AGAINST THE ORDER MADE BY THE AUTHORITY IN THAT BEHALF. THAT APPEAL IS DISPOSED OF IN THESE TERMS. NO COS TS. FURTHER IN PARA 16 AND 19 OF CASE LAW A.TAJUDEEN VS . UOI[2015 (317) ELT 177 (SC)] APEX COURT VERY RECENTLY HELD A S FOLLOWS ON ADMISSIBILITY OF STATEMENTS AND CROSS-EXAMINATION:- 16. HAVING GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE AFORESAID ISSUE WE ARE OF THE VIEW THAT THE STATEMENTS DATED 25-10-1989 AND 26- 10-1989 CAN UNDER NO CIRCUMSTANCES CONSTITUTE THE S OLE BASIS FOR RECORDING THE FINDING OF GUILT AGAINST THE APPELLAN T. IF FINDINGS COULD BE RETURNED BY EXCLUSIVELY RELYING ON SUCH ORAL STATEM ENTS SUCH STATEMENTS COULD EASILY BE THRUST UPON THE PERSONS WHO WERE BEING PROCEEDED AGAINST ON ACCOUNT OF THEIR ACTIONS IN CO NFLICT WITH THE PROVISIONS OF THE 1973 ACT. SUCH STATEMENTS OUGHT N OT TO BE READILY BELIEVABLE UNLESS THERE IS INDEPENDENT CORROBORATI ON OF CERTAIN MATERIAL ASPECTS OF THE SAID STATEMENTS THROUGH IN DEPENDENT SOURCES. THE NATURE OF THE CORROBORATION REQUIRED WOULD DEP END ON THE FACTS OF EACH CASE. IN THE PRESENT CASE IT IS APPARENT THAT THE APPELLANT - A. TAJUDEEN AND HIS WIFE T. SAHIRABANU AT THE FIRST OP PORTUNITY ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 36 - RESILEDFROM THE STATEMENTS WHICH ARE NOW SOUGHT TO BE RELIED UPON BY THE ENFORCEMENT DIRECTORATE TO SUBSTANTIATE THE CH ARGES LEVELLED AGAINST THE APPELLANT. WE SHALL NOW ENDEAVOUR TO EX AMINE WHETHER THERE IS ANY INDEPENDENT CORROBORATIVE EVIDENCE TO SUPPORT THE ABOVE STATEMENTS. 17 &18 .. .. 19. WE SHALL NOW DEAL WITH THE OTHER INDEPENDENT EV IDENCE WHICH WAS SOUGHT TO BE RELIED UPON BY THE ENFORCEMENT DIR ECTORATE TO ESTABLISH THE CHARGES LEVELLED AGAINST THE APPELLAN T. AND BASED THEREON WE SHALL DETERMINE WHETHER THE SAME IS SUFFICIENT O N ITS OWN OR IN CONJUNCTION TO THE RETRACTED STATEMENTS REFERRED TO ABOVE IN DECIDING THE PRESENT CONTROVERSY ONE WAY OR THE OTHER. FIRS T AND FOREMOST RELIANCE WAS PLACED ON MAHAZAR EXECUTED (AT THE TIM E OF THE RECOVERY FROM THE RESIDENCE OF THE APPELLANT) ON 25-10-1989. IT WOULD BE PERTINENT TO MENTION THAT THE APPELLANT IN HIS RES PONSE TO THE MEMORANDUM DATED 12-3-1990 HAD EXPRESSLY REFUTED TH E AUTHENTICITY OF THE MAHAZAR EXECUTED ON 25-10-1989. MERELY BECAU SE THE MAHAZAR WAS ATTESTED BY TWO INDEPENDENT WITNESSES NAMELY R.M. SUBRAMANIAN AND HAYADBASHA WOULD NOT LED CREDIBILI TY TO THE SAME. SUCH CREDIBILITY WOULD ATTACH TO THE MAHAZAR ONLY I F THE SAID TWO INDEPENDENT WITNESSES WERE PRODUCED AS WITNESSES A ND THE APPELLANT WAS AFFORDED AN OPPORTUNITY TO CROSS-EXAMINE THEM. THE AFORESAID PROCEDURE WAS UNFORTUNATELY NOT ADOPTED IN THIS CAS E. BUT THEN WOULD THE PREPARATION OF THE MAHAZARAND THE FACTUM OF REC OVERY OF A SUM OF RS. 8 24 900/- ESTABLISH THE GUILT OF THE APPELLANT INSOFAR AS THE VIOLATION OF SECTION 9(1)(B) OF THE 1973 ACT IS CON CERNED? IN OUR CONSIDERED VIEW EVEN IF THE MAHAZARIS ACCEPTED AS VALID AND GENUINE THE SAME IS WHOLLY INSUFFICIENT TO ESTABLISH THAT THE AMOUNT RECOVERED FROM THE RESIDENCE OF THE APPELLANT WAS DISPATCHED BY ABDUL HAMEED A RESIDENT OF SINGAPORE THROUGH A PERSON WHO IS NO T AN AUTHORISED DEALER IN FOREIGN EXCHANGE. EVEN IN RESPONSE TO TH E MEMORANDUM DATED 12-3-1990 THE APPELLANT HAD ACKNOWLEDGED THE RECOVERY OF RS. 8 24 900/- FROM HIS RESIDENCE BUT THAT ACKNOWLEDGM ENT WOULD NOT ESTABLISH THE VIOLATION OF SECTION 9(1)(B) OF THE 1 973 ACT. IN THE ABOVE VIEW OF THE MATTER WE ARE OF THE OPINION THAT THE EXECUTION OF THE MAHAZARON 25-10-1989 IS INCONSEQUENTIAL FOR THE DE TERMINATION OF THE GUILT OF THE APPELLANT IN THIS CASE. IN VIEW OF THE ABOVE BY NOT ALLOWING THE CROSS-EXA MINATION OF THE RELIED UPON WITNESSES UNDER SECTION 9D OF THE C ENTRAL EXCISE ACT 1944 THE EVIDENTIARY VALUE OF SUCH STATEMENTS DOES NOT SURVIVE AND IS REQUIRED TO BE DISCARDED. WE ACCORDINGLY HOLD SO. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 37 - 11. IT IS ALSO THE CASE OF THE APPELLANTS THAT ALL THE TRANSACTIONS ARE MADE BY THE APPELLANTS AT THE FACTORY GATE. THAT O NLY EXACT AMOUNT OF ADDITIONAL CONSIDERATION RECEIVED BY EACH APPELLANT HAS TO BE ADDED TO THE TRANSACTION VALUE AND THAT NO SUCH QUANTIFICATI ON HAS BEEN DONE BY THE REVENUE WHICH COULD BE ATTRIBUTED TO EACH MANUF ACTURER. THAT REVENUE CAN NOT ADOPT ANY BEST JUDGMENT VALUATION M ETHOD AS SUGGESTED IN CENTRAL EXCISE VALUATION RULES EVEN IF ALL THE STATEMENTS/ DOCUMENTS RELIED UPON BY THE REVENUE ARE PRESUMED T O BE CORRECT ADMISSIBLE AS EVIDENCES. 12. BEFORE GIVING OBSERVATIONS ON THIS ARGUMENT RAI SED BY THE APPELLANTS IT WILL BE RELEVANT TO GLANCE THROUGH T HE RELEVANT PORTION OF THE PROVISIONS OF SECTION 4 OF THE CENTRAL EXCISE A CT 1944 ALONGWITH DEFINITION OF TRANSACTION VALUE:- 4. VALUATION OF EXCISABLE GOODS FOR PURPOSES OF CHARGING OF DUTY OF EXCISE. (1) WHERE UNDER THIS ACT THE DUTY OF EXCISE IS CHA RGEABLE ON ANY EXCISABLE GOODS WITH REFERENCE TO VALUE THEN ON EACH REMOVAL OF THE GOODS SUCH VALUE SHALL - (A) IN A CASE WHERE THE GOODS ARE SOLD BY THE ASSES SEE FOR DELIVERY AT THE TIME AND PLACE OF THE REMOVAL THE ASSESSEE AND THE BUYER OF THE GOODS ARE NOT RELATED AND THE PRICE IS THE SOLE CON SIDERATION FOR THE SALE BE THE TRANSACTION VALUE; (B) IN ANY OTHER CASE INCLUDING THE CASE WHERE TH E GOODS ARE OT SOLD BE THE VALUE DETERMINED IN SUCH MANNER AS MAY BE PR ESCRIBED. (2) . (3) . (A) . (B) . (D) TRANSACTION VALUEMEANS THE PRICE ACTUALLY PAID OR PAYABLE FOR THE GOODS WHEN SOLD AND INCLUDES IN ADDITION TO T HE AMOUNT CHARGED AS PRICE ANY AMOUNT THAT THE BUYER IS LIABLE TO PA Y TO OR ON BEHALF OF THE ASSESSEE BY REASON OF OR IN CONNECTION WITH T HE SALE WHETHER PAYABLE AT THE TIME OF THE SALE OR AT ANY OTHER TIM E INCLUDING BUT NOT LIMITED TO ANY AMOUNT CHARGED FOR OR TO MAKE PROV ISION FOR ADVERTISE OR PUBLICITY MARKETING AND SELLING ORGANISATION EX PENSES STORAGE OUTWARD HANDLING SERVICING WARRANTY COMMISSION O R ANY OTHER MATTER; BUT DOES NOT INCLUDE THE AMOUNT OF DUTY OF EXCISE SALES TAX AND OTHER TAXES IF ANY ACTUALLY PAID OR ACTUALLY PAYA BLE ON SUCH GOODS. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 38 - 13. IT IS NOT THE CASE OF THE REVENUE THAT THE VALU E OF THE GOODS CLEARED BY THE APPELLANTS IS NOT DETERMINABLE AT TH E FACTORY GATE AND THEREFORE SOME OTHER METHOD UNDER THE CENTRAL EXCI SE VALUATION RULES IS REQUIRED TO BE ADOPTED TO ARRIVE AT THE ASSESSAB LE VALUE. RATHER THE CASE OF THE REVENUE ON VALUATION IS THAT CERTAIN AD DITIONAL CONSIDERATION COMING TO THE APPELLANT BY WAY OF CASH FLOW FROM TH E TILE MANUFACTURERS TO THE FRIT MANUFACTURERS IS REQUIRED TO BE ADDED T O THE ASSESSABLE VALUE. IN THE PRESENT CIRCUMSTANCES AND FACTUAL MATRIX THE EXACT AMOUNT OF SUCH ADDITIONAL CONSIDERATION WAS REQUIRED TO BE DE TERMINED FOR ADDITION TO THE TRANSACTION VALUE EVEN IF ALL THE STATEMENTS AND DOCUMENTS WERE HELD TO BE ADMISSIBLE EVIDENCE AND SATISFIED THE TE ST OF SECTION 9D OF THE CENTRAL EXCISE ACT 1944. IN APPEAL NOS. E/11960/2 013 AND E/12386/2014 THE VALUATION HAS BEEN ENHANCED SOLEL Y BASED ON THE ASSUMPTION THAT AFTER BOOKING OF THE CASE THESE APP ELLANT ENHANCED THEIR PRICES. IN THE CASE OF TRANSACTION VALUE REALM THE SAME PRODUCT CAN BE SOLD AT DIFFERENT PRICES AS PER SECTION 4 OF THE CE NTRAL EXCISE ACT 1944 UNLESS ACTUAL ADDITIONAL CONSIDERATION HAS BEEN SHO WN TO HAVE FLOWN BACK TO THE APPELLANTS. APPELLANTS IN THESE APPEAL S AND IN APPEAL NOS. E/13720/2014 AND E/534/2011 HAVE ALSO NOT ADMITTED DURING INVESTIGATION THAT THEY HAVE RECEIVED ANY ADDITIONA L CONSIDERATION. IN OTHER APPEALS ON THE ISSUE OF UNDERVALUATION INVEST IGATION ATTEMPTED TO SHOW THE FLOW BACK OF SUCH ADDITIONAL CASH FLOW THR OUGH THE STATEMENTS OF CERAMIC TILE MANUFACTURER AND THE STATEMENTS OF SHROFFS AND ANGADIAS. THE AMOUNT SO WORKED OUT HAS BEEN WORKED OUT TO BE RS. 38 95 860/- AS PER THE STATEMENT OF SHRI JAYESH PAT EL PROP. OF M/S. KEVEL MENTIONED IN PARA 9.3.3 OF OIO DATED 23.03.20 11 IN THE CASE OF M/S. BELGIUM GLASS & CERAMICS. THIS STATEMENT CLEA RLY CONVEYS THAT AMOUNT OF RS. 38 95 860/- WAS PAID TO VARIOUS FRIT MANUFACTURERS AND AT THE SAME TIME MENTIONS THAT THE NAMES OF THE FRIT M ANUFACTURERS ARE NOT WRITTEN AGAINST EACH PAYMENT IN THE CONCERNED DOCUM ENTS. UNDER THE ABOVE FACTUAL MATRIX APPELLANTS HAD THE RIGHT TO CR OSS-EXAMINATION THE WITNESSES ESPECIALLY SHROFFS AND ANGADIAS AS TO WHA T PORTION OF SUCH PAYMENT BELONGS TO A PARTICULAR APPELLANT. AS MENT IONED IN THE DEFINITION OF TRANSACTION VALUE IN PARA 11.1 ABOVE ONLY ACTUAL PRICE PAID OR PAYABLE HAS TO BE ADDED TO THE TRANSACTION VALUE AND NOT A HYPOTHETICAL VALUE BASED ON AVERAGING OF PRICES OR STANDARDIZING OF FRIT GRADES. AS ALREADY MENTIONED UNDER THE REALM OF TR ANSACTION VALUE AS PER SECTION 4 EVEN THE SAME PRODUCT COULD BE SOLD A T DIFFERENT PRICES DEPENDING UPON SEVERAL MARKET FACTORS AND ALL THESE PRICES WILL BE ACCEPTABLE AS PERMISSIBLE TRANSACTION VALUE. PRES ENT SECTION 4 DOES NOT ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 39 - GO BY THE CONCEPT OF NORMAL PRICE OF THE OLD SECTIO N 4 OF THE CENTRAL EXCISE ACT 1944. IN THE ABSENCE OF EXACT QUANTIFI CATION OF CASH RECEIVED BY INDIVIDUAL FRIT MANUFACTURER TRANSACTI ON VALUE CANNOT BE ENHANCED EVEN IF THERE ARE HALF COOKED CIRCUMSTANTI AL EVIDENCES TO THE PROCEEDINGS INDICATING SUSPECTED UNDERVALUATION. I T IS NOW WELL UNDERSTOOD THAT SUSPICION HOWSOEVER GRAVE CANNOT TA KE THE PLACE OF AN EVIDENCE. THEREFORE IT MAY NOT BE CORRECT TO HOLD THAT PREPONDERANCE OF PROBABILITY SHOULD ALWAYS BE GIVEN TO THE REVENU E AS HON'BLE APEX COURT IN A PARTICULAR HELD IT TO BE SO. EACH CASE HAS TO BE DECIDED IN VIEW OF THE FACTS OF THAT CASE. IN VIEW OF THE ABO VE OBSERVATION AND THE LAW LAID DOWN BY THE APEX COURT IN THE CASE OF A. T AJUDEEN VS. UOI (SUPRA) PREPONDERANCE OF PROBABILITY CANNOT ALWAYS BE ALLOWED IN FAVOUR OF THE REVENUE WHEN THERE IS NO INDEPENDENT CORROBORATION OF THE FACTS AND THE CASE IS MADE ONLY ON THE BASIS OF STATEMENTS WHICH WERE NOT ALLOWED TO BE TESTED UNDER CROSS-EXAMINATI ON AS PER SECTION 9D (1)(B) OF THE CENTRAL EXCISE ACT 1944. 14. IN VIEW OF THE REASONS RECORDED ABOVE APPEALS FILED BY THE APPELLANTS MENTIONED IN PARAS 5.1 AND 5.2 OF THIS O RDER ARE ALLOWED WITH CONSEQUENTIAL RELIEFS IF ANY. MISCELLANEOUS APPLIC ATIONS ARE ALSO DISPOSED OF ACCORDINGLY. IN THIS BACKGROUND LD. AUTHORISEDREPRESENTATIVE SU BMITTED THAT HONBLE CESTAT HAS CONSIDERED THE MERIT OF THE CASE RELEVANT MATERIAL I.E PEN DRIVE AND ALSO STATEMENTS RECORDED BY EXCIS E AUTHORITIES. ALL SUCH THREE QUESTIONS AS DISCUSSED IN ITS ORDER HAVE BEEN DECIDED IN FAVOUR OF ASSESSEE. SO FAR AS CIT(A)S OBSERVATION ARE CON CERNED THAT RELIEF GRANTED BY THE CESTAT IS HIGHLY TECHNICAL IT WAS S UBMITTED BY THE LD. AUTHORISEDREPRESENTATIVE THAT SUCH OBSERVATIONS ARE DEVOID OF MERIT. CESTAT HAS PASSED DETAILED REASONED ORDER. AS REGAR D TO CIT(A)S OBSERVATION AS TO OPPORTUNITY OF CROSS EXAMINATION OF PERSONS WHOSE STATEMENTS HAVE BEEN RECORDED LD. AUTHORISEDREPRES ENTATIVESUBMITTED THAT IT IS ABSOLUTELY ILLOGICAL ON THE PART OF THE LD. CIT(A) TOSEEK AN ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 40 - OPPORTUNITY OF EXAMINATION OF THE STATEMENTS RECOR DED BY THERELEVANT EXCISE AUTHORITIES.LD. AUTHORISEDREPRESENTATIVEFURT HER SUBMITTED THAT EXCISE DEPARTMENT PREFERRED AN APPEAL AGAINST ABOVE MENTIONED ORDER OF CESTAT BEFORE APEX COURT WHICH ACCORDING TO AR WAS DISMISSED AS WITHDRAWN VIDE ORDER DATED 27/01/2016 AND COPY OF S AME IS PLACED ON PAGE 327-328 OF PAPER BOOK. CONTENT OF THE SAME ARE REPRODUCED AS UNDER: IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.OF 2016 D NO.39019/2015 COMMISSIONER OF CENTRAL EXCISE & ST AHMEDABAD III ..APPELLANT(S) VERSUS ZIRCONIA CERA TECH. GLAZES PVT LTD & ANR...RESPONDE NT(S) ORDER LEARNED ADDITIONAL SOLICITOR GENERAL SEEKS LEAVE TO WITHDRAW THE APPEALS WITH A LIBERTY TO APPROACH THE HIGH COURT I N VIEW OF THE STATUTORY REQUIREMENT. LEAVE AND LIBERTY GRANTED. THE APPEALS ARE DISMISSED AS WITHDRAWN. ..J. (MADAN B. LOKUR) ...J. (R.K. AGRAWAL) NEW DELHI JANUARY 27 2016 **** ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 41 - ITEM NO. 6 COURT NO.8 SECTION III SUPREME COURT OF INDIA RECORD OF PROCEEDINGS CIVIL APPEAL DIARY NO(S).39019/2015 COMMISSIONER OF CENTRAL EXCISE &ST .APPE LLANT(S) AHMEDABAD - III VERSUS ZIRCONIA CERA TECH. GLAZES PVT LTD & ANR..RESPOND ENT (S) (WITHAPPLN. (S) FOR CONDONATION OF DELAY IN FILING APPEAL.) DATE : 27/01/2016 THIS APPEAL WAS CALLED ON FOR HEARING TODAY. CORAM : HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE R.K. AGRAWAL FOR APPELLANT(S) MR. N.K KAUL ASG MR. TARA CHANDRA SHARMA ADV MR. NITESHDARYANANI ADV. MR. B. KRISHNA PRASAD AOR FOR RESPONDENT (S) MR. M. Y. DESHMUKH AOR UPON HEARING THE COUNSEL THE COURT MADE THE FOLLOWI NG ORDER LEARNED ADDITIONAL SOLICITOR GENERAL SEEKS LEAVE TO WITHDRAW THE APPEALS WITH A LIBERTY TO APPROACH THE HIGH COURT IN VIEW OF THE STATUTORY REQUIREMENT. LEAVE AND LIBERTY GRANTED. THE APPEALS ARE DISMISSED AS WITHDRAWN. (SANJAY KUMAR-I) (JASWINDER KAUR) AR-CUM-PS COURT MASTER (SIGNED ORDER IS PLACED ON THE FILE) ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 42 - LD. AUTHORISEDREPRESENTATIVE FURTHER BROUGHT TO OUR NOTICE THAT EVEN THE TAX APPEAL BEING TAX APPEAL NOS.733 & 734 OF 2016 PREFERRED BY THE EXCISE DEPARTMENT BEFORE THE HON'BLE GUJARAT HIGH COURT WAS DISMISSED VIDE ORDER DATED 07.12.2016. AND COPY OF THE SAME HAS BEEN ANNEXED AS ANNEXURE A T THE CHART FILED ON BEHA LF OF THE ASSESSEE AND RELEVANT PORTION OF THE SAME IS REPRODUCED AS UNDER : CORAM: HONOURABLE MR.JUSTICE M.R. SHAH AND HONOURABLE MR.JUSTICE R.P.DHOLARIA DATE : 13/11/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] BY WAY OF THIS PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OFINDIA PETITIONER HAS PRAYED FOR AN APPROPRIATE W RIT DIRECTION AND ORDERQUASHING AND SETTING ASIDE THE SHOW-CAUSENOTIC E DATED 14.03.2012[ANNEXURE C TO THE PETITION] AS WELL AS T HE IMPUGNED ORDER DATED30.03.2013 PASSED BY THE COMMERCIAL TAX OFFICE R(4) MEHSANABYWHICH AN ORDER OF REASSESSMENT HAS BEEN PA SSED BY THE COMMERCIAL TAXOFFICER DIRECTING THE PETITIONER TO P AY AN AMOUNT OF RS.21 52 832/TOWARDSTHE BALANCE TAX UNDER THE GUJAR AT VALUE ADDED TAX ACT 2003[HEREINAFTER REFERRED TO AS VAT ACT] AND ALSO DIRECTED TO PAY 150%PENALTY I.E. RS.32 29 248/ANDIN ALL RS.7 3 19 630/. [2.0] FACTS LEADING TO THE PRESENT SPECIAL CIVIL AP PLICATION IN NUTSHELLARE AS FOLLOWS: [2.1] THAT THE PETITIONER IS A DEALER REGISTERED UN DER THE VAT ACT. THATTHE PETITIONER IS EXCISABLE TO TAX ON THE BASIS OF ITS TURNOVER UNDER THEVAT ACT. FOR THE FINANCIAL YEAR 2006-07 THE PETI TIONER FILED ITS RETURNWITH THE AUTHORITIES UNDER THE ACT. SUCH RETU RN WAS PROCESSED BY THEAUTHORITIES AND THE ORDER THEREON WAS PASSED AND ACCORDINGLY THEPETITIONER PAID THE VALUE ADDED TAX OF RS.2 06 4 48/. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 43 - [2.2] A NOTICE CAME TO BE ISSUED ON 14.03.2012 BY T HE ADJUDICATINGAUTHORITY INDICATING THAT FOR THE PERIO D FROM 01.04.2007 TO 31.03.2008 HE HAS REASON TO BELIEVE THAT TAXABLE TU RNOVER OF THE PETITIONER ASSESSEE HAS ESCAPED ASSESSMENT. THAT PETITIONER WA S REQUIRED TO ATTENDTHE OFFICER ON 31.03.2012. THAT THE PETITIONE R APPEARED BEFORE THECOMMERCIAL TAX OFFICER ASSESSING OFFICER AND S UBMITTED THAT THEY HAVECOME TO KNOW THAT AUTHORITY HAS RECEIVED CERTAI N INFORMATION FROMCENTRAL EXCISE I.E. DGCEI AND ON THE BASIS OF T HE SHOW- CAUSENOTICEISSUED BY THE CENTRAL EXCISE DEPARTMENT ADJUDICATING AUTHORITY HASINTENDED TO ENHANCE THE SALES AND ALSO INTENDED TO REASSESS UNDERSECTION 35(1) OF THE VAT ACT IT WAS ALSO SUBMI TTED THAT EXCEPT THESHOW-CAUSENOTICE ISSUED BY THE CENTRAL EXCISE DE PARTMENT THERE IS NOMATERIAL TO SHOW THAT THE PETITIONER HAD SUPPRESS ED THE SALES AND HASEVADED THE TAX LIABILITY. THAT SOLELY ON THE BAS IS OF THE SHOW- CAUSENOTICE ISSUED BY THE CENTRAL EXCISE DEPARTMENT THE AO CAME TO THECONCLUSION THAT THERE WAS A SALE OF RS.17 45 46 653/- ANDACCORDINGLY ATTHE RATE OF 4% THE TAX LIABILITY WOULD BE RS.67 13 333/- AGAINSTWHICHTHE CREDIT OF RS.43 54 053/- ISADJUSTED . THE PETITIONER IS LIABLE TO PAYTHE VAT OF RS.23 59 280/- ANDGIVING TH E CREDIT OF RS.2 06 448/- PAIDBYTHE PETITIONER TOWARDS THE TAX THE PETITIONER IS LIABLE TO PAY BALANCE OFRS.21 52 832/- TOWARDSVAT. CONSEQUENTLY BY ORDER DATED 30.03.2013 THE AO HAS PASSED THE REASSE SSMENT ORDER DIRECTING THE PETITIONER TO PAYTHE BALANCE AMOUNT O F RS.21 52 832/- ALONGWITH INTEREST UPTO31.03.2013 AND HAS ALSO IMPO SED THE PENALTY AT THE RATE OF 150% I.E. INALL RS.73 19 630/.FEELING A GGRIEVED AND DISSATISFIED WITH THE IMPUGNED ORDER THE PETITIONER THE PETITIONER HAS PREFERRED THE PRESENT SPECIAL CIVILAPPLICATION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA. [2.3] AT THE OUTSET IT IS REQUIRED TO BE NOTED THAT WE ARE CONSCIOUS OFTHE FACT THAT AGAINST THE IMPUGNED ORDER OF REASSESSMEN T THE PETITIONERHAS A STATUTORY REMEDY AVAILABLE BY WAY OF APPEAL HOWEVER CONSIDERINGTHE FACT IN THE IDENTICAL FACTS AND CIRCUMSTANCES EARLI ER THIS COURT HASENTERTAINED THE PETITION AND HAS QUASHED AND SET ASIDE THE ORDER OFREASSESSMENT IN THE FACTS AND CIRCUMSTANCES OF T HE CASE WE HAVEENTERTAINED THE PRESENT PETITION. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 44 - [2.4] THE PETITIONER HAS CHALLENGED THE IMPUGNED OR DER PASSED INREASSESSMENT PROCEEDINGS WHICH IS PASSED SOLELY ON THE BASIS OF THESHOW-CAUSENOTICE ISSUED BY THE EXCISE DEPARTMENT AND THE ADDITIONS AREMADE. LEARNED COUNSEL APPEARING ON BEHALF OF THE PETITIONERS HASVEHEMENTLY SUBMITTED THAT THIS SHOULD BE WHOLLY IMPERMISSIBLE. [3.0] SHRI PARIKH LEARNED ADVOCATE APPEARING ON BE HALF OF THEPETITIONER HAS HEAVILY RELIED UPON THE DECISION OF THIS COURT IN THE CASEOFFUTURA CERAMICS PVT. LTD. VS. STATE OF GUJARAT RENDERED IN SPECIAL CIVILAPPLICATION NO.6500/2012 AND RELYING UPON THE SAID DECISION IT ISSUBMITTED THAT SIMILAR REASSESSMENT ORDER PASSED BY THE AO SOLELY ONTHE BASIS OF THE SHOWCAUSENOTICE ISSUED BY THE EX CISE DEPARTMENT HASBEEN SET ASIDE BY THIS COURT. THEREFORE IT IS R EQUESTED TO QUASH AND SETASIDE THE IMPUGNED ORDER PASSED BY THE AO. [4.0] SHRI JAIMIN GANDHI LEARNED AGP APPEARING ON BEHALF OF THERESPONDENT IS NOT IN A POSITION TO DISPUTE THE A BOVE. HE IS ALSO NOT IN APOSITION TO DISPUTE THAT SIMILAR REASSESSMENT ORDE R HAS BEEN SET ASIDE BYTHIS COURT IN THE CASE OF FUTURA CERAMICS PVT. LT D. (SUPRA). HOWEVER SHRI GANDHI LEARNED AGP APPEARING ON BEHAL F OF THE RESPONDENT HASREQUESTED TO RESERVE THE LIBERTY IN F AVOUR OF THE AO AND/OR APPROPRIATEAUTHORITY TO PASS REASSESSMENT OR DER AFRESH IN ACCORDANCE WITH LAW ANDON MERITS. [4.1] SHRI PARIKH LEARNED ADVOCATE APPEARING ON BE HALF OF THEPETITIONER HAS SUBMITTED THAT IT MAY BE OBSERVED THAT FRESH RE ASSESSMENTORDER CAN BE PASSED IN ACCORDANCE WITH LAW AND ONLY IF THE SA ME ISPERMISSIBLE UNDER THE LAW. [5.0] HAVING HEARD SHRI PARIKH LEARNED ADVOCATE AP PEARING ON BEHALFOF THE PETITIONER AND SHRI GANDHI LEARNED AGP APPEARI NG ON BEHALF OFTHE RESPONDENTS AND HAVING GONE THROUGH THE IMPUGNED OR DER PASSED BYTHE AO IT APPEARS THAT THE REASSESSMENT ORDER HAS BEEN PASSED BY THEAO SOLELY ON THE BASIS OF SHOWCAUSENOTICE ISSUED BY TH E EXCISEDEPARTMENT. IT CAN BE SEEN THAT THE ASSESSMENT WHICH WAS PREVIO USLYCONCLUDED WAS REOPENED ON THE PREMISE THAT DURING THE EXCISE RAID IT WAS REVEALED THAT THE PETITIONER HAD CLANDESTINELY REMOVED GOODSWITHO UT PAYMENT OF EXCISE DUTY. THE SALES TAX DEPARTMENT THEREFORE FO RMED A BELIEF THAT VALUE OF THE GOODS + EXCISE DUTY EVADED AND FORMEDP ART OF TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF TAX UNDER THE VATAC T. IDENTICAL ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 45 - QUESTION CAME TO BE CONSIDERED BY THIS COURT IN THE CASEOFFUTURA CERAMICS PVT. LTD. (SUPRA) AND A SIMILAR REASSESSME NT ORDERWHICH WAS PASSED ON THE BASIS OF THE SHOWCAUSENOTICE ISSUED B Y THEEXCISE DEPARTMENT HAS BEEN SET ASIDE BY THE DIVISION BENCH OF THIS COURTBY OBSERVING AS UNDER: IT MAY BE THAT THE RAID CARRIED OUT BY THE EXCISE DUTY AND THEMATERIAL COLLECTED DURING SUCH PROCEEDINGS CULMINATING INTOI SSUANCE OF A SHOW CAUSE NOTICE FOR RECOVERY OF UNPAID EXCISE DUTYAND PENALTY IN A GIVEN CASE SUFFICIENT TO REOPENPREVIOUSLY CLOSEDASSESSMEN T. IN THIS CASE HOWEVER WE ARE NOT CALLED UPON TO JUDGETHIS ISSUE AND WOULD THEREFORE NOT GIVE ANY DEFINITE OPINION. THEQUESTIO N HOWEVER IS WHETHER ON A MERE SHOW CAUSE ISSUED BY THEEXCISE DE PARTMENT THE SALES TAX DEPARTMENT CAN MAKE ADDITIONSFOR THE PURP OSE OF COLLECTING TAX UNDER THE GUJARAT VALUE ADDEDTAX ACT WITHOUT AN Y FURTHER INQUIRY. IF THE ASSISTANTCOMMISSIONER OF COMMERCIAL TAX HAS UTILIZED THE MATERIALCOLLECTED BY THE EXCISE DEPARTMENT; INC LUDING THE STATEMENTS OF THEPETITIONER AND OTHER RELEVANT WITN ESSES AND HAD COME TO ANINDEPENDENT OPINION THAT THERE WAS IN FACT EVA SION OF EXCISE DUTYBY CLANDESTINE REMOVAL OF GOODS HE WOULD HAVE BEEN JUSTIFIED INMAKING ADDITIONS FOR THE PURPOSE OF VAT ACT. IN T HE PRESENT CASE HOWEVER NO SUCH EXERCISE WAS UNDERTAKEN. ALL THAT THE ASSESSINGOFFICER DID WAS TO RELY ON THE SHOW CAUSE NOTICE ISSUED BY THEEXCISE DEPARTMENT. NOWHERE DID HE CONCLUDE THAT THERE WAS A CASEOF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAX UNDER THEVAT ACT. MERELY BECAUSE THE EXCISE DEPARTMENT IS SUED A SHOWCAUSE NOTICE THAT CANNOT BE A GROUND TO PRESUM E AND CONCLUDETHAT THERE WAS EVASION OF EXCISE DUTY IMPLY ING THEREBY THAT THEREWAS ALSO EVASION OF TAXUNDER THE VAT ACT. IT I S NOT EVEN THE CASE OF THE DEPARTMENT THATSUCH SHOW CAUSE NOTICE PROCEE DINGS HAS CULMINATED INTO ANY FINALORDER AGAINST THE PETITION ER. WE WONDER WHAT WOULD HAPPEN TOTHE ORDER OF REASSESSMENT IF ULTIMAT ELY THE EXCISE DEPARTMENTWERE TO DROP THE PROCEEDINGS WITHOUT LEVY ING ANY DUTY OR PENALTYFROM THE PETITIONER. ALL IN ALL THE ASSTT. COMMISSIONER HAS ACTED IN A MECHANICALMANNER AND PASSED FINAL ORDER OF ASSESSMENT MERELY ON THEP REMISE THAT THE EXCISE DEPARTMENT HAS ISSUED A SHOW CAUSE NOTICEALL EGING CLANDESTINE REMOVAL OF THE GOODS. SUCH ORDER THEREFORE CANNOT BE SUSTAINED AND IS ACCORDINGLY QUASHED. WHEN THE ORDER ISEX FACIE ILLE GAL AND WHOLLY UNTENABLE IN LAW MERE AVAILABILITY OFALTERNATIVE R EMEDY WOULD NOT PRECLUDE US FROM INTERFERING AT THISSTAGE IN A WRIT PETITION. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 46 - [6.0] IN VIEW OF THE ABOVE DECISION OF DIVISION BEN CH OF THIS COURT THEIMPUGNED REASSESSMENT ORDER DESERVES TO BE QUASH ED AND SET ASIDE.HOWEVER LIBERTY CAN BE RESERVED IN FAVOUR OF THE DEPARTMENT TO PASS ANORDER AFRESH IN ACCORDANCE WITH LAW AND ON M ERITS AFTER GIVING ANOPPORTUNITY TO THE PETITIONER AND IF PERMISSIBLE UNDER THE LAW NOW. [6.1] IN VIEW OF THE ABOVE AND FOR THE REASONS STAT ED ABOVE PETITIONSUCCEEDS. IMPUGNED ORDER PASSED BY THE COMM ISSIONER TAX OFFICER(4) MEHSANA [ANNEXUREE] TO THE PETITION] DAT ED 30.03.2013 IS HEREBYQUASHED AND SET ASIDE. HOWEVER IT IS OBSERVE D THAT THE SAME SHALL NOTAFFECT THE PROCEEDINGS UNDER THE CENTRAL EXCISE ACT FOR WHICH THE SHOWCAUSENOTICE HAS BEEN ISSUED. A LIBERTY IS ALSO RESERVED IN FAVOUR OF THEDEPARTMENT TO PASS REASSESSMENT ORDER AFRESH IN ACCORDANCE WITH LAWAND ON MERITS AND AFTER GIVING FULLEST OPPORTUNI TY TO THE PETITIONER AND IFPERMISSIBLE UNDER THE LAW NOW. RULE IS MADE A BSOLUTE TO THE AFORESAIDEXTENT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THERE SHALL BE NOORDER AS TO COSTS. SD/- (M.R. SHAH J.) SD/- (R.P. DHOLARIA J.) IN THIS BACKGROUND LD. AUTHORISED REPRESENTATIVE SU BMITTED THAT ADDITIONS BE DELETED IN BOTH THE YEARS. ON OTHER HA ND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND CONTENDED THAT ORDER CESTAT IS TECHNICAL ONE SO SAME SHOULD B E IGNORED AND ORDERS OF AUTHORITIES BELOW BE UPHELD IN BOTH THE Y EARS. 11. WE FIND THAT THE BASIS OF ADDITION IS CONTENTS OF SHOW-CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT. AN INVESTIGATION W AS CARRIED OUT BY DGCEI AT ASSESSEE PREMISES ON 25/08/2008 WHEREIN I T WAS ALLEGED BY THE EXCISE DEPARTMENT THAT ASSESSEE HAS NOT DECLARE D ACTUAL ASSESSABLE ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 47 - VALUE OF GOODS MANUFACTURED AND CLEARED FROM FACTOR Y. BASED ON ABOVE DGCEI ISSUED SHOW-CAUSE NOTICE DATED 19/04/2010 EX CISE DEPARTMENT CONCLUDED THAT ASSESSEE WAS ENGAGED IN UNDER VALUAT ION OF SALES AND CLANDESTINE REMOVAL OF GOODS. ONLY ON THE BASIS OF SAME ASSESSING OFFICER REOPENED ASSESSEES INCOME TAX ASSESSMENT F OR THE YEARS UNDER CONSIDERATION AND MADE ADDITION OF ESTIMATED GROSS PROFIT ON UNDER VALUATION SALES AND CLANDESTINE REMOVAL OF GOODS. T HE REVENUE HAS BROUGHT NOTHING ON RECORD THAT IT HAS APPLIED ITS MIND OVER AND ABOVE THE CONTENTS OF SHOW-CAUSE NOTICE IN QUESTION THUS THER E IS LACK OF INDEPENDENT APPLICATION OF MIND ON BEHALF OF REVENU E IN THESE MATTERS. 12. WITHOUT PREJUDICE TO ABOVE WE FIND THAT IN EXC ISE PROCEEDINGS CONCERNED AUTHORITIES PASSED ORDER AGAINST ASSESSEE AND MATTER WAS CARRIED UP TO CONCERNED HONBLE CESTAT. HONBLE CES TAT VIDE ITS ORDER DATED 12/02/2015 AS DISCUSSED ABOVE HAS DECI DED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT EXCISE DEPARTME NT COULD NOT ESTIMATE VALUE OF ALLEGED SUPPRESSION OF SALES AS WELL AS CL ANDESTINE REMOVAL OF GOODS MERELY ON THE BASIS OF ASSUMPTION AND SURMISE S. THE CESTAT HAVING CONSIDERED THE RELEVANT FACTS OF THE CASE AS WELL AS RELEVANT MATERIAL I.E. PEN DRIVE AND STATEMENT RECORDED BY T HE EXCISE DEPARTMENT HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE AS DISCUSSED ABOVE. IN THESE CIRCUMSTANCES LD. CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT RELIEF GRANTED BY HONBLE CESTAT WAS HIGHLY TECHNICAL. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 48 - 13. WE ALSO FIND THAT EXCISE DEPARTMENT CARRIED MAT TER BEFORE HONBLE APEX COURT WHEREIN SAME WAS DISMISSED AS WITHDRAWN AS MENTIONED ABOVE. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDG E ON BEHALF OF REVENUE IN THIS REGARD. 14. WE ALSO FIND THAT TAX APPEAL BEING TAX APPEAL N O.733 AND 734 OF 2016 PREFERRED BY THE LD. EXCISE DEPARTMENT BEFO RE HONBLE GUJARAT HIGH COURT CAME TO BE DISMISSED VIDE ORDER DATED 07 /12/2016 AS MENTIONED ABOVE. AGAIN NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE IN THIS REGARD AS WELL. IN THI S BACKGROUND WE FIND THAT THE ORDER PASSED BY HONBLE CESTAT HAS ACHIEVE D THE FINALITY AGAINST THE REVENUE. AS WE HAVE OBSERVED EARLIER TH AT ONLY EXCISE DEPARTMENT ACTION WAS BASIS OF ADDITIONS BEFORE US IN BOTH THE YEARS WHICH DOES NOT SURVIVE FOR THE REASONS DISCUSSED AB OVE SO THE BASIS OF ADDITIONS MADE BY THE REVENUE DOES NOT SURVIVE. 15. IN VIEW OF THE ABOVE ADDITIONS MADE ON ACCOUNT AS ALLEGED VALUATION OF SALES AND CLANDESTINE REMOVAL OF GOODS DO NOT SURVIVE AND SAME ARE DIRECTED TO BE DELETED IN BOTH THE ASSESSM ENT YEARS.IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 16. NOW WE TAKE UP APPEALS IN CASE OF GROWMORE CERA MICS PVT. LTD. IN ITA NOS. 988 989 & 990/AHD/2016 FOR ASST. YEARS 2006-07 2007-08 & 2008-09 RESPECTIVELY. FOLLOWING GROUNDS HAS TAKE N BY THE ASSESSEE: ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 49 - 16.1 FOR ASST. YEAR 2006-07: 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT U/S.147 OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ACTION OF REOPENING IS WITHOUT JURISDICTION AND NOT PERMISSIB LE EITHER IN LAW OR ON FACTS. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN ESTIMATING INCOME OF THE APPELLANT WITHOUT REJECTI NG BOOKS OF ACCOUNTS OF THE APPELLANT. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN HOLDING THAT THE APPELLANT HAS UNDERVALUED SALES AMOUNTING TO RS.4 93 75 020/-. 4. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING ADDITION OF RS.74 06 253/- AFTER APPLYING GROSS PROFIT RATE OF 15% ON ALLEGED UNDERVALUED SAL ES. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN HOLDING THAT THE APPELLANT HAS CLANDESTINELY REMOVED GOODS AMOUN TING TO RS.5 32 45 944/-. 6. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING AN ADDITION OF RS.79 86 892/- AFTER A PPLYING GROSS PROFIT RATE OF 15% ON ALLEGED CLANDESTINE REMOVAL O F GOODS. 7. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHE R ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IM PUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN C LEAR BREACH OF ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 50 - LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. ASSESSING OFFICER IN L EVYING INTEREST U/S 234A/B/C/D OF THE ACT. 9. THE LEARNED CIT(A) HAS ERRED IN LAW ARID ON FACT S OF THE CASE IN CONFIRMING ACTION OF THE LD. ASSESSING OFFICER IN I NITIATING PENALTY U/S 271(L)(C) OF THE ACT. 16.2FOR ASST. YEAR 2007-08: 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT U/S.147 OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ACTION OF REOPENING IS WITHOUT JURISDICTION AND NOT PERMISSIB LE EITHER IN LAW OR ON FACTS. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN ESTIMATING INCOME OF THE APPELLANT WITHOUT REJECTI NG BOOKS OF ACCOUNTS OF THE APPELLANT. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN HOLDING THAT THE APPELLANT HAS UNDERVALUED SALES AMOUNTING TO RS.6 02 56 820/-. 4. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING ADDITION OF RS.90 38 523/- AFTER APPLYING GROSS PROFIT RATE OF 15% ON ALLEGED UNDERVALUED SAL ES. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN HOLDING THAT THE APPELLANT HAS CLANDESTINELY REMOVED GOODS AMOUNTING TO RS.60 54 462/-. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 51 - 6. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING AN ADDITION OF RS.9 08 169/- AFTER AP PLYING GROSS PROFIT RATE OF 15% ON ALLEGED CLANDESTINE REMOVAL O F GOODS. 7. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHE R ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IM PUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN C LEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD.ASSESSING OFFICER IN LE VYING INTEREST U/S 234A/B/C/D OF THE ACT. 9. THE LEARNED CIT(A) HAS ERRED IN LAW ARID ON FACT S OF THE CASE IN CONFIRMING ACTION OF THE LD. ASSESSING OFFICER IN I NITIATING PENALTY U/S 271(L)(C) OF THE ACT. 16.3FOR ASST. YEAR 2009-10 : 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT U/S.147 OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ACTION OF REOPENING IS WITHOUT JURISDICTION AND NOT PERMISSIB LE EITHER IN LAW OR ON FACTS. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN ESTIMATING INCOME OF THE APPELLANT WITHOUT REJECTI NG BOOKS OF ACCOUNTS OF THE APPELLANT. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN HOLDING ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 52 - THAT THE APPELLANT HAS UNDERVALUED SALES AMOUNTING TO RS.5 09 28 045/-. 4. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING ADDITION OF RS.76 39 207/- AFTER APPLYING GROSS PROFIT RATE OF 15% ON ALLEGED UNDERVALUED SAL ES. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN HOLDING THAT THE APPELLANT HAS CLANDESTINELY REMOVED GOODS AMOUNTING TO RS.69 80 511/-. 6. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING AN ADDITION OF RS.10 47 077/-AFTER AP PLYING GROSS PROFIT RATE OF 15% ON ALLEGED CLANDESTINE REMOVAL O F GOODS. 7. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHE R ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IM PUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN C LEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD.ASSESSING OFFICER IN LE VYING INTEREST U/S 234A/B/C/D OF THE ACT. 9. THE LEARNED CIT(A) HAS ERRED IN LAW ARID ON FACT S OF THE CASE IN CONFIRMING ACTION OF THE LD. ASSESSING OFFICER IN I NITIATING PENALTY U/S 271(L)(C) OF THE ACT. 17. ASSESSEE IS A PVT. LTD. COMPANY AND ENGAGED IN BUSINESS OF MANUFACTURING OF CERAMICS GLAZE MIXTURE FRIT. RETU RN OF INCOME FOR ASST. YEAR 2006-07 WAS FILED ON 07/12/2006 DECLARIN G TOTAL INCOME OF RS. NIL/- AND SAME WAS PROCESSED U/S.143(1) OF THE ACT. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 53 - THEREAFTER NOTICE U/S.148 OF THE ACT ISSUED ON 26. 03.2013 FOR REOPENING ASSESSMENT AND IN RESPONSE TO THE SAME AS SESSEE SUBMITTED TO TREAT THE ORIGINAL RETURN AS RETURN IN RESPONSE TO NOTICE U/S.148 OF THE ACT. THE REOPENING OF THE ASSESSMENT WAS MADE FOR SIMPLE REASON THAT DGCEI AHMEDABAD CARRIED OUT SEARCH OPERATION WHERE IN IT WAS ALLEGEDLY FOUND THAT ASSESSEE WAS EVADING PAYMENT O F EXCISE DUTY AND CLANDESTINE REMOVAL GOODS PARALLEL UNDER INVOICES. ACCORDINGLY DGCEI ISSUED SHOW CAUSE NOTICE TAKING THE TOTAL TURNOVER OF RS.4 93 75 020/- FOR THE PERIOD 01/04/2005 TO 31/03/2006 I.E. ASSESSMENT YEAR 2006-07 AND THEREFORE REOPENED INCOME TAX ASSESSMENT U/S. 148 F OR A.Y. 2006-07. 18. ASSESSEE CHALLENGED REASONS FOR RE-OPENING ASSE SSMENT U/S. 148 OF THE ACT AND SAME WAS REJECTED. THEREAFTER NOTICE U/ S.143 (2) WITH 142(1) OF THE ACT WAS ISSUED AND SERVED UPON ASSESSEE. IN RESPONSE TO THE SAME ASSESSEE SUBMITTED DETAILS AS CALLED FOR AND PRODUC ED BOOKS OF ACCOUNTS FOR VERIFICATION. ASSESSING OFFICER AFTER REJECTING CONTENTION RAISED ON BEHALF OF ASSESSEE ADOPTED GROSS PROFIT @ 15% ON UN DERVALUATION AND CLANDESTINE REMOVAL OF GOODS ACCORDINGLY PASSED ASS ESSMENT ORDER U/S.143(3) R.W.S. 147 OF THE ACT WHEREIN DETERMINED TOTAL INCOME OF RS 1 53 93 145/- AS AGAINST THE RETURN INCOME OF RS .NIL/-. ASSESSING OFFICER ALSO CALCULATED TAX AND CHARGED INTEREST U/ S.234B / 234C. SIMILAR ADDITION WERE MADE IN ASST. YEAR 2007-08 AND 2008-0 9. 19. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY WHEREIN VARIOUS SUBMISSIONS WERE MADE OPPOSING ADDITION IN QUESTION HOWEVER ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 54 - LD. CIT(A) UPHELD THE ORDER OF THE LD. ASSESSING OF FICER BY OBSERVING AS UNDER: 5.6 I HAVE CONSIDERED THE FACTS OF THE CASE ASSES SMENT ORDER SUBMISSION MADE BY THE APPELLANT REMAND REPORT AND REJOINDER FILED BY THE APPELLANT. ON PERUSAL OF ASSESSMENT ORDER IT IS OBSERVED THAT A LETTER WAS RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INV.) UNIT-II AHMEDABAD ALONG WITH SHOW CAUSE NOTICE ISSUED TO TH E APPELLANT BY DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE AHMEDABAD (DGCEI). FROM THE SHOW CAUSE NOTICE IT WAS NOTICED THAT APPELLANT WAS ENGAGED IN VARIOUS TYPES OF MODES & METHODS OF TAX EVASION WHICH RESULTED INTO ESCAPEMENT OF HUGE TAX FOR THE YEAR U NDER CONSIDERATION. IN SUCH FACTS CASE OF THE APPELLANT FOR THE YEAR UNDE R APPEAL WAS REOPENED U/S.147 OF THE IT ACT. AFTER RECORDING THE REASONS FOR REOPENING NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 26/03/2013. IN RE SPONSE TO THE NOTICE ISSUED APPELLANT REQUESTED TO TREAT THE ORIGINAL RE TURN FILED ON 07/12/2006 AS RETURN FILED IN RESPONSE TO NOTICE U/ S 148. FURTHER STATUTORY NOTICES U/S 143(2) AND U/S 142(1) WERE IS SUED AND SERVED TO THE APPELLANT. TO ELABORATE THE MATTER IT IS PERUSED T HAT IN THIS CASE ON THE BASIS OF INTELLIGENCE GATHERED BY DGCEI AS WELL AS THE DOCUMENTARY EVIDENCES RECOVERED FROM THE PREMISES A SEARCH OPE RATION WAS CONDUCTED AT THE PREMISES OF THE APPELLANT ON 29/08 /2008. INVESTIGATION CONDUCTED BY DGCEI AGAINST THE APPELLANT REVEALED T HAT THEY HAD NOT DECLARED THE ACTUAL ASSESSABLE VALUE OF GOODS MANUF ACTURED AND CLEARED FROM THEIR REGISTERED FACTORY PREMISES. THE DOCUMEN TARY AS WELL AS ORAL EVIDENCES COLLECTED BY DGCEI FROM VARIOUS BUYERS CL EARLY INDICATED THAT APPELLANTAS DECLARING IN THEIR CENTRAL EXCISE INVOICES ONLY A PART OF THE ACTUAL TRANSACTION VALUE MANUFACTURED A ND CLEARED FROM THEIR FACTORY. DIFFERENTIAL VALUE OF 1 FRIT OVER AND ABOVE THE VALUE DECLARED IN THE INVOICES WAS COLLECTED BY TH EM FROM THEIR BUYERS IN CASH. THE OBSERVATION AND FINDING G IVEN IN SHOW CAUSE NOTICE WAS ON THE BASIS OF INVESTIGATIONS AND E VIDENCES GATHERED BY THE OFFICIALS OF EXCISE DEPARTMENT WHICH CLEA RLY PROVED THAT APPELLANT HAD SUPPRESSED THE SALE VALUE BY WAY OF U NDERVALUATION OF INVOICES AS WELL AS CLANDESTINE REMOVAL OF GOODS FR OM THEIR PREMISES. THE SUPPRESSION WAS REVEALED ON THE BASIS OF FINDIN G DURING THE COURSE OF INVESTIGATIONS BY THE DGCEI AND AS MENTIONED IN DETAIL IN THE SHOW CAUSE NOTICE CONTAINED IN LETTER F. NO. DGCEI/AZU/3 6(4) 134/2009- 10 1842 DATED 9.02.2010. IT WAS REVEALED FROM THE S HOW CAUSE NOTICE OF THE DGCEI THAT APPELLANT WAS SHOWING SALE VALUE OF FRIT AT RS.10/- ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 55 - PER KG WHEREAS THE ACTUAL PRICE WAS AT. KS.20/- TO 30/- PER KG. THE AMOUNT SHOWN IN THE INVOICES WERE BEING COLLECTED T HROUGH CHEQUES WHEREAS THE REMAINING AMOUNT WAS BEING COLLECTED BY CASH. FURTHER IT WAS ALSO FOUND THAT APPELLANT WAS DECLARING LESS PR ODUCTION THAN THE ACTUAL PRODUCTION. THE COMPANY WAS SHOWING CONSUMPT ION OF 2044.494 SCM OF NATURAL GAS FOR MANUFACTURING OF 1 MT OF FRI T WHEREAS ON VERIFICATION BASED ON THE -FIGURES OF AVERAGE GAS C ONSUMPTION AGAINST ONE MT OF FRIT MANUFACTURED WHEN APPELLANT HAD SHOW N-HIGHER PRODUCTION AND ALSO IN VIEW OF THE STATEMENT OF SH. HARSHADBHAI C PATEL PARTNER AND PRODUCTION IN-CHARGE IT WAS FOU ND THAT 484 SCM OF NATURAL GAS WAS CONSUMED FOR MANUFACTURING OF 1 MT OF FRIT. IT WAS PROVED BEYOND DOUBT THAT APPELLANT WAS INVOLVED IN UNDERVALUATION OF SALE INVOICES THEREBY SUPPRESSIN G THE SALES AND ALSO HAD UNDERSTATED THE PRODUCTION AND ITS U NACCOUNTED SALE OF SUCHCLANDESTINE PRODUCTION. FOR THE YEAR UNDER APPE AL THE AMOUNT OF UNDERVALUATION HAS BEEN WORKED OUT AT RS.4 93 75 02 0/- [AS MENTIONED IN ANNEXURE D-1 (SR. NO. 1 TO 505) OF SCN ISSUED BY DGCEI AND THE AMOUNT OF CLANDESTINE REMOVAL GOODS HAS BEEN WORKED OUT AT RS.5 32 45 944/- ASMENTIONED IN ANNEXURE D-2 (APR-0 5 TO MAR-06) OF SCN ISSUED BY DGCEI]. AO HAS CONCLUDED THAT APPELLA NT HAD SHOWN G.P. AT A RATE OF 15% FOR THE YEAR UNDER APPEAL HEN CE FOR THE PURPOSE 15% G.P RATE ADOPTED AT 15%. ACCORDINGLY 15% OF TO TAL UNDERVALUED SALES IS WORKED OUT AT RS.74 06 253 (15% OF RS. 4 9 3 75 020/-) IS ADDED TO THE TOTAL INCOME OF THE APPELLANT. SIMILARLY 15% OF THE VALUE OF CLANDESTINE REMOVAL GOODS FOR THE YEAR UNDER CONSID ERATION IS WORKED OUT AT RS.79 86 892/- (15% OF RS. 5 32 45 944/-) AN D IS ADDED TO TOTAL INCOME OF THE APPELLANT. APPELLANT BEFORE ME CONTENDED THAT AO IN MAKING ADD ITION OF RS.74 06 253/- BEING ELEMENT OF PROFIT ON THE ALLEG ED UNDERVALUED SALES OF RS.4 93 75 020/-AND OF RS.79 86 892/- BEING ELEM ENT OF PROFIT ON THE ALLEGED VALUE OF ALLEGED CLANDESTINE REMOVAL OF GOO DS OF RS.5 32.45 944/-HAS ENTIRELY RELIED UPON THE SHOW C AUSE NOTICE ISSUED BY THE DGCEI FOR PROPOSING THE ADDITIONS IN HIS SHO W CAUSE NOTICE DT. 10/03/2014 REPRODUCED IN ASSESSMENT ORDER UNDER APP EAL AND ALSO IN MAKING THE IMPUGNED ADDITIONS. FURTHER APPELLANT H AS ALSO CONTENDED THAT AO HAD EXTENSIVELY RELIED UPON AND REPRODUCED THE PARAGRAPHS FROM THE SCN ISSUED BY ME DGCEI AND RELYING UPON TH E SAME HAD PROCEEDED TO MAKETHE ADDITIONS REFERRED TO ABOVE. FURTHER IT IS CONTENDED THAT EXCISEDEPARTMENT HAD PASSED THE ADJU DICATION ORDER ON ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 56 - THE BASIS OF THE SCN OF THE DGCEI DETERMINING THE A DDITIONAL EXCISE DUTY PAYABLE ON THE VALUES AS DETERMINED AND HAD BE EN SUBJECT MATTER OF APPEAL BEFORE THE HON. CENTRAL EXCISE & SERVICE TAX TRIBUNAL WZB AHMEDABAD. IT IS STATED THAT THE HON'BLE CESTAT HAS DECIDED THE SAID APPEALS IN FAVOUR OF THE 'APPELLANTS BY A COMMON AP PELLATE ORDER DT 12- 05-2015. THE HON.CESTAT HAS HELD THAT NO CASE OF UN DERVALUATION OF SALES OR OF CLANDESTINE REMOVAL OF FRIT HAS BEE N MADE OUT AND ACCORDINGLY QUASHED THEADJUDICATION ORDERS PASSE D BY THE CENTRAL EXCISE AUTHORITIES ON THE BASISOF THE SHOW CAUSE NO TICE OF THE DGCEI. FURTHER APPELLANT HAS CONTENDED AND RELIED ON THE D ECISION OF THE HON'BLE ITAT BENCH DECISION IN THE CASE OF PRIMA CE RAMICS PVT. LTD. INVOLVING FACTS SIMILAR TO THE APPELLANT'S CASE THA T THE APPEAL SHOULD BE DECIDED IN THE LIGHT OF THE ORDER OF THE EXCISE AND CUSTOM TRIBUNAL IT IS CONTENDED THAT HON'BLE ITAT HAD FOLLOWED THE ABOVE REFERRED ORDER IN ANOTHER CASE INVOLVING IDENTICAL FACTS M/S. WELSUI T GLASS & CERAMICS PVT. LTD. WHILE DECIDING CROSS APPEALS BY THE DEPAR TMENT VIDE ORDER DATED 20/06/2014. THE APPELLANT HAS ALSO ARGUED THA T AO HAS NOT REJECTED BOOKS OF ACCOUNT AND MADE ADDITION FOR GRO SS PROFIT OF UNDER VALUATION AND CLANDESTINE REMOVAL OF GOODS WHICH IS INCORRECT. HAVING CONSIDERED THE FACTS OF THE CASE AND SUBMISS IONS MADE AND REPORT SUBMITTED BY THE AO. IT IS SEEN FROM THE COMMON ORDER PASSED BY CESTAT IT IS HIGHLY TECHNICAL AND RELIEF IS GIVEN TO THE APPELLANT AND OTHER 22 APPELLANTS ON THE BASIS OF T ECHNICAL GROUNDS LIKE- WHETHER THE APPELLANTS HAD INDULGED IN CLANDESTINE MANUFACTUREAND CLEARANCE OF CERAMIC GLAZED MIXTURE (FRIT) IN VIEW OF THEADJUDICATION ORDERS PASSED ON THE BASIS OF NATURAL GAS CONSUMPTIONNORMS PER METRIC TON? WHETHER THE APPELLANTS HAD INDULGED IN UNDERVALUATI ON OF FRIT AND ALSO CLANDESTINELY CLEARED FRIT AS PER PERSONAL LED GERS RETRIEVED FROM A PEN-DRIVE RECOVERED AND OTHER PERSONAL RECOR DS READ WITH THEIR STATEMENTS? WHETHER THE ADJUDICATING AUTHORITIES WERE JUSTIFIED IN DENYING CROSS-EXAMINATION OF WITNESS UNDER THE PROVISIONS O F SECTION 9D OF THE CENTRAL EXCISE ACT 1944 READ WITH THE JUDIC IAL PRONOUNCEMENTS ON THE ISSUE. IT IS PERUSED FROM THE COMMON ORDER OF CESTAT THAT CLANDESTINE MANUFACTURE AND CLEARANCE OF FRIT BY TH E APPELLANT HAVE BEEN ESTIMATED BY TAKING DIFFERENT GAS CONSUMPTION NORMS WHICH EITHER GOT ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 57 - SUGGESTED BY THE APPELLANT OR WORKED OUT B Y THE INVESTIGATION. AVERAGE GAS CONSUMPTION FROM 263 SCMS TO 484 SCMS WERE FIXED FOR DIFFERENT APPELLANTS AND WERE CONSIDERED BY THE ADJUDICATING AUTHORITIES FOR CALCULATING/CONFIRMING THE DEMANDS AND IMPOSING PENALTIES. ON THE ABOVE LINES HON'BLE CESTAT HAS CONCLUDED IN PARAS. 8 9 & 10 THAT THE METHODOLOGY ADOPTED B Y THE ADJUDICATING AUTHORITIES IN ESTIMATING AND DEMANDING DUTY FROM THE APPELLANTS BASED ON CONSUMPTION OF NATURAL GAS ELECTRICITY CON SUMED AND PACKING TIME TAKEN AS NOT ACCEPTABLE AND REQUIRED TO BE RE JECTED. THE PARAS ARE REPRODUCED HEREUNDER: 8. IN VIEW OF THE ABOVE OBSERVATIONS AND JUDICIAL PRONOUNCEMENTS METHODOLOGY ADOPTED BY THE ADJUDICA TING AUTHORITIES IN ESTIMATING AND DEMANDING DUTY FROM T HE APPELLANTS; BASED ON CONSUMPTION OF NATURAL GAS ELECTRICITY CO NSUMED AND PACKING TIME TAKEN; IS NOT ACCEPTABLE AND IS REQUIR ED TO BE REJECTED. 9. SO FAR AS POINTS MENTIONED AT PARA 6(II) AND 6(I II) ARE CONCERNED IT HAS BEEN HELD BY THE ADJUDICATING AUT HORITIES THAT UNDERVALUATION AND CLANDESTINE REMOVAL STAND PROVID ED IN VIEW OF THE PEN-DRIVES AJTAK XYZ OF SANYO PERSONAL LEDGER OF COMET PRIVATE DIARIES/ WRITING PADS AND THE STATEMENTS OF CERAMIC TILE MANUFACTURERS. APPELLANTS HAVE ARGUED THAT THE PRI NT-OUT TAKEN FROM THE PEN-DRIVE AJTAK XYZ ARE NOT ADMISSIBLE AS A PIE CE OF EVIDENCE AS THE SAME ARE NOT THE DOCUMENTS ADMISSIBLE AS EVI DENCE UNDER THE RELEVANT SECTION OF THE CENTRAL EXCISE ACT 1944. IT WAS ALSO ARGUED BY THE APPELLANTS THAT THE NUMBER OF PANCHNAMAS REC ORDED AND THE OPENING OF THE SAID PEN-DRIVE CLEARLY SUGGEST THAT THE DATA RECOVERED FROM THE PEN-DRIVE IS HIGHLY OBJECTIONABLE SUSPICI OUS AND NOT ACCEPTABLE. IT IS OBSERVED FROM THE CASE RECORDS O F WELLSUIT GLASS & CERAMIC PVT. LIMITED [E/13720/2014] THAT SEIZURE OF THE SAID PEN- DRIVE WAS EFFECTED ON 17.7.2008 UNDER A PANCHNAMA A ND IT WAS NOT STATED IN THIS PANCHNAMA THAT THE PEN-DRIVE WAS PUT INSIDE A SEALED COVER. IT HAS BEEN ADMITTED BY SHRI V.N. THAKKAR ( SUPERINTENDENT) DGCEI IN THE CROSS-EXAMINATION BEFORE THE ADJUDICAT ING AUTHORITY THAT WHEN AN ARTICLE IS SEIZED THE SAME IS PLACED IN A SEALED COVER AND MENTION OF THE SAME IS MADE IN THE PANCHNAMA. IT I S ALSO ADMITTED BY SHRI THAKKAR THAT AS HE REMEMBERS THE SEIZED PEN-DR IVE WAS PLACED IN A PAPER COVER AND SEALED WITH ADHESIVE TAPES. IT I S THE CLAIM OF THE APPELLANTS THAT THE WAY THE SAID PEN-DRIVE WAS HAND LED IT IS POSSIBLE THAT THE SAME COULD BE TEMPERED WITH AS THE SAME WA S KEPT IN THE PAPER COVER SEALED WITH ADHESIVE TAPES. A SECOND P ANCHNAMA WAS ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 58 - MADE ON 30.8.2008 WHERE THE SAID PEN-DRIVE WAS MENT IONED TO HAVE BEEN TAKEN OUT OF A SEALED COVER WHEN THE FIRST PAN CHNAMA NEVER MENTIONED KEEPING THE SAID PEN-DRIVE IN A SEALED CO VER. IT IS ALSO OBSERVED THAT ON 30.8.2008 THE SEALED COVER WAS OPE NED BUT CONTENTS OF THE SILVER PEN-DRIVE WERE NOT OPENED ON 30.8.300 8 BUT INSTEAD ANOTHER BLACK COLOUR PEN-DRIVE WAS OPENED. ON 06.9 .2008 UNDER A PANCHNAMA THE SAID SILVER PEN-DRIVE TAKEN OUT OF TH E SEALED COVER AND ON OPENING THIS PEN DRIVE IN THE TALLY FOLDER NO D ATA WAS FOUND TO BE AVAILABLE. HOWEVER UNDER ANOTHER PANCHNAMA DATED 12.09.2008 WHEN THE SAID SILVER PEN-DRIVE WAS OPENED DATA WAS FOUND IN TALLY FOLDER WHICH IS THE RELIED UPON AS AAJTAK XYZ. THE RE IS A STRONG FORCE IN THE ARGUMENTS MADE BY THE APPELLANTS THAT WHEN NO DATA WAS FOUND IN TALLY FOLDER ON 06.9.2008 HOW THE RELIED UPON DOCUMENTS GOT GENERATED ON 12.09.2008. SHRI V.N. THAKKAR SUPERI NTENDENT IN HIS CROSS-EXAMINATION EXPLAINED THE REASON FOR NON RETR IEVAL OF DATA ON 06.9.2008 TO BE DUE TO OPERATIONAL LACK BUT HE ADM ITTED THAT NO MENTION OF ANY OPERATIONAL LACK IS MADE IN THE PANC HNAMA DATED 06.9.2008. FURTHER IT IS OBSERVED THAT IN PANCHNA MA DATED 12.09.2008 THE PRINT OUT OF ACCOUNT AJTAK TAKEN CO NTAINED 52 PAGES AND ACCOUNT OF APPELLANT WELLSUIT APPEARED AT PAGE 30 OUT OF 52 PAGES. ANOTHER PANCHNAMA DATED 24.09.2008 INDICATE IN ANNE XURE A3 THAT THE NUMBER OF PAGES OF ACCOUNT AAJTAKWERE 94 AND TH E NAME OF APPELLANT EXISTED AT PAGE 43 AS AGAINST PAGE 30 MEN TIONED IN PANCHNAMA DATED 12.09.2008. APPELLANTS HAVE ALSO R AISED THE ISSUE REGARDING DISCREPANCIES IN THE NAME OF THE PANCH WI TNESSES. IT IS ALSO CONTENDED THAT REVENUE HAD NOT FOLLOWED THE PROCEDU RE AS STIPULATED IN SECTION 36B OF THE CENTRAL EXCISE ACT 1944. IN VIEW OF THE ABOVE DISCREPANCIES THE AUTHENTICITY AND VERACITY OF DATA RETRIEVED BY INVESTIGATION FROM THE SILVER PEN-DRIVE IS NOT RELI ABLE AND CAN NOT BE ACCEPTED AS A PIECE OF EVIDENCE IN DECIDING THE CAS E OF UNDERVALUATION AND CLANDESTINE REMOVAL AGAINST THE PRESENT APPELLA NTS WITH RESPECT TO POINT MENTIONED IN PARA 6 (II). 10. SO FAR AS THE QUESTION MENTIONED AT PARA 6(III) REGARDING DENYING CROSS-EXAMINATION OF WITNESSES WHOSE STATEM ENTS WERE USED FOR ESTABLISHING UNDERVALUATION/ CLANDESTINE REMOVA L OF FRIT BASED ON THE PRIVATE RECORDS THE STATEMENTS OF TILE MANUFAC TURERS AND SHROFF/ ANGADIAS IS CONCERNED; IT IS ARGUED BY THE APPELLAN TS THAT THE ENTIRE EXERCISE OF SUCH QUANTIFICATION HAS BEEN MADE AS PE R THE STATEMENTS OF THE WITNESSES WHOSE CROSS-EXAMINATION HAS NOT BEEN ALLOWED BY THE ADJUDICATING AUTHORITY AS PER SECTION 9D OF THE CEN TRAL EXCISE ACT 1944. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 59 - FROM THE ABOVE IT IS PERUSED THAT THE HON'BLE CETAT FINDING ONTHE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE-I II AHMEDABAD IS ON HIGHLY TECHNICAL GROUNDS CITING VARIOUS DECISION S OF TRIBUNALS AND VARIOUSJUDICIAL PRONOUNCEMENTS REGARDING UNDER VALU ATION OF GOODS AND ONACCOUNT OF CLANDESTINE REMOVAL OF GOODS AND A LSO APPELLANT WAS NOTGIVEN OPPORTUNITY OF CROSS EXAMINATION ON THE ST ATEMENTS RECORDED OF VARIOUS PERSONS RELATED TO THE APPELLANT FOR THE PR ODUCTION OF THEIR GOODS.HOWEVER WITH DUE RESPECT TO HON'BLE CESTAT'S DECISION IT IS SEEN THATNOWHERE HON'BLE CESTAT HAS DEALT THE EVIDE NCES COLLECTED BY THEINVESTIGATING AUTHORITIES OF CENTRAL EXCISE T HOUGH MENTIONED IN THE BODYOF THE ORDER BY WAY OF ANNEXURES BY THE COM MISSIONER OF CENTRAL EXCISE-III AHMEDABAD WHICH ARE STILL IN TH E POSSESSION OF CENTRAL EXCISEDEPARTMENT LIKE INVOICES WHICH WERE PREPARED BY THE APPELLANT IN TWOFOLDS UNDER VALUATION OF GOODS WHI CH WERE COLLECTED AND ON THAT BASISACDL. DGCE HAD SHOW-CAUSED THE APP ELLANT. VARIOUS STATEMENTS WERERECORDED OF THE PARTNERS AND THE TEC HNICAL PERSONS OF VARIOUS CONCERNSFROM WHOM APPELLANT USED TO PURCHAS E OR SOLD THE PRODUCTS WHICH AREALSO NOT CROSS EXAMINED AS STATED BY THE HON'BLE CESTAT. THE HON'BLEJURISDICTIONAL TRIBUNAL HAS DEC IDED ONE M/S. PRIMA CERAMICS PVT LTD IN ITANO. 453/AHD/2013 WHIC H IS ONE OF THE 22 CASES INVOLVED HAVING IDENTICALISSUE. HON'BLE TRIBUNAL HAS GIVEN THE DIRECTIONS TO DECIDE THIS CASE ASUNDER: '......TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW ON MERIT IN THE LIGHT OFTHE ORDER OF THE EXCISE AND CUSTOM TRIBUNAL TO BE PASSED IN THIS CASE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. WE DIRECT ACCORDINGLY.' FOLLOWING THE ABOVE DIRECTIONS OF THE HON'BLE ITAT THE CASE OF THE APPELLANT WAS REMANDED TO AO AND DIRECTED TO GI VE FRESH OPPORTUNITY TO HE APPELLANT TO PRODUCE BOOKS OF AC COUNTS AND TO PROVIDE OPPORTUNITY TO CROSS-EXAMINE OF VARIOUS S TATEMENTS RECORDED AND EVIDENCES COLLECTED DURING THE ACTION CONDUCTED BY THE EXCISE DEPARTMENT AND THE DETAILED SHOW CAUSE NOTICE PREPA RED BY THE DGCEI AND FOLLOWED BY THE AO. AO HAS SUBMITTED A DETAILED REMAND REPORT WHICH IS REPRODUCED HEREIN ABOVE. APPELLANT WAS PROVIDED OPPORTUNITY TO FILE REJOINDER AND A COPY O F THE REMAND REPORT OF THE AO WAS PROVIDED TO THE APPELLANT HAS FILED R EJOINDER WHICH IS REPRODUCED HEREIN ABOVE. IT IS FURTHER OBSERVED THA T AO VIDE ITS LETTER DATED 07/03/2016 HAS ALSO SUBMITTED FOLLOWING REPOR T. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 60 - 2. THIS IS WITH RESPECT TO THE APPELLANT PROCEEDING S FOR THE A.Y.2006- 07 2007-08 2008-09 PENDING BEFORE THE HON'BLE CIT (A). IN THIS REGARD IT IS TO STATE THAT VIDE THIS OFFICE LETTER DATED 12/02/2016 THE ASSESSEE WAS SPECIFICALLY ASKED TO PRODUCE THE BOOK S OF ACCOUNTS FOR VERIFICATION. HOWEVER ON 23/03/2016 SHRIDAXESH M. THAKKAR ADVOCATE ATTENDED THE OFFICE OF THE UNDERSIGNED AND INSPITE OF SPECIFICALLY ASKED TO PRODUCE THE BOOKS THE AR DID NOT PRODUCE THE BOOKS. AND IN ITS SUBMISSION DATED 23/02/2016 RELA TED TO THE SHOW CAUSE FOR A.Y.2009-10 A.Y.2010-11 THE AR EXPRESSE D ITS INABILITY TO PRODUCE THE BOOKS OF ACCOUNT AS THE SAME HAS BE EN LYING WITH THE CENTRAL EXCISE DEPARTMENT AS SEIZED AT THE TIME OF SEARCH CONDUCTED IN ITS PREMISES ON 29/08/2008 BY DGCEI ZONAL UNIT AH MEDABAD. HOWEVER SINCE THE APPELLANT HAS DEMANDED THE SAME BEFORE THE HON'BLE CIT(A) VIDE ITS REJOINDER/REBUTTAL DATED 1 2/01/2016 IN WHICH THEY CLAIM BEFORE THE HON'BLE CIT(A) THAT NO CROSS EXAMINATION OPPORTUNITY WAS GIVEN BY THE ACIT MEHSANA. IN THIS REGARD IT IS TO STATE THAT THE DECISION OF A.Y 2006 07 2007-08 20 08-09 WAS NOT ONLY ON THE BASIS OF INFORMATION RECEIVED FROM THE EXCIS E DEPARTMENT BUT ALSO ON THE BASIS OF THE STATEMENT RECORDED AT THE TIME OF ASSESSMENT PROCEEDING BY THEN AO OF ONE OF THE DIRECTOR SHRI H ARSHAD PATEL WHICH IS ALSO FORMED PART OF THE ASSESSMENT ORDER. THEREFORE BEFORE FINALIZING THE ISSUE IT CONSIDER ESSENTIAL TO IMPA RT JUSTICE BY PROVIDING OPPORTUNITY OF CROSS EXAMINATION OF SHRI HARSHAD PA TEL DIRECTOR FOR ALL THE YEARS I.E. A.Y.2006 07 2007-08 2008-09 2 009-10 AND THE DATE OF COMPLIANCE WAS FIXED ON 29/02/2016. HOWEVER ON 29/02/2016. SHRI HARSHAD PATEL WAS NOT P RODUCED BEFORE THE UNDERSIGNED. THE AR ATTENDED THE OFFICE OF THE UNDERSIGNED AT AROUND 4:30 P.M. WITH INCOMPLETE SETS OF BOOKS WH EN HE WAS ASKED TO PRODUCE PRODUCTION REGISTER STOCK REGISTER WHIC H FORM ONE OF THE ESSENTIAL ELEMENT OF ADDITION IN ALL THESE YEAR. HE INFORMED THE UNDERSIGNED THAT HE WILL BROUGHT THE SAME FROM THE FACTORY PREMISE. HOWEVER FOR THAT UNDERSIGNED WAITED TILL 6:30 P.M. BUT NOTHING PRODUCED TILL THAT TIME AND WHEN ONE OF HIS STAFF S HRI MANISH S. PATEL WHO WAS PRESENT WAS ASKED TO SIGN THE ORDER SHEET HE REFUSED TO DO THE SAME AFTER TAKING WITH THE C-A SHRI DAXESH M. THAKKAR ADVOCATE ON PHONE LATER ON NEXT DAY ON 01/03/2016. NEITHER NO BODY ATTENDED THE OFFICE JUST THEY SUBMIT ME PHOTOCOPY OF THE VARIOUS DOCUMENT THROUGH DAK. IN THE ABSENCE OF VERIFICATIO N AS GIVEN TO THE ASSESSEE THE GENUINELY OF THE BOOKS CANNOT BE DETE RMINED. THEREFORE IT IS REQUESTED TO HON'BLE CIT TO PLEASE DECIDE TH E ISSUE ON THE BASIS ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 61 - OF FACTS AND MATERIAL ON RECORD. AS THE APPELLANT I S JUST TRYING TO DELAY THE PROCEDURE BEFORE THE CIT(A) FOR A.Y.2006-07 20 07-08 2008-09 WITH THE SOLE MOTIVE TO DELAY REASSESSMENT PROCEEDI NGS FOR A.Y.2009- 10 AND A.Y.2010-11 IT IS THEREFORE REQUESTED TO KI NDLY DISPOSE THE APPEAL AS EARLY AS POSSIBLE SO THAT THIS OFFICE CAN DECIDE THE IDENTICAL ISSUE IN ABOVE MENTIONED ASSESSMENT YEAR. PHOTOCOPIES OF THE ORDER SHEETS FOR BOTH THE YEARS AS WELL AS COPIES OF COVERING LETTERS OF SUBMISSIONS FILED ON 01/03/2016 ARE ANNEXED HEREWITH. AS IS EVIDENT FROM THE DIRECTION OF THE HON'BLE ITA T VIDE ORDERDATED 05/09/2013 REPRODUCED IN THE CASE OF PR IMA CERAMICS PVT LTD AND OTHER 22 CASES INCLUDING APPELLANT A REASO NABLE OPPORTUNITY OF BEINGHEARD AND OPPORTUNITY OF CROSS EXAMINATION ON THE BASIS OF EVIDENCES COLLECTED BY DGCEI AND RELIED UPON BY THE AO WAS GRANTED TO THE APPELLANT BY THE AO. THE OPPORTUNITY GRANTED WAS DENIED BY THE APPELLANT SIMPLY STATING IN HIS LETTER THAT SINCE T HEY ALREADY RECEIVED THE RELEVANT DOCUMENTS DURING THE ASSESSMENT PROCEEDING S THERE WAS NO NEED FOR FURTHER CROSS VERIFICATION AS THE APPELLAN T HAD RECEIVED THE RELEVANT DOCUMENTS DURING THE ASSESSMENT PROCEEDING S. HOWEVER THE AR ON THAT DAY ONLY SUBMITTED THE COPY OF ORDER PAS SED BY THE APPELLATE TRIBUNAL OF CENTRAL EXCISE IN WHICH THE ISSUE IN QU ESTION WAS ALLOWED IN FAVOUR OF THE ASSESSEE. AO HAS FURTHER REQUESTED TH E APPELLANT TO PRODUCE THE BOOKS OF ACCOUNTS AND RELEVANT DOCUMENT S TO VERIFY AND EXAMINE THE ISSUES RAISED BY THE ADDL. DGCEI IN HIS SHOW CAUSE NOTICE FOR DETERMINING THE UNDER VALUATION OF GOODS AND CL ANDESTINE REMOVAL. IN RESPONSE THERETO APPELLANT SUBMITTED THE SAME SU BMISSION SUBMITTED DURING THE ASSESSMENT PROCEEDINGS AND NO ORIGINAL B ILLS/VOUCHERS WERE PRODUCED BEFORE THE AO. AO THEREFORE WAS OF THE VIE W THAT APPELLANT DO NOT HAVE ANY MATERIAL EVIDENCE ON RECORD WHICH IT C AN RELY. IT IS FURTHER OBSERVED FROM COPY OF ORDER SHEET PROVIDED BY AO WH ICH PERTAINS TO REMAND PROCEEDINGS ALONG WITH REMAND REPORT DATED 7 LH MARCH 2016 AO HAS PROVIDED OPPORTUNITY TO APPELLANT TO CROSS E XAMINE MR HARSHAD PATEL DIRECTOR OF COMPANY FOR ALL THE THREE YEARS BECAUSE DURING THE SEARCH AND POST SEARCH INVESTIGATION BY EXCISE DEPA RTMENT HE HAS ADMITTED THAT RATES CHARGED WERE MUCH LOWER THAN TH E ACTUAL SELLING PRICE AND CLANDESTINE REMOVAL OF GOODS BUT SAID DIR ECTOR WAS NOT PRODUCED BEFORE AO INSPITE OF PROVIDING SUFFICIENT OPPORTUNITY. EVEN DURING REMAND PROCEEDINGS APPELLANT HAS NOT SUBMIT TED COMPLETE SET OF BOOKS OF ACCOUNT EVEN THOUGH IT WAS SPECIFICALLY AS KED TO PRODUCE ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 62 - PRODUCTIONREGISTER STOCK REGISTER WHICH FORM ONE O F THE ESSENTIALELEMENT OF ADDITIONS. . CONSIDERING THE DIRECTIONS AS WELL AS AFTER CONSIDE RING ISSUES INVOLVED ON THE BASIS OF FACTS COVERED AND SHOW CAU SE ISSUED/ THE FOLLOWING FACTS ARE REVEALED: 1) THE REASONS FOR PROVIDING THE OPPORTUNITY OF BEI NG HEARD AND CROSS EXAMINATION TO THE APPELLANT WAS AS PER THE D IRECTIONS OF THE HON'BLE ITAT AND ALSO TO VERIFY AND EXAMINE VAR IOUS EVIDENCES WHICH WAS MENTIONED IN THE SHOW CAUSE LET TER ISSUED TO THE APPELLANT BY ADDL. DGCEI LIKE THE EVIDENCES OF UNDER VALUATION OF GOODS UNDER VALUATION OF FREIGHT AND EVIDENCES MENTIONED ON PAGE NO.8 9 & 10 IN ORDER DATED 29/3/ 2014 OF COMMISSIONER OF CENTRAL EXCISE AHMEDABAD. 2) ALSO ONE OF THE ISSUE LIKE STATEMENT RECORDED O F DIRECTOR WHEREIN THE DIRECTOR HAS ACCEPTED MODUS OPERANDI OF TAX EVA SION BY UNDER-VALUATION OF GOODS AND FREIGHT AND UNACCOUNTE D PRODUCTION. IT IS NOT OUT OF PLACE TO MENTION THAT THESE FACTS WERE NOT DEALT BY THE HON'BLE ITAT IN THE ORDER PASSED C ESTAT HAS GIVEN RELIEF ON THE BASIS OF TECHNICAL GROUND BUT I NCOME-TAX DEPARTMENT HAS NOT EXAMINED THE PARTNERS OF THE COM PANY AND OTHER PERSONS WHOSE STATEMENTS WERE RECORDED ON OAT H DURING THE SEARCH ACTION BY THE EXCISE DEPARTMENT AS WELL AS O N THOSE EVIDENCES WHICH WAS COLLECTED AND WAS INPOSSESSION OF EXCISE DEPARTMENT WHICH WERE VERY WELLMENTIONED IN THE SHO W CAUSE LETTER OF ADDL. DGCEI AND ORDER PASSED BY THE COMMI SSIONER OF CENTRAL EXCISE-III AHMEDABAD IN THE CASE OF THE AP PELLANT. THE CASE WAS REMANDED TO THE AO TO CONFRONT THE APP ELLANT ON THESE ISSUES AS WELL AS TO GIVE OPPORTUNITY TO THE APPELLANT TO PRODUCE THE BOOKS IN SUPPORT OF THE CLAIM WHICH WAS NOT REL IED UPON BY THE AO. APPELLANT HAS NOT AVAILED THE OPPORTUNITY WITH THE PLEA THAT THE AO HAS TO FOLLOW THE ORDER OF THE HON'BLE CESTAT AND DIREC TIONS OF HON'BLE JURISDICTIONAL ITAT WHICH IS WELL DISCUSSED IN ABOV E PARAGRAPHS. THE DENIAL OF OPPORTUNITY BY THE APPELLANT INDICATES TH AT THE ISSUE IS STILL VERY LIVE IN THE CASE OF THE APPELLANT AS REPORTED BY THE AO ALSO AS CENTRAL EXCISE DEPARTMENT HAS FURTHER PREFERRED APP EAL BEFORE THE APEX COURT AGAINST THE ORDER OF CESTAT WHICH WAS DECIDED ON THE BASIS OF TECHNICALITIES AND JUDICIAL PRONOUNCEMENTS. THE CAS E WAS REMANDED TO ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 63 - THE AO WITH A SPECIFIC DIRECTION TO GIVE OPPORTUNIT Y OF BEING HEARD AND OPPORTUNITY OF CROSS EXAMINATION ON THE BASIS OF FA CTS FINDINGS GIVEN IN SHOW CAUSE NOTICES ISSUED BY THE BY THE ADDL. DGCEI AHMEDABAD BUT APPELLANT VOLUNTARILY DENIED TO AVAIL THE OPPOR TUNITIES AND DID NOT PRODUCE THE BOOKS OF ACCOUNTS ARID ON SUCH FACTS T HE APPEAL IS DECIDED IN THE BASIS OF EVIDENCES GATHERED BY THE EXCISE DE PARTMENT WHICH WAS FOLLOWED BY THE AO AND MADE THE DISALLOWANCE AND AD DITION TO THE TOTAL INCOME OF THE APPELLANT ON THE GROUNDS THAT PARTNER S OF THE APPELLANT COMPANY AND OTHERS IN THEIR STATEMENTS HAD ACCEPTED AND STATED HOW THE MODUS OPERANDI WAS CARRIED OUT BY THEM FOR UNDERVAL UATION OF GOODS AND CLANDESTINE REMOVAL; THE STATEMENT RECORDED WIT H REGARD TO FRIT AND SHOW CAUSE LETTER REGARDING BOOKS WHICH WAS REJECTE D BY THE AO. DURING THE COURSE OF INVESTIGATION A STATEMENT OF S HRI HARSHADBHAI C PATEL DIRECTOR OF APPELLANT COMP ANY WAS RECORDED ON OATH ON 30/1/2010 BY THE CENTRAL EXCISE A UTHORITIES AND DURING THE SEARCH OPERATION HE HAS VERY CATEGORICALLY ADM ITTED IN HIS STATEMENT THAT RATES CHARGED WERE MUCH LOWER THAN THE ACTUAL SELLING PRICE AND ALSO ACCEPTED THE FACT THAT APPELLANT COMPANY WAS INVOLVED IN PARALLEL INVOICES. EVEN DURING THE COURSE OF SEARCH CONDUCTE D BY EXCISE AUTHORITIES VARIOUS MATERIALS WERE FOUND WHICH REV EAL THE ABOVE FACT OF UNDER INVOICING AND ISSUANCE OF PARALLEL INVOICES. THE ABOVE FACT IS ALSO SUBSTANTIATED BY STATEMENT OF DIRECTOR RECORDED BY EXCISE AUTHORITY AND RELEVANT PORTION OF SAID STATEMENT IS REPRODUCED HE REIN UNDER : Q.1 8: SHRI HARSHADBHAI PATEL YOU ARE BEING SHOWN THE 'ORIGINAL FOR BUYER' COPY FURNISHED BY SHRI ASHAKBHAIJAYRAMBHAISA VSANI PARTNER OF M/S UDAY INDUSTRIES AND M/S UDAY GOLD CERAMICS OF INVOICE NO.132 DTD. 08-08-2007 ISSUED BY YOUR COMPANY IN FA VOUR M/S UDAY INDUSTRIES FOR SUPPLY OF 200 BAGS I.E. 10000 KGSOF CERAMIC GLAZE MIXTURE CHEMICALS DESCRIBING THE QUALITY AS 'TR' AT THE RATE OFRS 7/- PER KG. HAVING VALUE OF RS.70 000/- SHOWING CENTR AL EXCISE DUTY AS NIL IN VIEW OF BENEFIT O/EXEMPTION UNDER NOTIFN. NO . 8/2003-C.E. DTD. 01-03 2003 AND VAT @ 4 % AS RS. 2 800/ SHOWING THE TOTAL VALUE OF RS.72 800/-. FURTHER YOU ORE ALSO BEEN SHOWN THE O FFICIAL LEDGER OF M/S UDAY INDUSTRIES IN YOUR FAVOUR FOR THE YEAR 200 7-08 WHEREIN ON LEFT HAND SIDE SHOWING THE DETAILS OF VALUE DATE OF PURCHASE AND INVOICE/BILL NO. OF SUPPLIER I.E. M/S GROWMORE CERA MICS P. LTD. AND ON RIGHT HAND-SIDE SHOWING THE PAYMENTS THE DATE OF PAYMENT MADE. CHEQUE NOS.& DATE FOR THE PURCHASES MADE BY YOU. A LONGWITH THIS YOU ORE SHOWING THE INVOICE NO. 132DTD. 10-08-2007 OF M/S ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 64 - GROWMORE CERAMICS PVT. LTD. ISSUED IN THE NAME OF M/S SERON CERAMICS PVT. LTD. FOR 6000 KGS OF CERAMIC GLAZE MI XTURE CHEMICALS - 'OPAQUE ' GRADE @ RS.9/- HAVING ASSESSABLE VALUE OF RS. 54 000/- AND 4000 KGS CERAMIC GLAZE MIXTURE CHEMICALS - 'TR' GRADE @ RS. IF- PER KGS. HAVING ASSESSABLE VALUE OF RS. 28 000 /- TOTAL VALUE AS RS. 82 000/- AND SHOWING CENTRAL EXCISE DUTY AS NIL CLA IMING THE BENEFIT OF NOTIFN. NO. 8/2003-S.T. DTD. 01-03-2003. ALONGWI LH VAT @ 4 % AMOUNTING TO RS.3 280/- TOTAL AMOUNT OF RS. 85 280 /-. COPIES OF BOTH THE INVOICES ARE SCANNED HEREIN BELOW. PLEASE EXPLA IN THE SAME IN DETAIL? A.18: SIR AFTER CAREFULLY GOING THROUGH THE ABOVE TWO DOCUMENTS I PUT MY DATED SIGNATURE ON EACH OF IT. I STATE THAT VIDE THE TRIPLICATE COPY OF ASSESSES' COPY OF INVOICE NO. 132 DTD. 10-0 8-2007 OF M/S GROWMORE CERAMICS PVT. LTD. ISSUED IN THE NAME OF M/S SERON CERAMICS PVT. LTD. FOR 6000 KGS OF CERAMIC GLAZE MI XTURE CHEMICALS - 'OPAQUE' GRADE @ RS. 9/- HAVING ASSESSABLE VALUE OF RS.54 000/- AND 4000 KGS CERAMIC GLAZE MIXTURE CHEMICALS .. 'TR ' GRADE @ RS. 7/- PER KGS. HAVING ASSESSABLE VALUE OF RS.28 000/ - TOTAL VALUE AS RS.82 000/- AND SHOWING CENTRAL EXCISE DUTY US NIL CLAIMING THE BENEFIT OF NOTIFN. NO. 8/2003-S.T. DTD. 01-03-2003 ALONGWITHVAT@4% AMOUNTING TO RS. 3 280/. TOTAL AMOU NT OF RS. 85 280/- WE HAVE CLEARED THE ABOVE-MENTIONED QUANT ITIES OF 'OPAQUE ' AND 'TR' GRADE TO M/S SERON CERAMICS PVT. LTD. AN D RECEIVED THE TOTAL VALUE OF RS. 85 280/-. I FURTHER STATE THE AB OVE INVOICES HAVE BEEN SHOWN IN THE OFFICIAL INVOICES ISSUED BY OUR COMPAN Y DURING THE FINANCIAL YEAR 2007-08AND RECEIVED THE PAYMENT OF T HE TOTAL VALUE MENTIONED IN THE ABOVE INVOICE. FURTHER AS REGARDS THE 'ORIGINAL OF BUYER COPY OF INVOICE NO. 132 DTD. 08-08-2007 ISSUED BY MY COMPANY IN FAVOUR M/S UDAY INDUSTRIES FOR SUPPLY OF 200BAGS I.E. 10000 KGS OF CERAMIC GLA ZE MIXTURE CHEMICALS DESCRIBING THE QUALITYAS 'TR' AT THE RA TE OF RS.71- PER KG. HAVING VALUE OF RS.70 000/- SHOWINGCENTRAL EXCISE DUTY AS NIL IN VIEW OF BENEFIT OF EXEMPTION UNDER NOTIFN. NO. 8/20 03-C.E. DTD. 01- 03-2003 AND VAT @ 4 % AS RS. 2 800/-. SHOWING THE T OTAL VALUE OFRS.72 800/- I STATE THAT THE ABOVE QUANTITY OF ' TR' GRADE FRIT FROM OUR COMPANY HAS BEEN SOLD TOM/S. UDAY INDUSTRIES UN DER THE ABOVE INVOICE HOWEVER THE SAID INVOICE HAS BEEN A 'PARA LLEL INVOICE' ISSUED BY OUR COMPANY WHICH HAS ISSUED BY OUR COMPANY AL ONGWITH THE ORIGINAL INVOICE NO. 132 DID. 10-08-2007 AND WE HAV E NOT CONSIDERED THE SAME IN OUR OFFICIAL RECORDS. I FURTHER STATE THAT THE ABOVE-MENTIONED PARALLEL I NVOICE NO.132 DTD. 08-08-2007 IN FAVOUR OF M/S UDAY INDUSTRIES HAS BEE N ISSUED BY OUR ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 65 - COMPANY FOR SUPPLY OF 10000 KGS OF 'TR' QUALITY OF CERAMIC GLAZE MIXTURE I.E. FRIT FROM OUR COMPANY TO M/S UDAY INDU STRIES HOWEVER WE HAVE NOT ACCOUNTED FOR THE-ABOVE QUANTITY OF 'TR ' GRADE FRIT IN OUR BOOKS OF ACCOUNT AND DAILY STOCK ACCOUNT REGIST ER DURING THE MATERIAL TIME I STATE THAT AS LIKE THE OFFICIAL INV OICES ISSUED BY US WE ISSUE IN CASE OF PARALLEL INVOICE ALSO WE ISSUE- T HREE COPIES OUT OF WHICH THE 'ORIGINAL' AND 'DUPLICATE' COPIES WERE SE NT TO THE BUYER ALONGWITH THE GOODS AND 'TRIPLICATE COPY WAS RETAIN ED BY US. FURTHER 'TRIPLICATE FOR ASSESSEE' COPY OF THE PARALLEL INVO ICE NO. 132 DTD. 08- 08-2007 WHICH WE RETAINED WITH US AS PER ROUTINE P ROCEDURE I CONFIRM THAT AFTER DISPATCH AND RECEIPT OF THE FRIT CLEARED UNDER PARALLEL INVOICE WE HAVE DESTROYED THE SAME AND WE HAVE NOT KEPT ANY RECORDS. FURTHER ON BEING ASKED THE RAW MATERIALS PURCHASE AND CONSUMPTION OF IT IN THE PRODUCTION OF ABOVE-MENTIONED 10000 K GS OF 'TR' GRADE FRIT I STATE THAT WE HAD PURCHASED THE REQUIRED RA W MATERIALS IN CASH FOR MANUFACTURE OF ABOVE QUANTITY OF 'TR' GRADE FRI T AND THAT WE HAD NOT ACCOUNTED FOR THE SAID RAW MATERIALS IN OU R BOOKS OF ACCOUNT. REGARDING THE INVOICES OF RAW MATERIAL PURCHASE OR ITS COPIES I STATE THAT WE HAVE PURCHASED THE REQUIRED RAW MATERIALS I N CASH AND AFTER RECEIPT OF THE RAW MATERIALS PURCHASE IN CASH AT OU R FACTORY PREMISES WE USE TO DESTROY THE SAID INVOICES.--.' ALL THE BUYERS OF FRIT WHOSE STATEMENTS WERE RECORD ED HAD CONFIRMED THAT THE QUALITY OF FRIT BEGINNING FROM 2 006-07 TO 2009-10 WERE SIMILAR AND THUS APPELLANT UNDERVALUED THE GOO DS. SIMILARLY 8 TO 10 PERSONS STATEMENTS WERE RECORDED WHICH CONFIRMS THIS FACT. IN THE STATEMENT RECORDED OF SHRI ASHOK J SAVASANI PARTNE R OF M/S UDAY INDUSTRIES WHICH WAS RECORDED ON 24/12/2009 HAS ADM ITTED THAT THEY WERE PURCHASING CERAMIC FRIT FROM THE APPELLANT AND IN THE INVOICES THEY WERE SHOWING ABOUT RS.7/- TO RS.9/- PER KG AND ACTU AL VALUE OF FRIT WAS ABOUT RS.20 TO 26 PER KG AND BALANCE AMOUNT WAS PAI D IN CASH. SIMILARLY IN THE STATEMENT OF SHRI NILESHBHAI M GHO DASARA DIRECTOR OF SERON CERAMICS PVT LIMITED WAS RECORDED ON 07 TH JANUARY 2010 WHEREIN HE HAS STATED THAT DURING THE PERIOD 2004-05 TO 200 7-08 MANUFACTURERS WERE SHOWING VALUE OF FRIT AT RS 7/- TO RS 12/- PER KG AND FROM 2008-09 INCREASED THE PRICES FROM RS.20/- TO RS.30/- PER KG WHICH WERE THE ACTUAL VALUE AND HENCE IN THE PAST PERIOD OVER AND ABOVE THE INVOICE AMOUNT THEY WERE PAYING REMAINING AMOUNT IN CASH D IRECTLY TO THE FRIT MANUFACTURERS. SIMILARLY IN THE STATEMENT RECORDED OF SHRIJAYENDRABHAI KABABHAI KALARIA PARTNER OF M/S.ATLAS INDUSTRIES MORBI HE HAS ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 66 - ADMITTED THAT THEY HAD PURCHASED OPAQUE QUALITY FRI TS AND SOMETIMES TRANSPARENT QUALITY ALSO. HOWEVER THE QUALITY OF B OTH THE OPAQUE AND TRANSPARENT FRIT RECEIVED WERE THE SAME. HE ALSO CO NFIRMED THAT THERE WAS UNDERVALUATION OF CERAMIC FRIT AS THEY WERE GET TING INVOICES FROM THE SUPPLIERS @7/- TO RS.12/- PER KG WHICH WAS PAI D IN CHEQUE. THE BALANCE WAS COLLECTED IN CASH AND WAS ALSO NOT SHOW N IN THE INVOICES RAISED. IN THE STATEMENT RECORDED OF SHRI JAGDISHBH AIGOVINDBHAI PATEL PARTNER OF M/S SATYAM CERAMIC LAKHDIRPUR ROAD MOR BI HE HAS ADMITTED THAT THERE WAS UNDERVALUATION OF CERMIC FR IT AS THEY WERE GETTING INVOICES FROM THE SUPPLIERS @ 7/- TO RS.12/ - WHICH WAS PAID THROUGH CHEQUES HOWEVER FOR THE DIFFERENCE IN VALU E OF FRIT WHICH WAS RS.20/- TO RS.30/- PER KG THE BALANCE WAS PAID IN CASH. SIMILAR STATEMENT HAS BEEN GIVEN BY SHRI BALUBHAIARNARSINHB HAI PATEL PARTNER OF M/S LEO CERAMIC MORBI; SHRI KISHOREBHAIRAGHAVJI BHAI PATEL PARTNER OF M/S PRIYA GOLD CERAMICS MORBI; SHRI SURESHBHAIKARSANBHAIFEFAR PARTNER OF M/S OMSON CER AMIC MORBI; SHRI LALJIBHAIVISHRAMBHYAI PATEL PARTNER OF AM/S S WAGAT CERAMIC MORBI; SHRI JITENDRABHAIPURCHOTTAMDASROJMALA PART NER OF M/S. SILK CERAMICS MORBI; SHRI CHHAGANBBAIVALJIBHAI PATEL D IRECTOR OF M/S SACMI CERAMIC PVT LTD. MORBI; SHRI CHAMANBHAIJIRRA JBHAI PATEL DIRECTOR OF M/S SQUARE CERAMIC PVT. LTD.MORBI AND V ARIOUS OTHER PERSONS. FROM THE ABOVE IT IS VERY CLEAR THAT APPE LLANT WAS ENGAGED IN UNDER VALUATION OF GOODS AND CLANDESTINE REMOVAL OF FRITS. IT WAS FOR THE APPELLANT TO PROVE THAT THE ALLEGATIONSMADE AGAINST IT ARE NOT CORRECT BY PRODUCING BOOKS OF ACCOUNTS AND THEFACTS AGAINST EV IDENCES COLLECTED DURING THE SEARCH OPERATION BY THE EXCISE DEPARTMEN T WHICH WAS NOT DONE BY THE APPELLANT AND HENCE THE ONLY CONCLUSION THAT CAN BE DRAWN IS THAT APPELLANT WAS INVOLVED IN THE PRACTICE OF U NDERVALUATION OF GOODS AND REMOVAL OF CLANDESTINE OF GOODS. IT IS PERTINENT TO NOTE THAT APPELLANT HAS INDULGED IN UNDER INVOICING OF SALES BILLS AND WERE RECORDING SALES B ELOW AT SALE VALUE WHICH IS SUPPORTED BY VARIOUS EVIDENCES FOUND DURIN G THE COURSE OF SEARCH CARRIED OUT BY EXCISE DEPARTMENT ALONG WITH STATEMENT OF DIRECTOR REPRODUCED HEREIN ABOVE WHEREIN HE HAS CATEGORICALL Y ADMITTED THAT THERE ARE RECORDING SALES BELOW ITS ACTUAL VALUE WH ICH PROVE BEYOND DOUBT THAT APPELLANT IS NOT MAINTAINING PROPER BOOK S OF ACCOUNT. THE APPELLANT HAS FAILED TO SUBMIT SUCH BOOKS OF ACCOUN T EVEN DURING REMAND PROCEEDINGS. EVEN AO WHILE PASSING ORIGINAL ASSESSMENT PROCEEDINGS HAS CLEARLY MENTIONED THAT BOOKS OF APP ELLANT CANNOT BE ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 67 - RELIED UPON AS THE APPELLANT WAS ENGAGED IN SUPPRES SION OF SALES BY WAY OF UNDER VALUATION OF SALES INVOICE AS WELL AS CLAN DESTINE REMOVAL OF UNACCOUNTED PRODUCTION AND CONSEQUENT UNACCOUNTED S ALES. THUS AO WAS CORRECT IN APPLYING GROSS PROFIT AS ADOPTED BY APPELLANT ON UNACCOUNTED SALES AND CLANDESTINE REMOVAL OF GOODS. IN VIEW OF THE ABOVE ACTION OF THE AO IN MAKING TH E ADDITION OF RS.74 06 253/- ON ACCOUNT OF UNDER VALUATION AND AD DITION OF RS.79 86 892/- ON ACCOUNT OF CLANDESTINE REMOVAL OF FRITS TO THE TOTAL INCOME OF THE APPELLANT IS HELD JUSTIFIED AND IS HE REBY CONFIRMED. RELEVANT GROUNDS OF APPEAL ARE THEREFORE REJECTED. 6. NEXT GROUND OF APPEAL AGAINST CHARGING OF INTEREST U/S.234B AND 234C OF THE ACT BEING MANDATORY AND CONSEQUENTIAL TO THE DETERMINATIONOF TOTAL INCOME IS DECIDED AS SUCH. 7. IN THE RESULT APPEAL IS DISMISSED. 20. BEFORE US LD. AUTHORISEDREPRESENTATIVESUBMITTED THAT HE IS NOT PRESSING THE ISSUE OF RE-OPENING SO SAME IS DISMISS ED AS NOT PRESSED IN ALL THREE YEARS. 21. NOW COMING TO THE ADDITIONS ON MERIT RAISED PAR ALLEL UNDER INVOICING ACCORDING EXCISE DEPARTMENT TOOK TURNOVER OF RS.4 93 75 020/- FOR A.Y. 2006-07 IN EXCISE MATTER AND IMPUGNED ADDI TIONS WERE MADE ON THE BASIS EXCISE PROCEEDINGS AS MENTIONED ABOVE IN ALL THREE YEARS WHICH WERE CONFIRMED BY THE LD. CIT(A) IN ALL THREE YEARS . 22. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT EX CISE MATTER WAS CARRIED BEFORE HONBLE CESTAT WHEREIN ORDER WAS PAS SED O 12/05/2015 IN FAVOUR OF ASSESSEE WHICH HAS BEEN REPRODUCED IN PARA 10 OF THIS ORDER AND SAME IS NOT BEING REPEATED FOR SAKE OF BREVITY. IN THIS BACKGROUND LD. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 68 - AUTHORISED REPRESENTATIVE SUBMITTED THAT INCOME TAX ADDITIONS DOES NOT SURVIVE BECAUSE BASIS OF THE SAME HAS ALREADY BEEN DEMOLISHED BY THE HONBLE CESTAT AS MENTIONED ABOVE. NOTHING CONTRARY WAS BROUGHT TO NOTICE ON BEHALF OF REVENUE. 23. NOW APPEAL IS BEFORE US WE FIND THAT ASSESSEE IS PVT. LTD. COMPANY AND ENGAGED IN BUSINESS OF MANUFACTURING OF CERAMICS GLAZE MIXTURE FRIT. RETURN OF INCOME FOR ASST. YEAR 2006 -07 WAS FILED ON 07/12/2006 DECLARING TOTAL INCOME OF RS.NIL/- AND S AME WAS PROCESSED U/S.143(1) OF THE ACT.AS DISCUSSED ABOVE NOTICE U/S .148 OF THE ACT WAS ISSUED FOR REOPENING HOWEVER ASSESSING OFFICER REJE CTED THE CONTENTIONS OF THE ASSESSEE MADE IMPUGNED ADDITIONS U/S.143(3) READ WITH SECTION 147 OF THE ACT WHICH WAS CONFIRMED BY THE LD. CIT( A) IN ALL THREE YEARS. ACCORDINGLY WE FIND THAT THE BASIS OF ADDITION IS CONTENTS OF SHOW-CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT. AN INVESTIG ATION WAS CARRIED OUT BY DGCEI AT ASSESSEE PREMISES WHEREIN IT WAS ALLEG ED BY THE EXCISE DEPARTMENT THAT ASSESSEE HAS NOT DECLARED ACTUAL AS SESSABLE VALUE OF GOODS MANUFACTURED AND CLEARED FROM FACTORY. BASED ON THE SAME DGCEI ISSUED SHOW-CAUSE NOTICE EXCISE DEPARTMENT CONCLUD ED THAT ASSESSEE WAS ENGAGED IN UNDER VALUATION OF SALES AND CLANDESTINE REMOVAL OF GOODS. ONLY ON THE BASIS OF SAME ASSESSING OFFICER REOPENE D ASSESSEES INCOME TAX ASSESSMENT FOR THE YEARS UNDER CONSIDERATION AN D MADE ADDITION OF ESTIMATED GROSS PROFIT ON UNDER VALUATION SALES AND CLANDESTINE REMOVAL OF GOODS. ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 69 - THE REVENUE HAS BROUGHT NOTHING ON RECORD THAT IT H AS APPLIED ITS MIND OVER AND ABOVE THE CONTENTS OF SHOW-CAUSE NOTI CE IN QUESTION THUS THERE IS LACK OF INDEPENDENT APPLICATION OF MIND ON BEHALF OF REVENUE IN THESE MATTERS. 24. WE ALSO FIND THAT IN EXCISE PROCEEDINGS CONCER NED AUTHORITIES PASSED ORDER AGAINST ASSESSEE AND MATTER WAS CARRIE D UP TO CONCERNED HONBLE CESTAT. HONBLE CESTAT PASSED AN ORDER DATE D 12/05/2015 AS DISCUSSED ABOVE HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT EXCISE DEPARTMENT COULD NOT ESTIMATE V ALUE OF ALLEGED SUPPRESSION OF SALES AS WELL AS CLANDESTINE REMOVAL OF GOODS MERELY ON THE BASIS OF ASSUMPTION AND SURMISES. THE CESTAT HA VING CONSIDERED THE RELEVANT FACTS OF THE CASE AND STATEMENT RECORD ED BY THE EXCISE DEPARTMENT HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE AS DISCUSSED IN THE ORDER OF THE CESTAT. IN OUR CONSIDERED OPINI ON AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS NOT JU STIFIED IN OBSERVING THAT RELIEF GRANTED BY HONBLE CESTAT WAS HIGHLY TE CHNICAL. 25. IT IS PERTINENT TO MENTION HERE THAT IN CONNECT ED MATTER WE ALSO FIND THAT EXCISE DEPARTMENT CARRIED MATTER BEFORE HONBL E SUPREME COURT WHEREIN SAME WAS DISMISSED AS WITHDRAWN. NOTHING CO NTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE IN TH IS REGARD. 26. WE ALSO FIND IN CONNECTED MATTER THAT TAX APPEA L BEING TAX APPEAL NO.733 AND 734 OF 2016 PREFERRED BY THE LD. EXCISE DEPARTMENT ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 70 - BEFORE HONBLE GUJARAT HIGH COURT CAME TO BE DISMIS SED VIDE ORDER DATED 07/12/2016 AS DISCUSSED EARLIER. AGAIN NOTHIN G CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE IN TH IS REGARD AS WELL. 27. IN THIS BACKGROUND IN OUR CONSIDERED OPINION O RDERS PASSED BY THE HONBLE CESTAT IN THESE YEARS HAVE ACHIEVED FINALIT Y AGAINST THE REVENUE. AS WE HAVE OBSERVED EARLIER THAT ONLY EXCI SE DEPARTMENT ACTION WAS BASIS OF ADDITIONS IN ALL THE THREE YEARS WHICH DOES NOT SURVIVE FOR THE REASONS STATED THEREIN SO THE BASIS OF ADDITIO NS MADE BY THE REVENUE DOES NOT SURVIVE. 28. IN VIEW OF THE ABOVE OBSERVATION ADDITION MADE BY THE REVENUE HAS ALLEGED UNDERVALUATION SALES AND CLANDESTINE RE MOVAL OF GOODS DO NOT SURVIVE AND SAME ARE DIRECTED TO BE DELETED IN ALL THE THREE YEARS. THEREFORE ALL THE THREE APPEALS ARE ALLOWED. 29. IN THE RESULT ALL FIVE APPEALS OF THE ASSESSEE S IN BOTH GROUPS ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30 / 11 /201 7 SD/- SD/- (PRAMOD KUMAR) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/11/2017 PRITI YADAV SR.PS ITA NOS.376 377 988 989 & 990/AHD/2016 ZIRCONIA CERA TECH GLAZES AND GROWMORE CERAMICS PVT . LTD. ASST.YEARS 2007-08 & 2008-09 2006-07 2007-08 & 2008-09 RESPECTIVELY. - 71 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-GANDHINAGAR AHMEDABAD. 5. -. //'( '(# 12$&$ / DR ITAT AHMEDABAD 6. .34 5 / GUARD FILE. / BY ORDER / //TRUE COPY// / !'# ( DY./ASSTT.REGISTRAR) #$ % / ITAT AHMEDABAD