Appeal Details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 1445 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 7 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-05-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2009-2010
Appeal Filed On
04-10-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NOS: 2204 & 2205/AHD/2017 (ASSESSMENT YEARS: 2009-10 & 2010-11) GROW MORE CERAMICS PVT. LTD. 591, KOTHA TA. KALOL, GANDHINAGAR V/S ACIT, MEHSANA CIRCLE, MEHSANA (APPELLANT) (RESPONDENT) PAN: AABCG8742P APPELLANT BY : SHRI PARIMAL SINGH PARMAR, AR RESPONDENT BY : SHRI KAMLESH MAKWANA, SR. D. R. ( )/ ORDER DATE OF HEARING : 09 -05-201 9 DATE OF PRONOUNCEMENT : 21-05-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDER OF THE LD. CIT(A)-GANDHINAGAR, AHMEDABAD DATED 08.09.2017 PERTAINING TO A.Y. 2009-10 & 2010-11 AND ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 2 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN REOPENING THE ASSESS MENT U/S 147 OF THE ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CI T(A) OUGHT TO HAVE HELD THAT THE ACTION OF REOPENING IS WITHOUT JURISDICTION AND NOT PERMISSIBLE 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 AO IN REJECTING BOOKS OF A CCOUNTS U/S 145 OF THE INCOME- TAX ACT, 1961. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LEARNED AO THAT THE APPELLANT HAS SUPPRES SED SALES AMOUNTING TO RS.4,83,95,568/-. 4. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING AN ADDITION OF RS.72,59,335/- AFTER APPL YING NET PROFIT RATE OF 15% ON ALLEGED SUPPRESSED SALES. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BR EACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHE D. 2. FACTS OF THE CASE ARE EMANATED AS PER ASSESSMENT OR DER AS UNDER: THAT APPELLANT IS PRIVATE LIMITED CO. AND ENGAGED I N BUSINESS OF MANUFACTURING CERAMICS GLAZE MIXTURE, FRIT. RETURN OF INCOME FOR A.Y. 2009-10 WA S FILED ON 28/09/2009 AND DECLARED TOTAL INCOME OF RS. 5176543 AND SAME WAS PROCESSED U/S. 1 43(1) OF THE L.T. ACT. NOTICE U/S. 148 OF -THE ACT ISSUED ON 5.08.2014 FOR REOPENING ASSESSMENT AND IN RESPONSE TO THE SAME ASSESSEE HAS FURNISHED WRITTEN REPLY DTD.12/08 /2014 AND REQUESTED TO TREAT THE ORIGINAL RETURN AS RETURN IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. .FURTHER, REOPENING THE ASSESSMENT LOR THE SIMPLE: REASON THAT THE DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE, AHMYDABAD CARRIED OUT SE'ARCH OPERATION AND WHEREIN IT WAS ALLEGEDLY FOUND THAT THE ASSESSEE IS EVADING PAYMENT' OF EXCISE DUT Y AND CLANDESTINE REMOVAL OF GOODS. PARALLEL UNDER INVOICES AND ACCORDINGLY DGCEI HAS ISSUED SHO W CAUSE NOTICE TOOK THE TOTAL TURNOVER OF RS.48395568/- FOR THE PERIOD 01/04/2008 TO 31/03/20 09 I.E. ASSESSMENT YEAR 2009-10 AND THEREFORE ASSESSMENT U/S. 148 FOR A.Y. 2009-10. FURTHER ASSESSEE HAS CHALLENGED REASONS FOR REOPENI NG ASSESSMENT U/S.148 OF THE ACT AND SAME WAS REJECTED BY THE LD. AO VIDE SEPARATE ORDER DTD 04/08/2015 AND NOTICE U/S. 143 (2) WITH ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 3 142(1) OF THE ACT ISSUED AND SERVED TO THE APPELLAN T AND IN RESPONSE TO THE SAME ASSESSEE AND AUTHORISED REPRESENTATIVE ATTENDED FORM TIME TO TIM E AND SUBMITTED DETAILS AS CALLED FOR AND PRODUCE BOOKS OF ACCOUNT FOR VERIFICATION. HOWEVER LD. AO HAS NOT CONSIDERED THE SUBMISSION OF THE ASSESSEE AND IGNORING VARIOUS EXPLANATIONS AND INFORMATION SUBMITTED BY THE ASSESSEE FROM TIME TO TIME AND WITHOUT GIVEN ANY REASON REJECTED BOOKS OF ACCOUNTS ADOPTED GP RATIO @ 15% ON UNDERVALUATION AND CLANDESTINE REMOVAL OF GOODS AND PASSED ASSESSMENT ORDER U/S. 143(3) R.W.S. 147 OF THE ACT WITH DETERMINED TOTAL INCOME OF RS.12435878/- AS AGAINST THE RETURN INCOME OF RS.NIL AND CALCULATED TAX AND CHARGED INTEREST U /S.234B/C ACCORDINGLY. BEING AGGRIEVED AND DISSATISFIED BY THE ORDER OF TH E LD. DY. COMMISSIONER OF INCOME TAX, MEHSANA CIRCLE, MEHSANA, THE APPELLANT HAS PREFERRE D AN APPEAL BEFORE YOUR HONOUR ON FOLLOWING GROUNDS OL APPEAL. 1. THE LEARNED AO HAS ORRED BOTH IN LAW AND ON THE FACTS IN ISSUING NOTICE U/S.148 OF THE ACT FOR REOPENING ASSESSMENT. 2. THE LEARNED AO HAS ERRED BOTH IN LAW AND ON THE FACTS AND REJECTED BOOKS OF ACCOUNTS U/S. 145(3) AND ADOPTED GP @15 % ON SUPPRESSION OF SALES , HOWEVER THE LD. AO HAS NOT FOUND ANV DEFECT OR DISCREPANCY IN BOOKS OF ACCOUNTS. THE RAT E OF GROSS PROFIT IS HIGHLY EXAGGERATED AND EXCESSIVE AND THEREFORE ACTION OF THE LD. AO NOT SU STAINED. IT BE SO HELD NOW. 3. -THE LEARNED AO HAS ERRED IN LAW AND ON THE FACT S OF THE CASE IN MAKING ADDITION ON GROSS PROFIT @ 15% RS.798689?./ ON ACCOUNTS OF SUPPRESSIO N OF SALES OF RS.48395568/-, NO SUCH GOODS REMOVAL BY THE APPELLANT. IT BE SO HELD NOW. 4. ;THE LEARNED AO HAS PASSED THE ORDERS WITHOUT PR OPERLY APPRECIATING THE . FACT AND THAT THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIO NS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE AO IS IN CLEAR B RCACH:0F LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. THE APPELLANT CRAVES LEAVE TO ADD. AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE TIME OF OR BEFORE THE HEAR ING OF THE APPEAL. : YOUR HONOUR, IT IS ADMITTED FACT THAT THE ACTION OF THE LD. AO IN RESP ECT; OF CALCULATED UNDER VALUATION OF FRIT (CERAMICS GLAZE MIXTURE) ON THE BASIS; OF INVESTIGA TION OF CENTRAL EXCISE DEPARTMENT AND THEIR SHOW CAUSE. HOWEVER, THE APPELLANT HAS PREFERRED AN APPEAL BEFORE CENTRAL EXCISE AND CUSTOM TRIBUNAL WEST ZONAL BENCH. AHMEDABAD (APPEAL NO. E/ 13289/2014 DTD.24.09.2014) AND HONORABLE TRIBUNAL AFTER DETAILED DISCUSS, ALLOWED THE APPELLANT APPEAL AND THEREFORE ADDITION UNDER THE INCOME TAX ACT ON THE BASIS OF EXCISES NO T SUSTAINED IN PRESENT CASE OF THE APPELLANT : IN RESPECT OF UNDER VALUATION OF GOODS, 'THE HONORABLE TRIBUNAL OBSERVED THAT;-'9. SO FAR AS POINTS MENTIONED AT PARA 6(II) AND 6(HI) ARE CONCERNED, IT HAS BEEN HELD BY THE ADJUDICATING AUTHORITIES ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 4 THAT UNDERVALUATION AND CLANDESTINE REMOVAL STAND P ROVIDED IN VIEW OF THE PEN DRIVES, AJ'IAK XYZ OF SANYO, PERSONAL LEDGER OF CORNET, PRIVATE DIARIE S/ WRITING PADS AND THE STATEMENTS OF CERAMIC TILE MANUFACTURERS. APPELLANTS HAVE ARGUED THAT THE PRINT OUT TAKEN FROM THE PEN-DRIVE AJTAK XYZ ARE NOT ADMISSIBLE AS A PIECE OF EVIDENCE AS THE SA ME ARE NOT THE DOCUMENTS ADMISSIBLE! AS EVIDENCE UNDER THE RELEVANT SECTION OF THE CENTRAL EXCISE ACT, 1944. IT WAS ALSO ARGUED BY THE APPELLANTS THAT THE NUMBER OF PANCHNAMAS RECORDED A ND THE OPENING OF THE SAID PEN-DRIVE CLEARLY SUGGEST THAT THE DATA RECOVERED FROM THE P EN-DRIVE IS HIGHLY OBJECTIONABLE, SUSPICIOUS AND NOT ACCEPTABLE. IT IS OBSERVED FROM THE CASE RECORD S OF WELLSUIT GLASS & CERAMIC PVT. LIMITED IE/13720/2014] THAT SEIZURE OF THE SAID PEN-DRIVE W AS EFFECTED ON 17.7.2008 UNDER A PANCHNAMA AND IT WAS NOT STATED IN THIS PANCHNAMA THAT THE PE N-DRIVE WAS PUT INSIDE A SEALED COVER. IT HAS BEEN ADMITTED BY SHRI V.N. THAKKAR (SUPERINTENDENT) DCCEI IN THE CROSS-EXAMINATION 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 IN THE PANCHNAMA. IT IS ALSO ADMITTED BY SHRI THAKKAR THAT AS HE REMEMBERS THE SEIZED PEN-DRIVE WAS PLACED IN A PAPE R COVER AND SEALED WITH ADHESIVE 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 SECOND PONCHNAMO WAS MADE ON 3O.8.2008 WHE RE THE SAID PEN-DRIVE WAS MENTIONED TO NAVE BAT>N TAKEN OUT OF A SEALED COVER WHEN THE FIR ST PANCHNAMA NEVER MENTIONED KEEPING THE SAID PEN-DRIVE IN A SEALED COVER. IT IS ALSO OBSERV ED THAT ON 30.8.2008 THE SEALED COVER WAS OPENED BUT .CONTENTS OF THE SILVER PEN-DRIVE WERE NOT OPENED O N 30.8.3008 BUT INSTEAD ANOTHER BLACK COLOUR PEN-DRIVE WAS OPENED. ON 06.9.2008 UNDER A PANCHNAM A .THE SAID SILVER PEN-DRIVE TAKEN OUT OF THE SEALED COVER AND ON OPENING THIS PEN DRIVE IN THE TALLY FOLDER, NO DATA WOS 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 R-OLDER WHICH IS THE RELIED UPON AS AAJTAKXYZ. THERE IS A STRONG FORCE IN THE ARGUMENTS MADE BY THE APPELLANTS THAT WHEN NO DATA WAS FOUND IN RALLY FOLDER ON 06.9.2O08, HOW THE RELIED UPON DOCUMENTS GOT GENERATED ON 2.09 .2008. SHRI V.N. JHAKKOR, SUPERINTENDENT IN HIS CROSSEXAMINA N\ON EXPLAINED THE REASON FOR NAN RETRIEVAL OF DATA ON 06.9,2008 TO BE DUE TO OPERATIONAL LACK, BUT HE ADMITTED THAT NO MERLON OF L ANY OPERATIONAL LACK IS MADE IN THE PANCHNAMA DATED 06.9.2008. FURTHER,! IT IS OBSERVED THAT IN PANCHNAMA DATED 12.OSI.2008, THE PRINT OUT OF 'ACCOUNT AJTAKTAKEN CONTAINED 52 PAGES AND ACCOUNT OF APPELLANT WEL/SUIT 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 AAJTAK WERE 94 AND T HE NAME OF APPELLANT EXISTED AT PAGE 43 AS AGAINST PAGE 30 MENTIONED IN PANCHNAMA DATED 12.09. ZOOS. APPELLANTS HAVE ALSO RAISED THE ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 5 ISSUE REGARDING DISCREPANCIES IN THE NAME OF THE PA NCH WITNESSES. IT IS ALSO CONTENDED: THAT REVENUE HAD NOT FOLLOWED THE PROCEDURE AS STIPULATE D IN SECTION 36B OF THE CENTRAL EXCISE ACT, 1944. IN VIEW OF THE ABOVE DISCREPANCIES THE AUTHEN TICITY AND VERACITY OF DATA RETRIEVED BY INVESTIGATION FROM THE SILVER PEN-DRIVE IS NOT RELI ABLE AND CANNOT BE ACCEPTED AS A PIECE OF EVIDENCE IN DECIDING THE CASE OF UNDERVALUATION AND CLANDESTINE REMOVAL AGAINST THE PRESENT APPELLANTS WITH RESPECT TO POINT MENTIONED IN PARA 6 (II).' 13. IT IS NOT THE CASE OF THE REVENUE THAT THE VALU E OF THE GOODS CLEARED BY THE APPELLANTS IS NOT DETERMINABLE AT THE FACTORY GATE AND THEREFORE, SOM E OTHER METHOD UNDER THE CENTRAL EXCISE VALUATION RULES IS REQUIRED TO BE ADOPTED TO ARRIVE AT THE ASSESSABLE VALUE. RATHER THE CASE OF THE REVENUE ON VALUATION IS I THAT CERTAIN ADDITIONAL C ONSIDERATION CORNING TO THE APPELLANT BY WAY OF CASH ] FLOW FROM THE, TILE MANUFACTURERS TO THE FRIT MANUFACTURERS IS REQUIRED TO BE : ADDED TO THE ASSESSABLE VALUE. IN THE PRESENT CIRCUMSTANCES AND FACTUAL MATRIX THE EXACT AMOUNT OF SUCH ADDITIONAL CONSIDERATION WAS REQUIRED TO BE DETERMI NED FOR ADDITION TO THE TRANSACTION VALUE EVEN IF THE STATEMENTS AND DOCUMENTS WERE HELD TO BE AD MISSIBLE EVIDENCE AND SATISFIED THE TEST OF SECTION 9DOFTHE CENTRAL EXCISE ACT, 1944. IN APPEAL NOS. E/11960/2013 AND E/12386/2014, THE VALUATION HAS BEEN ENHANCED SOLELY BASED ON: THE AS SUMPTION THAT AFTER BOOKING OF THE CASE THESE APPELLANT 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 CENTRAL EXCISE ACT, 1944 UNLESS ACTUAL ADDITIONAL CONSIDERATION HAS BEEN SHOWN TO HAVE FLO WN BACK TO THE APPELLANTS. APPELLANTS IN THESE APPEALS 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 NDERVALUATION INVESTIGATION ATTEMPTED TO SHOW TH E FLOW BACK OF SUCH ADDITIONAL CASH, FLOW THROUGH THE STATEMENTS OF CERAMIC TILE MANUFACTURER AND THE STATEMENTS OF SHROFFS ARID ANGADIAS. THE AMOUNT SO WORKED OUT HAS BEEN WORKED OUT TO BE RS. 38,95,80O/- AS PER THE STATEMENT OF SHRI JAYESH PATEL, PROP. OF M/S. KEVEL MENTIONED IN PARA 9.3.3 OF OIO DATED 23.03.2011 IN THE CASE OF M/S. BELGIUM GLASS & CERA MICS. THIS STATEMENT CLEARLY 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 MANUFACTURERS ARE NOT WR ITTEN AGAINST EACH PAYMENT IN THE CONCERNED DOCUMENTS. UNDER THE ABOVE FACTUAL MATRIX APPELLANT S HAD THE RIGHT TO CROSS-EXAMINATION THE WITNESSES ESPECIALLY SHROFFS AND ANGADIAS AS TO WHA T PORTION SUCH PAYMENT BELONGS TO A PARTICULAR APPELLANT. AS MENTIONED IN THE DEFINITIO N O/ 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 FR IT GRADES. AS ALREADY MENTIONED UNDER THE REALM OF TRANSACTION VALUE AS PER SECTION 4 EVEN TH E SAME PRODUCT COULD BE SOLD AT DIFFERENT PRICES DEPENDING UPON SEVERAL MARKET FACTORS AND T HESE PRICES WILL BE ACCEPTABLE AS PERMISSIBLE ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 6 TRANSACTION VALUE. PRESENT SECTION 4 DOES NOT GO BY THE] CONCEPT OF NORMAL PRICE OF THE OLD SECTION 4 OF THE CENTRAL EXCISE ACT, 1944. IN THE A BSENCE OF EXACT QUANTIFICATION OF CASH RECEIVED BY INDIVIDUAL FRIT MANUFACTURER, TRANSACTION VALUE CANNOT BE ENHANCED EVEN IF THERE ARE HALF COOKED CIRCUMSTANTIAL EVIDENCES TO THE PROCEEDINGS INDICATING, SUSPECTED UNDERVALUATION. IT IS NOW WE/I UNDERSTOOD THAT SUSPICION HOWSOEVER GRAVE CANNOT TAKE THE PLACE OF EVIDENCE. THEREFORE, IT MAY NOT BE CORRECT TO HOLD THAT PREPO NDERANCE OF PROBABILITY SHOULD ALWAYS BE GIVEN TO THE REVENUE, AS HONBLE APEX COURT IN A PARTICUL AR HELD IT TO BE SO. EACH CASE HAS TO BE DECIDED IN VIEW OF THE FACTS OF THAT CASE. IN VIEW OF THE A BOVE OBSERVATION AND THE LAW LAID DOWN BY THE APEX COURT IN THE CASE OF A. TAJUDEEN VS. UOI (SUPR A.) PREPONDERANCE OF PROBABILITY CANNOT ALWAYS BE ALLOWED IN FAVOUR OF THE REVENUE WHEN THERE IS N O INDEPENDENT CORROBORATION OF THE FACTS AND THE CASE IS MADE ONLY ON THE BASIS OF STATEMENTS WH ICH WERE NOT ALLOWED TO BE . TESTED UNDER CROSS-EXAMINATION AS PER SECTION 9D (L)(B) OF THE C ENTRAL EXCISE ACT, 1944. J4. IN VIEW OF THE REASONS RECORDED ABOVE, APPEALS FILED BY THE APPELL ANTS MENTIONED IN PARAS 5.1' IN RESPECT OF UNDER CLANDESTINE REMOVAL OF GOODS, THE HONORABLE T RIBUNAL OBSERVED THAT;- '86 IN VIEW OF THE ABOVE OBSERVATIONS MADE BY THIS BENCH IT HAS ALREADY BEEN HELD THAT METHOD ADOPTED BY THE INVESTIGATION TO ESTIMATE CLANDESTIN E REMOVAL OF FINISHED GOODS IS HOT SOUND AND HAS TO BE DISCARDED, HOWEVER, REVENUE WAS GIVEN AN OPPORTUNITY TO STRENGTHEN THEIR CASE BY CORROBORATING EVIDENCE WITH SOME MORE FACTUAL DATA FROM ADDITIONAL STUDIES. NO APPEAL HAS BEEN FILED BY THE] REVENUE AGAINST THE ABOVE ORDER PASSE D BY THIS BENCH. IT IS ALSO OBSERVED FROM 3.2 OF THE REMAND ORDER THAT APPELLANT HAS MADE CERTAIN CH ANGES IN THE PLANT AND MACHINERY AND OTHER METHODOLOGIES TO REDUCE GAS CONSUMPTION. EVEN IN TH E REMAND PROCEEDINGS ALSO ADJUDICATING AUTHORITY 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 CONSUMP TION. ON A SPECIFIC QUERY FROM THE BENCH, THE LEARNED SENIOR ADVOCATE ALSO ARGUED THAT SIMILAR MO DERNIZATION IN PROCESSES OF MANUFACTURE, AS UNDERTAKEN BY M/S. WELLSUIT GLASS IN THE MANUFACTUR E OF FRIT, HAVE ALSO BEEN UNDERTAKEN BY OTHER APPELLANTS. NO FINDINGS HAVE BEEN GIVEN BY THE ADJU DICATING AUTHORITIES IN COUNTERING THE CLAIMS OF THE APPELLANTS, JUSTIFYING THE MODERNIZATION DAM -- TO REDUCE CONSUMPTION OF GAS FROM TIME TO TIME. NO EXPERT OPINION HAS BEEN OBTAINED BY THE REVENUE TO CHALLENGE THE GAS CONSUMPTION PATTERN ADOPTED BY THE APPELLANTS TO INDICATE THAT CLAIM OF THE APPELLANTS WAS WRONG. 8 IN VIEW OF THE ABOVE OBSERVATIONS AND JUDICIAL PR ONOUNCEMENTS, METHODOLOGY ADOPTED BY THE ADJUDICATING AUTHORITIES IN ESTIMATING AND DEMANDIN G DUTY FROM THE APPELLANTS; BASED ON CONSUMPTION OF NATURAL GAS, ELECTRICITY CONSUMED AN D PACKING TIME TAKEN; IS NOT ACCEPTABLE AND IS REQUIRED TO BE REJECTED. ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 7 YOUR HONOUR, IN INCOME TAX POINT OF VIEW, IN ASSESS MENT ORDER ID. AO HAS NOT POINT OUT ANY INDEPENDENT REMARKS FOR UNDER VALUATION OF GOODS AN D CLANDESTINE REMOVAL OF GOODS AND RELIES ON SHOW CAUSE NOTICE ONLY AND MADE HIGH PITCH ASSES SMENT IN CASE OF APPELLANT, ID- AO HAS ALSO NOT JUSTIFIED VALUE ADOPTED BY CENTRAL EXCISES IS F AIR AND REASONABLE, I.D. AO HAS NOT ESTABLISHED THAT THE VALUE DETERMINED BY THE APPELLANT IS NOT F AIR ACCORDANCE TO THE BOOKS OF ACCOUNTS AND RELEVANT DOCUMENTS PRODUCE BEFORE HIM. THERE IS NO PROVISION UNDER THE AD TO DETERMINED ACTUAL ASSESSABLE VALUE AND THEREFORE ADDITION MADE IN RES PECT OF UNDERVALUATION OF GOODS AND CLANDESTINE REMOVAL OF GOODS IS NOT JUSTIFIED AND R EQUIRED TO BE DELETED. YOUR HONOUR, :EVEN ON MERIT THE APPELLANT HAS RELIE D ON STATEMENT OF FACT AND GROUNDS OF APPEAL AND SUBMITTED AS UNDER. THE LEARNED AO HAS ERRED BOTH IN LAW AND ON THE FAC TS IN ISSUING NOTICE U/S,148OF THE ACT FOR REOPENING ASSESSMENT. THAT THE APPELLANT HAS FILED ORIGINAL RETURN OL INC OME FOR ASST. YEAR 2007-08 ON 10.09.2007 AND DECLARED TOTAL INCOME RS.NIL. THE NOTICE U/S.148 OF THE ACT WAS ISSUED BY THE DIRECTOR GENERAL OF CENTRAL EXCISES INTELLIGENCE. AHMEDABAD AND ALLEGED LY FOUND IN SHOW CAUSE NOTICE THE APPELLANT MUST HAVE EARNED SOME UNACCOUNTED INCOME BY UNDERVA LUATION AND CLANDESTINE REMOVAL OF GOODS WHICH MEANS ESCAPED ASSESSMENT FOR THE YEAR U NDER CONSIDERATION. : YOUR HONOUR, SECTION EMPOWERS THE ASSESSING OFFICER TO REOPEN TH E ASSESSMENT PROCEEDINGS AND ONLY IF ASSESSING OFFICER, HAS REASON TO BELIEVE THAT INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE, THE LD. AO HAS REOPEN THE APPELLA NT CASE ON THE BASIS OF STATEMENT RECORDED BY DGCEI OF BUYERS OF THE ASSESSEE COMPANY WHEREIN THE ALLEGATION IS THAT SALES HAVE IBEEN MADE AT LOWER PRICE; HOWEVER, THERE IS NO TANGIBLE MATERIAL ON RECORD WHICH CAN DEMONSTRATE THAT INCOME WHICH IS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. UNTIL AND UNLESS THERE IS SOME MATERIAL ON RECORD WHICH INDICATES THAT INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT, ASSESSMENT CANNOT BE REOPENED; MERELY ON SOME SUSPICIOUS OR PR ESUMPTION. FURTHER TH;E REASONS RECORDED TO REOPEN THE ASSESSM ENT ARE NOTHING BUT ONLY A CHANGE OF OPINION. HAVING, FORMED THAI OPINION, UNDER THE OTHER LAW, I T IS NOT OPEN TO LEARNED AO TO CHANGE HIS OPINION AND ISSUED THE IMPUGNED NOTICE UNDER SECTIO N 148 OF THE ACT. IN ANY CASE, THE ASSESSEE HAS FULLY AND TRULY DISCLOSED ALL THE MATERIAL FACT S ARE NECESSARY WITH SUBMITTED RETURN OF INCOME AND THEREFORE, THERE IS NO ESCAPEMENT OF INCOME, WH ICH MEANS ESCAPED ASSESSMENT SO AS TO ISSUE THE IMPUGNED NOTICE UNDER SECTION 148 OF THE ACT. I T IS LEGALLY WELL SETTLED THAT THE' ASSESSMENT CANNOT BE REOPENED FOR RE-APPRECIATING THE EVIDENCE ON RECORD OR MERE CHANGE OF OPINION ON THE PART OF THE ID. AO. THIS IS A MERE CHANGE OF OPINIO N AND TIME AND AGAIN VARIOUS HIGH COURTS HAVE TAKEN A VIEW THAT-MERE CHANGE OF OPINION IS NOT SUF FICIENT GROUNDS TO REOPEN ANY COMPLETED ASSESSMENT. IT IS, THEREFORE, SUBMITTED THAT THE EN TIRE PROCEEDING U/S. 147 IS BAD IN LAW AND ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 8 DESERVE TO BE QUASHED. IN THIS REGARD WE RELIES FOL LOWING JUDICIOUS PRONOUNCEMENT OF VARIOUS COURTS=- (I) CIT VS. KELVINATOR OF INDIA 320 ITR 561 (S C) (II) BIRLA VXL LTD. V. ASSISTANT COMMISSIONER OF INCOME TAX. (1996) (217ITR1 (GUJ)) (III) KAIRA DISTRICT CO-OPERATIVE MILK P RODUCERS UNION LTD. V. ASSISTANT COMMISSIONER OF INCOME TAX. (1996) (220 ITR 194 (IV) INDIAN AND EASTERN NEWSPAPER SOCIETY V. CO MMISSIONER OF INCOME-TAX, NEW DELHI. (1979) (119 ITR 996 (SC)) (V) GA RDEN SILK MILLS LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX (NO,2). (1996) (222 ITR 68 (GUJ)) THE ASSESSEE FURTHER SUBMITS THAT NOW THE LAW IS SE TTLED IN THE CASE OF KELVINATOR INDIA LTD. REPORTED IN THAT TO REOPEN THE ASSESSMENT EVEN WITH IN FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, THE ASSESSING OFFICER SHOULD HAVE SOME TANGIBLE MATERIAL TO FORM AN OPINION THAT THERE IS ESCAPEMENT OF INCOME AND MERELY THE A SSESSING OFFICER CANNOT EXECUTE HIS POWER TO REOPEN THE ASSESSMENT FOR HIS WRONG DONE IN ORIGINA L ASSESSMENT PROCEEDINGS AND THEREFORE THE ASSESSING OFFICER MERELY ON CHANGE OF OPINION CANNO T REOPEN THE ASSESSMENT PROCEEDINGS. RELIANCE IS PLACED ON THE SUPREME COURT'S DECISION IN THE CASE OF KELVINATOR INDIA LTD. REPORTED IN 320'ITR 561 (SC). FURTHER, SHOW CAUSE NOTICE ISSUED BY THE DGCEI WAS ALSO AVOIDABLE BECAUSE OF THE DGCEI HAS ISSUED DEMAND CUM SHOW CAUSE NOTICE AND ACCORDANCE TO THE GENERAL PRINCIPAL OF LAW EITHER IT IS DEMAND NOTICE OR IT IS SHOW CAUSE NOTICE BOTH IN ON E NATURE CAN NOT PERMISSIBLE. IT IS ALSO WELL SETTLED POSITION OF LAW THAT MERELY RELYING ON INQU IRY BY ANY OTHER, DEPARTMENT OR ON REPORT OF SOME OTHER AUTHORITY, NO PROCEEDINGS CAN BE INITIAT ED. THE AUTHORITY WHO DESIRES TO INITIATE ANY PROCEEDINGS IS SUPPOSED TO HOLD INQUIRY AND GATHER THE MATERIAL AND THEN ON FRAMING A DEFINITE OPINION BASED ON THE SELF INQUIRY AND MATERIAL GATH ERED THE CONCERNED AUTHORITY CAN INITIATE PROCEEDINGS. IN THE PRESENT CASE, THE LD. AO HAS IN ITIATE THE RE ASSESSMENT PROCEEDING MERELY RELYING ON THE SHOW CAUSE NOTICE ISSUED BY DGCEI AN D HIMSELF HAS NOT DONE ANY INQUIRY. SO THE REASSESSMENT PROCEEDINGS ARE ILLEGAL AND WITHOUT JU RISDICTION. ; IN CASE OF COMMISSIONER OF INCOME TAX VS. SHL STOCK BROKING LIMITED 325,ITR 285, HONORABLE DELHI COURT HELD THAT,- 'MERE INFORMATION RECEIVED FROM THE DY. DIRECTOR OF IT (INV.) AND DIRECTION OF THE SAID OFFICE AND THE ADDL. CIT TO INITIATE PROCEEDING U/S.147 CAN NO T CONSTITUTE VALID REASONS FOR INITIATING REASSESSMENT PROCEEDING IN THE ABSENCE OF ANYTHING TO SHOW THAT THE AO HAS INDEPENDENTLY APPLIED HIS MIND TO ARRIVE AT A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT' ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 9 IN CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. DHARIYA CONSTRICTION COMPANY 328ITR 515 (SC). WHERE IN HONORABLE SUPREME COURT HELD THAT- 'THE INFORMATION FOR THE PURPOSE OF REOPENING ASSES SMENT U/S. 147 OF THE IT ACT, 1961, THE AO HAS TO APPLY HIS MIND TO THE INFORMATION IF ANY COL LECTED AND MYST FORM A BELIEF THEREON. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVIL APPEA L. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN ASSESSMENT.' IN CASE OF M/S. FUTURA CERAMICS PVT. LT D. VS. STATE OF GUJARAT - SCA NO.6500/20 12 DTD.20/12/2012, DECISION OF HONORABLE GUJARA T HIGH COURT SQUARELY COVERED TO THE APPELLANT CASE OF THE FACT AND WHERE IN HONORABLE C OURT HAS SET ASIDE THE ORDERS OF REASSESSMENT WHICH WERE-SOLELY BASED ON THE INQUIRY OF CENTRAL E XCISE AUTHORITIES WITHOUT ANY INDEPENDENT INQUIRY ON THE PART OF THE OFFICERS OF THE COMMERCI AL TAX DEPARTMENT. IN CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. PRABHAT OIL MILLS 52 ITJ 533 (AHD.) HONORABLE TRIBUNAL HELD THAT - 'WITHOUT ANY DOCUMENTARY EVIDENCE AND CONDUCTING IN DEPENDENT INQUIRY, MERE ENTRIES IN THE ACCOUNTS OF THIRD PARTY ARE NOT SUFFICIENT TO PROVE THAT THE ASSESSES HAS MADE SALES IN BOOKS PARTICULARLY WHEN ITS YIELD AND OTHER ALLIED FACTOR S DO NOT INDICATE SUPPRESSED SALES' CONSIDERING THE ABOVE LEGAL AND FACTUAL ASPECT YOUR APPELLANT HEREBY REQUESTED THAT THE ASSESSMENT PROCEEDING U/S. 147 OF THE ACT DESER VED TO BE QUASHED AND SUITABLE RELIEF, AS DEEMED FIT MAY BE GIVEN TO YOUR APPELLANT. 4.2 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESS MENT ORDER AND SUBMISSION MADE. IT IS PERUSED THAT AO WAS IN POSSESSION OF THE AN AUTHENTIC INFOR MATION OF DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE, AHMEDABAD (DGCEI) THAT APPELLA NT WAS ENGAGED IN VARIOUS TYPES OF MODES AND METHODS OF TAX EVASION WHICH RESULTED INTO ESCA PEMENT OF TAX FOR THE YEAR UNDER APPDAL. IN VIEW BF THE ABOVE, THE CASE OF THE APPELLANT WAS RE OPENED U/S 147 OF THE ACT AFTER RECORDING; THE REASONS AND NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE APPELLANT. REASONS FOR REOPENING THE ASSESSMENT WAS ALSO INTIMATED TO THE APPELLANT. THE ASSESSMENT HAS BEEN REOPENED IN THIS CASE SINCE THE INCOME TAXABLE HAD ESCAPED ASSESSMENT. TH E INCOME WHICH ACCORDING TO AO SHOULD HAVE BEEN TAXED UNDER THE PROVISIONS OF SECTION 194 C HAD ESCAPED ASSESSMENT IN THE ORIGINAL ASSESSMENT STAGE. IN THESE CIRCUMSTANCES, IT CANNOT BE ASSUMED THAT THE AO IN THE REGULAR ASSESSMENT HAS APPLIED HIS MIND. THE DECISIONS OF H ON'BLE HIGH COURTS IN THE FOLLOWING CASES ARE SQUARELY APPLICABLE. 'MATERIAL AVAILABLE ON RETURNS BUT FAILURE TO TAKE NOTICE WILL ALSO CONSTITUTE A NEW INFORMATION', PRAFULCHUNILAL PATEL- 236 ITR 832 ( GUJ), KSIDC 116 ITR,158(KER), ARUNDHATIBALKRISHNA TRUST 108 ITR 78(GUJ). IT IS AL SO PERUSED THAT THE REASONS RECORDED BY THE AO ARE PROPER AND THE PROCEEDINGS U/S 147 OF THE ACT A RE ALSO VALID. HENCE, THIS GROUND OF APPEAL RAISED BY THE APPELLANT IS HEREBY REJECTED. ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 10 5. NEXT EFFECTIVE GROUNDS OF APPEAL ARE AGAINST THE ACTION OF THE AO IN MAKING ADDITION OF RS.72,59,335/- ON ACCOUNT OF UNDER VALUATION & CLAN DESTINE REMOVAL. 5.1 AO IN THE ASSESSMENT ORDER HAS CONTENDED A S UNDER: IN THIS CASE A LETTER WAS RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INV.), UNIT-11, AHMEDABAD BEARING NO.-DDIT/LNV/AHD/REIC/12-13 DATED 14.02.2013 ALONG WITH SHOW CAUSE NOTICE (HERE IN-AFTER REFERRED TO AS SCN) ISSUED TO M/S GROW MORE CERAMICS PVI. LTD. (HERE IN AFTER REFERRED TO AS ASSESSEE) FROM DIRECTORATE GENERAL O F CENTRAL EXCISE INTELLIGENCE, AHMEDABAD (HERE-IN-AFTER REFERRED TO AS EXCISE DEPARTMENT). O N GOING THROUGH THE ABOVE MENTIONED SCN IT IS NOTICED THAT THE ASSESSEE WAS ENGAGED IN VARIOUS TY PES OF MODES & METHODS OF TAX EVASION WHICH RESULTED INTO ESCAPEMENT OF HUGE TAX FOR THE YEAR UNDER CONSIDERATION. 2. I IN VIEW OF THE ABOVE, THE CASE WAS REOPENED U/ S.147 OF THE I.T. ACT AFTER RECORDING THE REASONS. NOTICES U/S.148 WAS ISSUED ON 26.03.2013. THE ASSESSEE VIDE THEIR WRITTEN REPLY DATED 9.04.2033 REQUESTED TO TREAT THE ORIGINAL RETURN FI LED ON 30.09.2008 AS RETURN FILED IN RESPONSE TO NOTICE U/S 148. REASON FOR ISSUANCE OF NOTICE U/S 1 48 IS ALSO CONVEYED TO THE ASSESSEE VIDE THIS OFFICE LETTER DATED 01.07.2013. A SPEAKING ORDER WA S PASSED VIDE THIS OFFICE LETTER DATED 13.12.2013 IN CONSEQUENCE OF ASSESSEE'S OBJECTION D ATED NIL RECEIVED IN THIS OFFICE ON 16.08.2013. FURTHER NOTICE U/S 143(2) AND U/S 142(1) WERE ISSUE D ON 21.06.2013 WHICH WERE DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO NOTICES ISSUED THE ASS ESSEE SUBMITTED THEIR WRITTEN REPLY TIME TO TIME. : 3. FOR MAKING ADDITION ON THE GROUND OF SCN ISSUOD BV THE DGCEI FOLLOWING DISCUSSION ARE MADE: : 3.1 IN THIS CASE ON THE BASIS OF INTELLIGENCE GATHE RED BY DGCEI AS WELL AS THE DOCUMENTARY EVIDENCES RECOVERED FROM SEVERAL PROMISES DURING TH E COURSE OF INVESTIGATION AGAINST TILES MANUFACTURERS, D SEARCH OPERATION WAS CONDUCTED AT THE PREMISES OF M/S. GORWMORE ON 29.08.2008. INVESTIGATION CONDUCTED BY DGCEI AGAINS T M/S. GROWMORE, REVEALS THAT THEY HAVE NOT DECLARED THE ACTUAL ASSESSABLE VALUE OF GOODS M ANUFACTURED AND CLEARED FROM THEIR REGISTERED FACTORY PREMISES. THE DOCUMENTARY AS WELL AS ORAL E VIDENCES COLLECTED BY DGCEI FROM VARIOUS BUYERS CLEARLY INDICATES THAT M/S. GROWMORE WAS DEC LARING IN THEIR INVOICES ONLY A PART OF THE ACTUAL TRANSACTION VALUE OF FRIT MANUFACTURED AND C LEARED FROM THEIR FACTORY. DIFFERENTIAL VALUE OF FRIT, OVER AND ABOVE THE VALUE DECLARED IN THE INVO ICES, WAS COLLECTED BY THEM FROM THEIR BUYERS IN CASH. THE OBSERVATION AND FINDING GIVEN IN SCN ON T HE BASIS OF INVESTIGATIONS AND EVIDENCES GATHERED BY THE OFFICIALS OF EXCISE DEPARTMENT CLEA RLY INDICATES THAT THE ASSESSEE HAD SUPPRESSED THE SALE VALUE BY WAY OF UNDERVALUATION OF INVOICES AS WELL AS CLANDESTINE REMOVAL OF GOODS FROM THEIR PREMISES. THQ SUPPRESSION WAS REVEALED ON THE BASIS OF..FINDING DURING THE COURSE OF ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 11 INVESTIGATIONS BY THE DGCEI AND AS MENTIONED IN DET AIL IN THE SCN CONTAINED LETTER F. NO. DGCEI/AZU/36(4) 134/2009-10 DATED 09.02.2010. : 3.2 THE SCN ISSUED BY THE DGCEI REVEALED THAT THE A SSESSEE WAS SHOWING ASSESSEE SALE VALUE OF FRIT AT RS.//-- TO RS. 13/ PER KG. WHEREAS THE ACTU AL PRICE WAS AT RS.20/-TO 307- PER KG. THE AMOUNT SHOWN IN THE INVOICES WERE BEING COLLECTED THROUGH CHEQUES WHEREAS THE REMAINING AMOUNT WAS BEING COLLECTED BY.CASH. FURTHER IT IS ALSO FOUND T HAT THE COMPANY WAS DECLARING LESS PRODUCTION THAN THE ACTUAL PRODUCTION. THE COMPANY WAS SHOWING CONSUMPTION OF 2044.49 SCM OF NATURAL GAS FOR MANUFACTURING OF 1 MT OF FRIT WHEREAS ORJ V ERIFICATION BASED ON THE PHYSICAL VERIFICATION OF PRODUCTION DONE BY THE OFFICIALS OF EXCISE DEPARTME NT ON 27 & 28.01.2010 AND FROM THE STATEMENT OF SH, HARSHADBHAI C. PATEL, IT WAS FOUND ; THAT- 484 SCM OF NATURAL GAS WAS CONSUMED FOR MANUFACTURING OF 1 MT OF FRIT. THE ILLICITLY MA NUFACTURED GOODS WERE SOLD OUT/CLEARED BY THE ASSESSEE BY MAKING PARALLEL INVOICES.: 3.3 FROM THE ABOVE, THIS EMERGES THAT THE ASSESSES WAS INVOLVED IN UNDERVALUATION OF SALE INVOICES, THEREBY SUPPRESSING THE SALES AND ALSO HA D UNDERSTATED THE PRODUCTION AND IT'S UNACCOUNTED SALE OF SUCH CLANDESTINE PRODUCTION. FO R THE YEAR UNDER CONSIDERATION I.E. F.Y. 2006- 07, THE AMOUNT OF UNDER VALUATION HAS BEEN WORKED O UT AT RS.6,02,56,8207- AS MENTIONED IN ANNEXURE D-L (SR. NO. 506 TO 1022) OF SCN ISSUED BY DGCEI AND THE AMOUNT OF CLANDESTINE REMOVAL GOODS HAS BEEN WORKED OUT AT RS.60,54,462/- AS MENTIONED IN ANNEXURE 0-7 (APR-07 TO MAR-08) OF SCN ISSUED BY DGCEI. 4. IN VIEW OF THE ABOVE AND RELYING ON THE EVIDENCE S STATED IN THE SCN OF DGCEI, A DETAILED SHOW CAUSE NOTICE WAS ISSUED VIDE THIS OFFICE LET TER DATED 10.03.2014, WHICH IS REPRODUCED AS UNDER: '......2. IN YOUR CASE A SEARCH OPERATION WA S CARRIED OUT ON 29.08.2008 BY DGCEI,ZONAL UNIT, AHMEDABAD. A DETAIL REPORT HAS BE EN FORWARDED BY EXCISE DEPARTMENT AFTER CARRYING OUT DETAILED INVESTIGATION AND ENQUIRY. ON EXAMINING THE SAID REPORT FOLLOWING POINTS ARE OBSERVED: I,UNDERVALUATION: YOU WERE SHOWING SALE VALUE OF FR IT AT RS.7/- TO 13'/-PER KG. WHEREAS THE ACTUAL PRICE WAS AT RS.20/- TO 30/- PER KG. THE AMOUNT SHO WN IN THE INVOICES WERE BEING COLLECTED THROUGH CHEQUES WHEREAS THE REMAINING AMOUNT WAS BE ING COLLECTED BY CASH. THE DETAILS OF UNDERVALUED GOODS SOLD OUT/CLEARED BY YOU HAS ALREA DY BEEN CONVEYED TO YOU VIDE ANNEXURE 0-1 OF SHOW CAUSE NOTICE DATED 09.02.2010 ISSUED BY THE DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE, AHMEDABAD ZONAL UNIT. II. CLANDESTINE REMOVAL: DURING THE COURSE OF INVES TIGATION ON THE BASIS OF MONTH WISE PRODUCTION AND GAS CONSUMPTION, IT WAS FOUND THAT THE COMPANY WAS SHOWING LESS PRODUCTION. THE COMPANY WAS SHOWING CONSUMPTION OF 2044.49 SCM OF NATURAL G AS FOR MANUFACTURING OF 1 ML OF FRIT WHEREAS ON VERIFICATION BASED ON THE PHYSICAL VERIF ICATION OF PRODUCTION DONE BY THE OFFICIALS OF ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 12 EXCISE DEPARTMENT ON 27 & 28.01.2010 AND STATEMENT OF SH. HARSHADBHAI C. PATEL, IT WAS FOUND THAT 484 SCM OF NATURAL GAS CONSUMED FOR MANUFACTUR ING OF 1 MT OF FRIT. THE ILLICITLY MANUFACTURED GOODS WERE SOLD OUT/CLEARED BY YOU BY MAKING PARALLEL INVOICES. THE DETAILS OF ILLICITLY MANUFACTURED GOODS HAS ALREADY BEEN CONVE YED TO YOU VIDE ANNEXURE D-2 OF SHOW CAUSE NOTICE DATED 09.02.2010 ISSUED BY THE \ DIREC TOR GENERAL OF CENTRAL EXCISE INTELLIGENCE, AHMEDABAD ZONAL UNIT. 3. DURING THE SEARCH AND POST SEARCH INVESTIGATIONS , STATEMENTS OF SHRI HARSHADBHAI C. PATEL, DIRECTOR OF M/S GROWMORE CERAMICS PVT. LTD.L WERE ' RECORDED BY THE EXCISE DEPARTMENT. IN THE SAID STATEMENT SHRI HARSHADBHAI C. PATEL VIDE ANSWE RS TO Q. NO. 18 & 19 HAD ADMITTED THAT COMPANY WAS INVOLVED IN ISSUING PARALLEL INVOICES. VIDE ANSWERS TO Q. NO. 9 HAD ADMITTED THAT] RATES CHARGED WERE MUCH LOWER THAN THE ACTUAL SELLI NG PRICE I.E. YOU WERE CHARGING LESS SELLING PRICE IN THE INVOICES ISSUED FROM YOUR FACTORY AND COLLECTING CASH AMOUNT OVER AND ABOVE THE INVOICE AMOUNT. ; 4. AFTER CONSIDERING THE STATEMENTS OF SH. HARSHADB HAI C. PATEL, DIRECTOR AND SHRI RAMESHBHAI C. PATEL, PRODUCTION /NCHARGE AND VARIOU S FACTS, UNACCOUNTED PRODUCTION HAS ALSO BEEN WORKED OUT AT RS4,83,95,568/-(FOR THE PERIOD F .Y. 2008-09) ON THE BASIS OF FUEL CONSUMPTION AND MATERIAL 5. IT IS ALSO RELEVANT TO MENTION HERE THAT THE ASSESSMENTS U/S. 143(3) R.W.S. 147 OF I.T. ACT HAD BEEN FINALIZED IN THE CASE OFZIRCONIA CERA TECH GLAZES FOR A.Y.2007-08 AND A.Y.2008- 09 INVOLVING THE IDENTICAL ISSUE, THE ID. OT(A)/GNR /'74 & 73/2014-15 DATED 22/01/2016 HAS DECIDED THE ISSUES IN FAVOUR OF THE REVENUE DISMISS ING THE APPEALS OFZIRCONIA CERALTECH CLAZES FOR A.Y.2007-08 AND A.Y.2008-09. THESE ORDERS ARE SELF- EXPLANATORY AS THE ISSUES ARE DISCUSSED ELABORATELY AND DECIDED THE ISSUES REJECTING ALL YO UR PLEAS. IN VIEW OF THE ABOVE GLARING DISCREPANCIES NOTICED DURING THE INVESTIGATION AND MODUS OPERANDI BROUGHT OUT BY THE EXCISE DEPARTMENT IT IS CLEAR THAT THE BOOKS OF ACCOUNT MA INTAINED BY YOU DOES NOT REFLECT A TRUE AFFAIRS OF YOUR BUSINESS AND HENCE THE SAME ARE NOT ACCEPTA BLE. YOU ARE GIVEN FINAL OPPORTUNITY TO PRODUCE YOUR BOOKS OF ACCOUNTS WITH ALL BILLS AND V OUCHERS AND IN ABSENCE. YOU ARE HEREBY REQUESTED TO SHOW CAUSE WHY YOUR BOOKS SHOULD NOT B E REJECTED U/S 145 OF THE ACT AND FINALIZE THE ASSESSMENT. 6. \ YOU ARE ALSO SHOW CAUSED AS TO WHY THE FOLLOWI NG ADDITION OF RS.4,83,95,568/~ SHOULD NOT BE MADE TO YOUR LOTAL INCOME ON ACCOUNT OF UNDE RVALUATION OF SALES AND ON ACCOUNT OJ CLANDESTINE PRODUCTION CONSIDERING THE FACTS AND CI RCUMSTANCES OF THE CASE AND HAVING REGARD TO THE FINDI G AND OBSERVATIONS CONTAINED IN THE REPOR T AS DISCUSSED ABOVE. 7. : YOU ARE REQUESTED TO SUBMIT YOUR EXPLANATION A ND ATTEND THE OFFICE OF THE UNDERSIGNED ON 23.02,2016 AT 11:00 AM. IF NO REPLY IS FURNISHED OR REPLY FURNISHED IS FOUND, ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 13 UNSATISFACTORY/UNACCEPTABLE NECESSARY ADJUSTMENT/AD DITION WILL BE MADE WITH THE MATERIAL RECORD AVAILABLE TO THIS OFFICE AND ISSUE WILL BE D ECIDED ON MERITS.' S. THE ASSESSEE SUBMITTED THEIR WRITTEN REPLY DATED 23/02/2016. THE SAME IS REPRODUCED AS UNDER: : '...L..UNDER THE INSTRUCTION ON MY ABOVE N AMED CLIENT AND WITH REFERENCE TO ABOVE SUBJECT, WE SUBMIT HEREWITH AS UNDER- 1.UNDERVALUATION ON GOING THROUGH YOUR NOTICE, WE HAVE MADE SALES AT THE RATE OF RS.7/. TO 13/-AS AGAINST THE ACTUAL PRICE ADOPTED BY YOU OF RS.20/- TO 30/~ PER KG. ON THE BASIS OF SHOE CAUSE NOTICE ISSUED BY THE D6ECI, ZONAL UNIT, AHMEDABAD. HOWEVER NEITHER I N SHOW CAUSE NOTICE ISSUED BY THE DGCTL ZONAL UNIT, AHMEDABAD. HOWEVER NEITHER IN SHOW CAUS E NOTICE ISSUED BY THE DGCEI AND IN YOUR NOTICE GIVEN ANY DOCUMENTARY/SUPPORTING/WORKING EVI DENCE IN RESPECT OF OUR COST OR SALES PRICE AT THE RATE OF RS.20/ TO 30/- PER KG AND THEREFORE YOUR ASSUMPTION IN RESPECT OF UNDERVALUATION OF SALES IS NOT [ENABLE WITH THE RECORDS. WITHOUT PREJUDICE OVER AND ABOVE, THE SHOW CAUSE NO TICE ISSUED BY THE DGCEI CHALLENGED BY THE ASSESSEE BEFORE CENTRAL EXCISE AND CUSTOM TRIBUNAL WEST ZONAL BENCH, AHMEDABAD (APPEAL NO. E/L 3289/2014 DTD.24.09.2014) AMI HONORABLE TRIBUNA L AFTER DETAILED DISCUSS, ALLOWED THE ASSESSEE APPEAL AND THE HONORABLE TRIBUNAL OBSERVED THAT: '9. SO FAR AS POINTS MENTIONED AT PARA 6(0) AND G(I II) ARE CONCERNED, IT HAS BEEN HELD BY THE ADJUDICATING AUTHORITIES THAT UNDERVALUATION AND CL ANDESTINE REMOVAL STAND PROVIDED 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. APPEL LANTS 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 NOT THE DOCUMENTS ADMISSIBLE AS EVIDENCE UNDER THE RELEVANT SECTION OF THE CENTRAL EXCISE ACT, 1944. IT WAS ALSO ARGUED BY THE APPELLANTS THAT THE NUMBER O F PANCHNAMAS RECORDED ANA THE OPENING OF THE SAID PEN DRIVE CLEARLY SUGGEST THAT THE DATA RE COVERED FROM THE PEN DRIVE' IS HIGHLY OBJECTIONABLE, SUSPICIOUS AND NOT ACCEPTABLE. IT IS OBSERVED FROM THE CASE RECORDS OF WELHUIT CLASS & CERAMIC PVT. LIMITED 11/13720/20141 THAT SEISURE OF THE SAID PEN-DRIVE WAS EFFECTED ON 17.7.2008 UNDER A PANCHNAMA AND .IT WAS NOT STATED IN THIS PANCHNAMO THAT THE PEN-DRIVE WAS PUT INSIDE A SEALED COVER. IT HAS BEEN ADMITTED BY SHI V.N. THAKKAR (SUPERINTENDENT) DGCEL IN THE CROSS-EXAMINATION BEFORE THE ADJUDICATING 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 IS ALSO ADMITTED BY SHRITHAKKAR THAT AS HE REMEMBERS THE SEIZED PEN- DRIVE WAS PLACED IN A PAPER COVER AND SEALED WITH ADHESIVE TAPES. IT IS THE CLAIM OF THE APPELLA NTS THAT THE WAY THE SAID PEN-DRIVE WAS HANDLED, IT IS POSSIBLE THAT THE SAME COULD BE TEMPERED WITH AS THE SOME WAS KEPT IN THE PAPER COVER SEALED WITH ADHESIVE TAPES. A SECOND PANCHNAMA WAS MADE ON 30.8.2008 WHERE THE SAID PEN- ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 14 DRIVE WAS MENTIONED TO HAVE BEEN TAKEN OUT OF A SEA LED COVER WHEN THE FIRST PANCHNAMO NEVER MENTIONED KEEPING THE SAID PEN-DRIVE IN A SEALED, C OVER. IT IS A/SO OBSERVED THAT ON 30.8.2008 THE SEALED COVER WAS OPENED BUT CONTENTS OF THE SILVER PEN DRIVE WERE NOT OPENED ON 3U.8.30O8 BIN INSTEAD 'ANOTHER BLACK COLOUR PEN DRIVE WAS OPENED. ON 06.9.2008 UNDER A PANCHNAMA THE SAID SILVER PEN-DRIVE TAKEN OUT OF THE SEALED COVER AND ON OPENING THIS PEN DRIVE IN THE LOLLY F-OLDER, NO DATA WAS FOUND TO BE AVAILABLE. HOWEVER, UNDER ANOT HER PANCHNAMA DATED 12.09.2008, WHEN (HE SAID SILVER PEN-DRIVE WAS OPENED DATA WAS FOUND IN TALLY FOLDER WHICH IS THE RELIED UPON AS AAJTAKL XYZ. THERE IS A STRONG FORCE IN THE ARGUMENTS MADE BY THE APPELLANTS THAT WHEN NO DATA WAS FOUND IN TALLY FOLDER ON 06.9.2.008 HOW THE RELIED UPON DOCUMENTS GOT GENERATED ON 2.09.2008. SHRI V. N. THAKKAR, SUPERINTENDENT IN HIS ICROSS EX AMINATION ON EXPLAINED THE REASON FOR NON RETRIEVAL OF DATA ON 06.9.2008 TO BE DUE TO OPERATI ONAL LACK, BUT HE ADMITTED THAI NO MENTION OF ANY OPERATIONAL LACK IS MADE IN THE PANCHNAMA DOTED 00.9.2008. FURTHER, IT IS OBSERVED THAT IN PANCHNAMA DATED 12.09.2008, (HE PRINT OUT O] ACCOUN T AJTAK TAKEN CONTAINED 52 PAGES AND ACCOUNT OF APPELLANT WELLSUIT APPEARED AT PAGE 30 O UT OF 52 PAGES. ANOTHER PANCHNAMA DATED 24.09.2008 INDICATE IN ANNEXURE A3 THAT THE NUMBER OF PAGES OF ACCOUNT AAJTAK WERE 1J4 AND THE NAME OF APPELLANT EXISTED AT PAGE 43 AS AGAINST PAG E 30 MENTIONED IN PANCHNAMA DATED 12 09.2008'. APPELLANTS HAVE ALSO RAISED THE ISSUE REG ARDING DISCREPANCIES IN THE NAME OF THE PANCH WITNESSES. IT IS ALSO CONTENDED THAT REVENUE HAD NO T FOLLOWED THE PROCEDURE AS STIPULATED IN SECTION 36/3 OF THE CENTRA/ EXCISE ACT, 1944. IN VI EW OF THE ABOVE DISCREPANCIES THE AUTHENTICITY AND VERACITY OF DATA RETRIEVED BY INVESTIGATION FRO M THE SILVER PEN-DRIVE IS NOT RELIABLE AND CANNOT BE ACCEPTED AS A PIECE OF,EVIDENCE IN DECIDING THE CASE OF UNDERVALUATION AND CLANDESTINE REMOVAL AGAINST THE PRESENT APPELLANTS WITH RESPECT TO POINT MENTIONED IN PARA 6 (II).' 13. IT IS NOT THE CASE OF THE REVENUE THAT THE VALU E OF THE GOODS CLEARED BY THE APPELLANTS IS NOT DETERMINATE AT THE FACTORY GATE AND THEREFORE, SOME OTHER METHOD UNDER THE CENTRAL EXCISE VALUATION RULES IS REQUIRED TO BE ADOPTED TO ARRIVE AT THE ASSESSABLE VALUE. RATHER THE CASE OF THE REVENUE ON VALUATION IS THAT CERTAIN ADDITIONAL CON SIDERATION COMING TN THE APPELLANT BY WAY OF CASH FLOW FROM THE TILE MANUFACTURERS TO THE FRIT M ANUFACTURERS IS REQUIRED TO BE ADDED TO THE ASSESSABLE VALUE. IN THE PRESENT CIRCUMSTANCES AND FACTUAL MATRIX THE EXACT AMOUNT OF SUCH ADDITIONAL CONSIDERATION WAS REQUIRED TO BE DETERMI NED FOR ADDITION TO THE TRANSACTION VALUE EVEN IF ALL THE STATEMENTS AND DOCUMENTS WERE HELD TO BE ADMISSIBLE EVIDENCE AND SATISFIED THE TEST OF SECTION 9D OF THE CENTRAL EXCISE ACT. 1944. IN APPE AL NOS. E;1196D/2013 AND E/12386/2014 THE VALUATION HAS BEEN ENHANCED SOLELY BASED ON THE ASS UMPTION THAT AFTER BOOKING OF THE CASE THESE APPELLANT ENHANCED THEIR PRICES. IN THE CASE OF TRA NSACTION 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 SHOWN TO HAVE FLOWN BACK TO THE APPELLANTS. APPELLANTS IN THESE APPEALS ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 15 AND IN APPEAL NOS. E/13720/2014 AND E/534/2011 HAVE ALSONOT ADMITTED DURING INVESTIGATION THAT THEV HAVE RECEIVED ANY ADDITIONAL CONSIDERATIO N. IN OTHER APPEALS ON THE ISSUE OF NDERVALUATION INVESTIGATION ATTEMPTED TO SHOW THE F LOW BACK OF SUCH ADDITIONAL CASH FLOW THROUGH 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,I95,860/- AS PER THE STATEMENT OFSHRI JAYESH PATEL, PROP. OF MS. KEVEL MENTIONED I N PARA 9.3.3 OF OIO DATED 23.03.2011 IN THE CASE OF M/S. BELGIUM GLASS & CERAMICS. THIS STATEME NT CLEARLY CONVEYS THAT AMOUNT OFRS. 38,95,860/-WAS PAID TO VARIOUS FRIT MANUFACTURERS A ND AT THE SAME TIME MENTIONS THAT THE NAMES OF THE FRIT MANUFACTURERS ARE NOT WRITTEN AGAINST E ACH PAYMENT IN THE CONCERNED DOCUMENTS. UNDER THE ABOVE FACTUAL MATRIX APPELLANTS HAD THE R IGHT TO CROSS-EXAMINATION THE WITNESSES ESPECIALLY SHROFFS AND ANGADIAS AS TO WHAT PORTION OF SUCH PAYMENT BELONGS TO A PARTICULAR APPELLANT. AS MENTIONED IN THE DEFINITION OF TRANSA CTION VALUE IN PARA 11.1 ABOVE, ONLY ACTUAL PRICE PAID OR PAYABLE HAS TO BE ADDED TO THE TRANSA CTION VALUE AND NOIL A HYPOTHETICAL VALUE BASED ON AVERAGING OF PRICES OR STANDARDISING OF FRIT GRA DES. AS ALREADY MENTIONED UNDER THE REALM OF TRANSACTION VALUE AS PER SECTION 4 EVEN THE SAME PR ODUCT COULD BE SOLD AT DIFFERENT PRICE.-, DEPENDING UPON SEVERAL MARKET FACTORS AND ALL THESE PRICES WILL BE ACCEPTABLE AS PERMISSIBLE TRANSACTION VALUE. PRESENT SECTION 4 DOES NOT GO BY THE CONCEPT OF NORMAL PRICE' OF THE OLD SECTION 4 OF THE CENTRAL EXCISE ACT, 1944. IN THE ABSENCE O F EXACT QUANTIFICATION OF CASH RECEIVED BY .INDIVIDUAL FRIT MANUFACTURER, TRANSACTION VALUE CA NNOT BE ENHANCED EVEN IF THERE ARE HALF COOKED CIRCUMSTANTIAL EVIDENCES TO THE PROCEEDINGS INDICAT ING SUSPECTED UNDERVALUATION. IT IS NOW WELL UNDERSTOOD THAT SUSPICION HOWSOEVER GRAVE CANNOT TA KE THE PLACE OF EVIDENCE. THEREFORE, IT MAY NOT BE CORRECT TO HOLD THAT PREPONDERANCE OF PROBAB ILITY SHOULD A/WAYS BE GIVEN TO THE REVENUE, AVL HON UE 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 ABOVE OBSERVATIO N AND THE LAW LAID DOWN BV THE APEX COURT IN THE CASE OF A. TAJUDEEN VS. LOI (SUPRA) PREPONDERAN CE 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- EXAMINATION AS PER SECTION 9D (L)(B) OF THE CENTRAL EXCISE ACT, 1944. 14\ IN VIEW OF THE REASONS RECORDED ABOVE, APPEALS FILED BY THE APPELLANTS MEN TIONED IN PARAS 5.1' 2. CLANDESTINE REMOVAL OF GOODS. FURTHER, ASSESSEE HAS SHOWING LESS PRODUCTION ACCOR DANCE TO THE SHOW CAUSE NOTICE ISSUED BY TH DGCEL, ASSESSEE COMPANY HAS SHOWING CONSUMPTION OF 2044.49 SCM OF NATURAL GAS FOR THE MANUFACTURING OJ MT PRODUCTION OF CERAMICS GLAZE FRIT. ON VERIFICATION OF SHOW CAUSE NOTICE, THE DGCEL HAS ADOPTED THE VASIS OF GAS CONSUMPTION FOR ALLEGINGAND ASCERTAINING QUANTITIES OF FRIT C LANDESTINELY PRODUCED AND REMOVED BY THE DEALER. ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 16 THE DGCEL HAS ADOPTED 484 SCM NATURAL GAS CONSUMPT ION FOI MANUFACTURING OF IMT FRIT AND THE QUANTITIES OF FRITALLEGED/Y ILLICITLY MANUFACTURED /.-, WORKED OUT A! ANNEXURC D-2. SIR, NATURAL GAS. IS NOT THE ONLY INPUT OR CONSUMAB LE FOR MANUFACTURING OF CERAMIC G/AXE MIXTURE AND IT ISCONSUMOBLE GOODS NOT INGREDIENT WITH FRIT. A FERE SO MANY ROW MATERIALS REQUIRED FOR MANUFACTURING OFFR'IT, NATNELY QUARTZ. FELDSPAR, SO DA FELDSPAR, POTASSIUM, BORAX SPENTA ,BORIC ACID, ZINC QXIDE, CALCITE,CHINA. CLAY, DOLOMITE, AL UMINA ETC. ALL THESE RAW MATERIALS FOUND IN EQUAL QUALITY AND NO VARIATION MPRODUCTION AND CONSUMPTIO N DGCEI HAS ONLY ASSUMPTION AND PRESUMPTION AND CALCULATED EXCESS PRODUCTION. RESPECTED SIR, NATURAL GAS IS AS AFORESAID NOT AN I NPUT OR CONSUMABLE ON THE BASIS OF WHICH PRODUCTION OF FRIT COULD HAVE BEEN ALLEGED AGAINST US. THE DGCEI HAS ALSO COMMITTED A GRAVE ERROR IN CONSIDERING THE QUANTITY OF GAS FOR WHICH PAYMEN T WAS MADE BY US TO THE SUPPLIER, NAMELY ONGC AS THE QUANTITY OF GAS ACTUALLY CONSUMED BY US FOR MANUFACTURE OF FRIT. THE FOLLOWING FACTS HAVE NOT BEEN CONSIDERED BY THE DGCLI WHILE RAISING DEMAND OF DULY ON THE BASIS OF GAS CONSUMPTION AND THEREFORE, WE REQUEST YOU TO CONSID ERING THE FOLLOWING OF THIS CASE ALSO. BY VIRTUE OF AN AGREEMENT BETWEEN ONGC AND ASSESSEE COMPANY, GAS US SUPPLIED TO US BY ONGC TO USE MINIMUM 80% TO 90% OF MONTHLY QUANTITY, OTHE RWISE COMPANY HAS PAID MGO (MINIMUM GUARANTEED OFF TAKE) AND YOUR REFERENCE ASSESSEE HA S PAID MGO FOR (HE YEAR UNDER CONSIDERATION. IN OTHER WORD THE DGCEI HAS WORKED O UT EXCESS CONSUMPTION OF GAS BUT REAL FACT IS THAT THE ASSESSEE HOT CONSUMED HIS MINIMUM MONTHLY QUOTA UP TO 80% TO 90% AND VERY HUGE AMOUNTS PAID AS MGO/PENALTY, THEREFORE EXCESS CONSU MPTION OF GAS AND DEALER HAS ACHIEVED EXCESS PRODUCTION OFFRIT AND REMOVE WITHOUT PAY DUT Y IS NOT LOGICAL. FURTHER, ASSESSEE HAS USED 520 SCM (37 M3 GAS PER N OUR) GAS FOR GENERATED CAPTIVE POWER FROM GENERATOR, HOWEVER DGCEI HAS NOT CONSIDERED THE SAM E AND CALCULATED ALL GAS CONSUMED LOR MANUFACTURING FOR FRIT ONLY, IN THIS REGARD WE ENCL OSED HEREWITH COPY OF TECHNICAL DATA FOR YOUR REFERENCE. FURTHER THE HONORABLE TRIBUNAL IN ASSESSEE OWN CASE ( CENTRAL EXCISE AND CUSTOM TRIBUNAL WEST ZONAL BENCH, AHMEDABAD (APPEAL NO. E/L 3289/2014 DT D.24.09.2014) OBSERVED THAT; '8.6 IN VIEW OF THE ABOVE OBSERVATIONS MADE BY THI S BENCH IT HAS ALREADY BEEN HELD THAT METHOD ADOPTED BY THE INVESTIGATION TO ESTIMATE CLANDESTIN E REMOVAL OF FINISHED GOODS IS NOT SOUND AND HAS TO BE DISCARDED. HOWEVER, REVENUE WAS GIVEN AN OPPORTUNITY TO STRENGTHEN THEIR CASE BY CORROBORATING EVIDENCE WITH SOME MORE FACTUAL DATA FROM ADDITIONAL STUDIES. NO APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ABOVE ORDER PASSED BY THIS BENCH. IT IS ALSO OBSERVED FROM 3.2 OF THE REMAND ORDER THAT APPELLANT HAS MADE CERTAIN CH ANGES IN THE PLANT AND\MACHINERY AND OTHER METHODOLOGIES TO REDUCE GAS CONSUMPTION. EVEN IN TH E REMAND PROCEEDINGS ALSO ADJUDICATING AUTHORITY HAS NOT COUNTERED THE ARGUMENTS TAKEN BY THE APPELLANT AS TO WHY THE STEPS TAKEN BY ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 17 THEM FROM TIME TO TIME, DOES NOT EFFECT GAS CONSUMP TION. ON A SPECIFIC QUERY FROM THE BENCH, THE LEARNED SENIOR ADVOCOTE ALSO ARGUED THAT SIMILAR MO DERNIZATION IN PROCESSES OF MANUFACTURE, AS UNDERTAKEN BY M/S. WELLSUIT GLOSS IN THE MANUFACTUR E OF FRIT, HAVE ALSO BEEN UNDERTAKEN BY OTHER APPELLANTS. NO FINDINGS HAVE BEEN GIVEN BY THE ADJU DICATING AUTHORITIES IN COUNTERING THE CLAIMS OF THE APPELLANTS, JUSTIFYING THE MODERNIZATION DON E TO REDUCE CONSUMPTION OF GAS FROM TIME TO TIME. NO EXPERT OPINION HAS BEEN OBTAINED BY THE RE VENUE TO CHALLENGE THE GAS CONSUMPTION PATTERN ADOPTED BY THE APPELLANTS TO INDICATE THAT CLAIM OF THE APPELLANTS WAS WRONG. 8 IN VIEW OF THE ABOVE OBSERVATIONS AND JUDICIAL PR ONOUNCEMENTS, METHODOLOGY ADOPTED BY THE ADJUDICATING AUTHORITIES IN ESTIMATING AND DEMANDIN G DUTY FROM THE APPELLANTS BASED ON CONSUMPTION OF NATURAL GAS, ELECTRICITY CONSUMED AN D POCKING TIME TAKEN; IS NOT IS NOT ACCEPTABLE AND IS REQUIRED LO BE REJECTED. ' RESPECTED SIR IT IS ADMITTED THAT ENTIRE RE ASSESSMENT PROCEEDING CARRIED ON THE BASIS OF SHOW CAUSE NOTICE ISSUED BY THE DGCEI AND YOUR GOODS SELVES PROPOSED ADDITION ON THE BASIS OF SHOW CAUSE NOTICE. HOWEVER SHOW CAUSE NOTICE ISSUED HAS BEEN DISMISSED/ THE DEMAND OF EXCISE DUTY HAS BEEN NULLI FIED THEN THE BASIS ITSELF REMAINS NO MORE TO MAKE ANY ADDITION ON ACCOUNT OF UNDER VALUATION OF GOODS AND CLANDESTINE REMOVAL OF GOODS. 3. IN RESPECT OF STATEMENT OFSHRI HARSHADBHAI C PAT EL DIRECTOR OF THE COMPANY AND RAMESHBHAI C PATEL, PRODUCTION MANAGER HAS RETRACT ON VERY NEXT WORKING DAY, THEREFORE IT IS NOT BOUND TO THE ASSESSED IN RESPECT OF UNDERVALUATION OF FOODS AND CLANDESTINE REMOVAL OF GOODS. 4 FURTHER, YOUR GOODS SELVES HAS RELIED THE ORDE R OF HONORABLE CIT(A) IN CASE OF ZIRCONIA CERA TECH GLAZE VIDE ORDER CIT(A)/GNR/74 & 73/201 4-15 DATED 22101.2016 FOR ASSTT. YEAR 200/-08 AND 2008-09, IDENTICAL ISSUE INVOLVED IN CASE OF AS SESSES AND THE HONORABLE CIT(A) HAS DECIDED APPEAL IN FAVOUR OF REVENUE AND IT IS NOT GOOD REAS ONS TO MAKE AN ADDITION TO THE TOTAL INCOME OF THE ASSESSEE BECAUSE OF IN CASE SUPREME GLAZES PRIV ATE LIMITED, HONORABLE CIT(A) - II, VIDE HIS ORDER C1T(A) - 2/197/OC. S.K. CIR.HMT/2014-LS DTD.2 2.01.2016 FOR ASST. YEAR 2007-08 DECIDED IN FAVOUR OF APPELLANT. IT IS FURTHER SUBMITTED THAT THE ASSESSES HAS ALSO FILED AN APPEAL FOR ASST. YEAR 2006-07,2007-08 AND 2008-09 BEFORE HONORABLE CIT(A), GANDHIANGAR AN D SAME IS NOT ADJUDICATE TILL DATE. 5 .FURTHER IN RESPECT OF REJECTING BOOKS OF ACCOUNT S, PROVISION OF SECTION 145 OF THE ACT NOT INVOKING IN PRESENT CASE OF ASSESSEE BECAUSE OF YOU R GOOD SELVES HAS PROPOSED ADDITION MERELY CM THE BASIS OF THE FINDING IN THE SHOW CAUSE NOTIC E ISSUED BY THE DGCEI, WITHOUT ANY INDEPENDENT DEJECTS OR DISCREPANCIES HAS BEEN POINT ED OUT AND ON THE FACTS WHEN THE. ORIGINAL BASIS OF ADDITION I.E. SHOW CAUSE NOTICE ISSUED HAS BEEN DISMISSED/ THE DEMAND OF EXCISE DUTY HAS BEEN NULLIFIED THEN NO MORE ADDITION REQUIRED IN CA SE OFASSESSEE UNDER THE 1 T ACT. ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 18 6. FURTHER YOUR GOODS SELF HAS PROPOSED ADDITION OF RS. 433955681 ON ACCOUNT OF UNDER VALUATION OF GOODS AND CLANDESTINE REMOVAL O{ GOODS . HOWEVER, WE HAVE ALL READY SUBMITTED FOLLOWING DETAILS IN OUR PREVIOUS SUBMISSION. : [II COPY OF SALES INVOICE. IN RESPECT OF SALES INVOICE FOR THE YEAR UNDER CONS IDERATION,] THE DG CEI HAS IMPOUNDED ALL SALES AND IMPOUNDED ALL SALES AND PURCHASE INVOICE FOR FU RTHER VERIFICATION DURING THE COURSE OF SEARCH. [2] DETAILS OF SALES A COPY OF SALE REGISTER WITH PARTY- WISE, ITEM WISE IN QUANTITY AND VALUE ON MONTHLY BASIS SUBMITTED IN OUR PREVIOUS SUBMISSION. [3}. COPY OF BONK STATEMENT A COPY OF DANK STATEMENT SUBMITTED IN OUR PREVIOUS SUBMISSION. [4] COPY OF AUDIT REPORT AND BALANCE SHEET. A COPY OF AUDIT REPORT WITH STATEMENT OF INCOME SU BMITTED IN OUR PERVIOUS SUBMISSION. OVER AND ABOVE ISSUE INVOLVED FOR ASST YEAR 2006-07 , 2007-08 AND 2008-09, THEM. THE A.O HAS MADE ADDITION ON ACCOUNT OF GP @ 15'% ON UNDERVALUA TION OF GOODS AND CLANDESTINE REMOVAL OF GOODS, THUS ADDITION OF RS.48395568/ NOT SUSTAIN. : 7 EVEN IF YOUR GOOD SELF OJ IN VIEW THAT THE ASSE SSEE HAS UNDERVALUATION OF GOODS AND CLANDESTINE REMOVAL OF GOODS AS A/LIED IN SHOW CAUSE NOTICE ISS UED BY THE DGCEI, THEREFORE IT IS OUR REQUEST TO YOU GOODSELF PLEASE PROVIDE AN OPPORTUNITY FOR CROS S EXAMINE TO THE DETAILS/DOCUMENTS COLLECTED AGAINST THE ASSESSEE EXCEPT SHOW CAUSE NOTICE ISSUE D BY DGCEI AND PROVIDE FOLLOWING DETAILS/DOCUMENTS SO PROPER REPLY CAN BE GIVEN. 1 DETAIL WORKING IN RESPECT OF UNDER VALUATION O] G OODS AND CLANDESTINE REMOVAL OF GOODS OFRS.483 9556S/ FOR THE YEAR UNDER CONSIDERATION. 2. COMPLETE DOCUMENTARY EVIDENCE REGARDING UNDER VA LUATION OR ILLICIT REMOVAL OF GOODS AND COY OF ALL LEDGER A/C OF BUYERS IN WHICH YOU ARE RELIED THAT THE ASSESSEE HAS ESCAPEMENT OF TURNOVER. 3. DETAIL WORKING OF CONSUMPTION OF-GAS FOR PRODUCT ION OF CERAMINES GLAZES MIXUTRE, FRIT IN WHICH YOU ARE RELIED THAT THE ASSESSEE HAS CLANDESTINE RE MOVAL OF GOODS. : 4. DETAIL WORKING OF UNDER VALUATION OF CERAMICS GLAZE FRIT. 5. DETAILS WITH CONTRA LEDGER A/C OF BUYERS IN WHIC H YOU ARE RELIED THAT THE ASSESSEE HAS CLANDESTINE REMOVAL OF GOODS. : 6. DETAILS WITH CONTRA LEDGER A/C OF BUYERS IN WHIC H YOU ARE RELIED THAT THE ASSESSEE HAS MADE SALES IN UNDER VALUATION OJ GOODS. : 7. COMPLETE NAME AND ADDRESS TO WHO COLLECTED CASH AMOUNT ON BEHALF OF ASSESSEE COMPANY. 8. REQUEST FOR CROSS EXAMINATION TO ALL BUYERS /SUP PLIERS AS MENTION IN NOTICE ISSUED BY DGCEI. ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 19 9. ANY OTHER DETAILS/ DOCUMENTS WITH REGARDS TO THE TRANSACTION APPEARING IN THE NAME OF THE ASSESSEE COMPANY WITH THE DEALERS AS MENTIONED IN S HOW CAUSE NO LICE ISSUED BV DGCKI. ' 6.0 THE ASSESSEE WAS SPECIFICALLY ASKED TO PRODUCE THAT BOOKS OF ACCOUNTS WITH A/I THE INVOICES, VOUCHERS, BILLS, REGISTERS, ETC VIDE THE ABOVE REFE RRED SHOW CAUSE NOTICE DATED 12/02/2016. HOWEVER, IT FAILED TO PRODUCE THE SAME ON GIVEN DAT E. FOR THE SAKE OF NATURAL JUSTICE, ANOTHER OPPORTUNITY WAS PROVIDED VIDE ORDER SHEET ENTRY DAT ED 23/02/20-16 TO PRODUCE THE COMPLETE SET OF BOOKS WITH BILLS/VOUCHERS & REGISTERS. AL-SO, AS PER THE REQUEST OF THE ASSESSEE, IT WAS PROVIDED AN OPPORTUNITY FOR CROSS EXAMINATION OF SHRI HARSHA DBHAI C PATEL, DIRECTOR WHOSE STATEMENTS WERE RECORDED BY THE CENTRAL EXCISE DEPARTMENT AS W E/I AS BY THIS OFFICE IN THE RE-OPENING PROCEEDING FOR A. YS 2006-07, 2007-08 & 2008-09. HO WEVER, NEITHER SHRI HARSHAD PATEL NOR THE A.R. OR OTHER DIRECTORS REMAINED PRESENT ON THE GIV EN DATE. ONE OF THE STAFF SHRI MANISH S. PATEL. ATTENDED IN AFTERNOON SESSION, HOWEVER, NEITHER ANY SUBMISSION FILED NOR THE BOOKS OF ACCOUNTS PRODUCED. HE EVEN DENIED SIGNING ON THE ORDER SHEET DATED 29/02/2016. THUS, THE ASSESSES INTENTIONALLY AVOIDED THE OPPORTUNITY GRANTED FOR C ROSS EXAMINATION OF THE WITNESS. THEREAFTER ON 01/03/2016, THE ASSESSEE FILED A SUBMISSION CONTAIN ING COMPUTERIZED DETAILS OF STOCK & PRODUCTION. '- THEREFORE INSIPTE OF GIVING SUFFICIE NT OPPORTUNITY TO THE ASSESSEE TO BE PRESENT ; ALONG WITH THE BOOKS OF ACCOUNT THE ASSESSEE FOILED TO DO SO , THEREFORE IN THE ABSENCE OF BOOKS THE PHOTOCOPY SUBMITTED BY THE ASSESSEE CANNOT BE R ELIED UPON . 6.1 . HOWEVER, ON CAREFUL SCRUTINY OF THE SUBM ISSION, IT WAS REVEALED THAT THE MAIN CONTENTIONS OF THE ASSESSEE IN ITS SUBMISSIONS DATED 23/02/2016 ARE THAT: ' THE EXCISE DEPARTMENT HAS ARRIVED AT VALUE OF FRIT ONLY ON REASON THAT THE DEALER HAS INCREASED PRICE AND IS ONLY A MERE ASSUMPTION. THE CLANDESTINE PRODUCTION AS WORKED OUT BY THE DGC LI IS ONLY BASED ON GAS CONSUMPTION. . 6.2 THE ASSESSEE FURTHER STATED THAT IF ADD ITION OUGHT TO BE MADE THEN IT SHOULD BE RESTRICTED TO THE ELEMENT OF NET PROFIT. 7. THE SUBMISSION OF THE ASSESSEE IS CONSIDERE D AND DEALT WITH AS UNDER: 7.1 'THE CONTENTION OF THE ASSESSEE THAT THE COMPUT ATION OF SUPPRESSED SALE AND CLANDESTINE PRODUCT BY THE EXCISE DEPARTMENT AS PER SHOW CAUSE NOTICE DATED 09.02.2010 IS ON CONJECTURE & SURMISE ONLY IS NOT CORRECT. THE DGCEI HAS UNEARTHE D THE EVIDENCE OF SUCH SUPPRESSION IN THE INVOICE VALUE AS WELL AS CLANDESTINE REMOVAL OF GOO DS, AFTER CONDUCTING A THOROUGH INVESTIGATION AS WELL AS AFTER RECORDED STATEMENT OF VARIOUS PERS ONS INCLUDING THAT OF DIRECTOR OF THE ASSESSEE COMPANY. BASED ON SUCH INVESTIGATION DGCEI HAS ISSU ED A DETAILED SHOW CAUSE NOTICE DATED 09.02.2010 INTER ALIA DETRAINING THE TOTAL SUPPRESS ION BY THE ASSESSEE (OR THE PERIOD. THE SAID SHOW CAUSE NOTICE IS FULLY RELIED UPON IN THIS ASSE SSMENT ORDER. THE IMPORTANT FINDINGS OF DGCEI RELEVANT TO THE ASSESSEE ARE AS UNDER: ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 20 7.2 A SEARCH OPERATION WAS CONDUCTED AT THE PREMISE S OF M/S. GROW MORE CERAMICS PVT.LTD.ON 29.08.2008, SEVERAL DOCUMENTS WERE SEIZED AND STATE MENTS OF SHRI HARSHADBHAI C. PATEL, DIRECTOR OF M/S GROWRNORE CERAMICS PVT. LTD. WERE RECORDED B Y THE EXCISE DEPARTMENT. IN THE SAID STATEMENT SHRI HARSHADBHAI C. PATEL IN WHICH HE ADM ITTED '-THAT COMPANY WAS INVOLVED IN ISSUING PARALLEL INVOICES. HE ALSO ADMITTED THAT RATES CHAR GED WERE MUCH LOWER THAN THE ACTUAL SELLING PRICE I.E. THE COMPANY WERE CHARGING LESS SELLING P RICE IN THE INVOICES ISSUED FROM YOUR FACTORY AND COLLECTING CASH AMOUNT OVER AND ABOVE THE INVOICE A MOUNT. IT HAS ALSO BEEN CONFIRMED BY THESE BUYERS OF FRIT THAT THE AMOUNT SHOWN IN THE INVOICE WERE BEING PAID BY THEM THROUGH CHEQUES WHEREAS THE REMAINING AMOUNT WAS BEING PAID BY THEM IN CASH. DURING THE COURSE OF INVESTIGATION DGCEI HAS SEIZED DOCUMENTS, SOME OF T HE DOCUMENTS SCANNED AND FINDINGS THEREON, GIVEN IN THE SAID SCN AND WHICH ARE RELEVANT TO THE CASE ARE REPRODUCED BELOW: '.....8.1.INVESTIGATION CONDUCTED BY DGCEI AGAINST M/S. GROWRNORE,,REVEAIS THAT THEY HAVE NOT DECLAREDTHE ACTUAL ASSESSABLE VALUE OF EXCISABLE GO ODS MANUFACTURED, AND CLEARED FROM THEIR REGISTERED FACTORY PREMISES, INVESTIGATION ALSO REV EALS THAT M/S. GROWRNORE HAD REMOVED QUANTITY OF FRIT CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUT Y, UNDER PARALLEL INVOICES. THE DOCUMENTARY AS WELL AS ORAL EVIDENCES COLLECTED BY DGCEI FROM VARI OUS PREMISES CLEARLY INDICATES THAT M/S. GROWRNORE WAS DECLARING IN THEIR CENTRAL EXCISE INV OICES ONLY A PART OF THE ACTUAL TRANSACTION VALUE OF FRIT MANUFACTURED AND CLEARED FROM THEIR F ACTORY. VALUE OF CLANDESTINELY CLEARED FRIT AS WELL AS THE DIFFERENTIAL VALUE OF .UNDERVALUED FRIT S, OVER AND ABOVE THE VALUE DECLARED IN THE INVOICES, WERE COLLECTED BY THEM FROM THEIR BUYERS IN CASH. 8.2.1. M/S. GROWMORE HAS GRADUALLY STARTED SHOWING HIGHER ASSESSABLE VALUE OF FRIT IN THEIR INVOICES, AFTER THE INVESTIGATION AGAINST TILES MAN UFACTURERS AND FRIT MANUFACTURERS WAS INITIATED BY DGCEI. M/S. GROWMORE HAS STARTED SHOWING ASSESSA BLE VALUE OF OPAQUE QUALITY OF FRIT FROM RS. 15/- TO RS. 30 PER KGS. AND THAT OF TRANSPARE NT QUALITY OF FRIT FROM FFV L2/ TO RS. 73.30 PER KGS. IN THE YEOR 2008-09 AND 2009 10. 8.2.2. VARIOUS BUYERS OF FRIT FROM M/S. GROWMO RE, VIZ........ IN THEIR RESPECTIVE STATEMENTS HAVECONFIRMED THAT THEY WERE GETTING INVOICES FROM THE SUPPLIERS OF FRIT BY SHOWING THE RATE OF FRIT AS RS. 7'/-TO RS. 13/ WHEREAS THE ACTUAL VALUE OF FRIT WAS ABOUT RS. 20/- TO RS. 30/- PER KGS. IT HAS ALSO BEEN CONFIRMED BY THESE BUYERS OF FRIT'THA T THE AMOUNT SHOWN IN THE INVOICE WERE BEING PAID BY THEM THROUGH CHEQUES WHEREAS THE REMAINING AMOUNT WAS BEING PAID BY THEM IN CASH. 8.2.3 SHRI HARSHADBHAICHIMANBHAI PATEL, DIRECTOR O F M/S. GROWMORE HAS ALSO CONFIRMED'AND ADMITTED THAT THE RATES OF OPAQUE AND TRANSPARENT G RADE OF FRIT REMAIN FROM RS. 20/- TO R:S. 30/- DEPENDING UPON THE QUALITY. THE AFORESAID DOCUMENTA RY EVIDENCES AS WELL AS ORAL EVIDENCES IN THE FORM OF STATEMENTS OF AUTHORIZED PERSONS OF TILES M ANUFACTURERS WHO PURCHASED FRIT FROM M/S. GROW/MORE AND STATEMENTS 'OF SHRI HARSHADBHAICHIMAN BHAI PATEL DIRECTOR OF M/S. GROWMORE ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 21 APPEAR TO ESTABLISH THAT THE ASSESSABLE VALUE SHOWN IN THE CENTRAL EXCISE INVOICES DO NOT REFLECT THE CORRECT VALUE OF FRIT BEING CHARGED AND RECOVER ED BY M/S. GROWMORE FROM.ITS DIFFERENT BUYERS. 7.3 ASCERTAINMENT OF CORRECT VALUE OF FRIT 9.1.2 M/S. GROWMORE HAS STARTED SHOWING ASSESSABLE VALUE OF OPAQUE QUALITY OF FRIT FROM RS. IS/- TO RS. 30/- PER KGS. AND THAT OF TRANSPARENT QUALIT Y OF FRIT FROM RS. 12/- TO RS. 23.30 PER KGS. IN THE YEAR 2008-09 AND 2009-10 I.E. AFTER INITIATION OF INVESTIGATION AGAINST TILES MANUFACTURERS AND FRIT MANUFACTURERS BY THE DGCEI. HOWEVER, TO MISLED THE DEPARTMENT, THEY ALSO STARTED SUFFIXING DIFFERENT CODES WITH THE 'OPAQUE'OR'JR' GRADES OF F RIT. 9.1.3 VARIOUS BUYERS OF FRIT FROM M/S. GROWMORE IN THEIR RESPECTIVE STATEMENTS HAVE CONFIRMED THAT ACTUAL VALUE OF FRIT WAS ABOUT RS. 2 0/- TO RS. 30/- PER KGS. 9.1.5 DURING THE COURSE OF INVESTIGATIONS, IT IS FO UND THAT FROM 2008-09, M/S GROWMORE, STARTED GRADUALLY INCREASING THE PRICES OF ABOVE-M ENTIONED 'OPAQUE' AND 'TR' GRADES OF FRIT. ON THE BASIS OF THE CLASSIFICATION OF DIFFERENT SUFFIX COD ES UNDER DIFFERENT QUALITIES OF FRIT SUBMITTED BY T HE DIRECTOR OF M/S GROWMORE, IT IS FOUND THAT IN THE C ENTRAL EXCISE ISSUED BY M/S GROWMORE, THE PRICES WERE INCREASED FROM RS. IS/ PER KG OF 'OPAQU E GRADE' IN THE BEGINNING OF 2008-09 TO THE HIGHEST PRICE OF RS. 30/~ AND THE PRICES VARIED IN INVOICE TO INVOICE AS WELL AS PER THE CODES. SIMILARLY, UNDER THE 'TR' GRADE ALSO, THE PRICES WE RE INCREASED FROM RS. 12/- TO RS. 23.30 PER KG. IN THE CENTRAL EXCISE INVOICES ISSUED BY THEM. TH E PRICE FOR THE NEW QUALITY OF 'OPAQUE FOR FAST FIRING APPLICATION' HAS ALSO VARIED FROM RS. 25.30 TO RS. 30/- PER KG IN THE CENTRAL EXCISE INVOICES ISSUED BY THEM. THE PRICES FOR THE NEW 'TR FOR FAS T FIRING APPLICATION' ALSO FLUCTUATED FROM RS. 22.50 TO RS. 27/- PER KG FROM INVOICE TO INVOICE AN D BUYER TO BUYER. FINALLY, REGARDING THE LAST GRADE I.E. 'TR FOR ENGOBE APPLICATION', SHRI HARSHA DBHAICHIMANBHAI PATEL, THE DIRECTOR OF M/S GROWMORE IN HIS STATEMENT DTD. 30-01 2010, EXPLAINE D THAT THOUGH THE RATE SHOWN IN THE CENTRAL EXCISE INVOICES ISSUED BY THEM HAS BEEN RS. 12.50 P ER KG, BUT THE ACTUAL RATE COLLECTED BY THEM WAS SAME AS LIKE THE 'TR' QUALITY ONLY. FROM THE CO PIES OF INVOICES AND THE DATA SUBMITTED BY M/S GROMORE, IT IS FOUND THAT SIMILAR PATTERN HAS BEEN FOLLOWED BY M/S GROWMORE DURING THE FINANCIAL YEAR 2009-10 ALSO. THEREFORE, AS THE RATES C HARGED BY M/S GROWMORE, UNDER DIFFERENT INVOICES VARIED UND.ER INVOICE TO INVOICE AND BUYER TO BUYER, THE HIGHEST RATES AT WHICH M/S GROWMORE HAS CLEARED THE PARTICULAR QUALITY, THE SA ME HAS BEEN CONSIDERED AS THE ASSESSABLE VALUE FOR WORKING OUT THE CENTRAL EXCISE DUTY LEVIA BLE THEREON. 9.1.6 IN VIEW OF THE INVESTIGATIONS AND THE EVIDENC ES DISCUSSED HEREINABOVE, THE- CORRECT VALUE OF OPAQUE GRADE AND '77?' (TRANSPARENT) GRADE OF FRIT MANUFACTURED AND CLEARED BY M/S. GROWMORE CAN BE TAKEN AS RS. 30/- PER KG AND RS. 23 .30 PER KG RESPECTIVELY. SIMILARLY, THE CORRECT VALUE OF 'OPAQUE GRADE FOR'- FAST FIRING PROCESS' H AS ALSO BEEN RS. 30/-, WHILE FOR 'TRFORENGOBE APPLICATION' HAS BEEN SIMILAR AS TO 'TH' I.E. RS. 2 3.30 AND THE CORRECT VALUE OF 'TR' FOR FAST FIRING ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 22 APPLICATION HAS BEEN HS. 27/~. 9.1.7 ACCORDINGLY, ON THE BASIS OF THE DETAILS OF C LEARANCES OF FRIT SUBMITTED BY M/S. GROWMORE DURING THE COURSE OF INVESTIGATION, THE OFFICERS OF DGCEI PREPARED A CHART TO WORK OUT THE CENTRAL EXCISE DULY SHORT-PAID BY THEM DURING THE PERIOD FR OM JANUARY'2005 TO 2009-10 [TILL OCTOBER' 2009], WHICH IS ATTACHED TO THIS NOTICE AS ANNEXURE -D-1 7.4 CLANDESTINE REMOVAL OF FRIT BY M/S. GROWM ORE 10.1.1 THE DETAILS OF THE PARALLED INVOICES DETECTE D DURING THE COURSE OF INVESTIGATION AND DISCUSSED UNDER ABOVE-MENTIONED PARA 5 TO THIS SHOW CAUSE NOTICE, HAS REVEALED THAT DURING THE PERIOD FROM 2005-06 TO 2007-08, M/S GROWMORE, HAS B EEN ENGAGED IN THE REMOVAL OF 'OPAQUE' AND 'TRANSPARENT' GRADES OF FRIT UNDER THE PARALLEL INVOICES MENTIONED IN THE ABOVE PARA. ON COMPARING DETAILS SHOWN IN THE PARALLEL INVOICES AN D CORRESPONDING OFFICIAL CENTRAL EXCISE INVOICES AND WITHDRAWN FROM M/S GROWMORE AND THE FACTS NARRA TED BY SHRI HARSHADBHAICHIMANBHAI PATCL, THE DIRECTOR OF THE SAID COMPANY, IT WAS FOU ND THAT THEY ARE CLEARED THE QUANTITY AND QUALITY OF FRIT MENTIONED IN THE PARALLED INVOICES TO THE BUYERS MENTIONED THEREIN THE PARALLEDINVOICES, WHICH WAS NOT ACCOUNTED FOR IN TH EIR BOOKS OF ACCOUNTS. THIS INDICATES THAT M/S. GROWMORE WAS ALSO INDULGING IN CLANDESTINE REMOVAL OF FRIT MANUFACTURED BY THEM. 10.1.2. AS THE PARALLEL INVOICES MENTIONED IN THE P ARA 5 ABOVE, BELONGED TO DIFFERENT FINANCIAL YEARS AND HAVING VARIOUS SERIAL NUMBERS, CORRESPOND ING TO THE SERIAL NUMBER OF INVOICES ISSUED ON OR AFTER THE DATES OF ISSUANCE OF OFFICIAL CENTRAL EXCISE INVOICES BEARING THE SAME SERIAL NUMBERS, IT APPEARS THAT THE CLANDESTINE CLEARANCE MADE UNDE R THE ABOVE-MENTIONED PARALLEL INVOICES WERE ONLY A QUANTUM CLEARED THE BUYERS MENTIONED IN THE PARALLEL INVOICES AND THE TOTAL QUANTUM OF CLANDESTINE MANUFACTURE AND CLEARANCE OF FRIT MANUF ACTURED BY M/S. GROWMORE IS REQUIRED TO BE ASCERTAINED. 7.5 INVESTIGATION ON THE BASIS OF MONTH-WISE PRODUC TION AND GAS CONSUMPTION:- 11.1.1. DURING THE INVESTIGATION, THE DIRECTOR OF M /S. GROWMORE HAD STATED THAT THEIR FACTORY IS USING NATURAL GAS AS FUEL AND THAT THEY USE ELECTRI CITY FOR OPERATING ELECTRIC MOTORS, INSTALLED IN THEIR FACTORY, IT WAS ALSO ASCERTAINED THAT M/S. GR OWMORE WAS PROCURING SUCH NATURAL GAS FROM M/S OIL AND NATURAL GAS COMMISSION OF INDIA LTD. (O NGC) AS PER THEIR ALLOTTED QUOTA. THEREFORE, DETAILS OF CONSUMPTION OF NATURAL GAS AND THE CORRE SPONDING QUANTITY OF FRIT MANUFACTURED BY M/S. GROWMORE WAS CALLED FOR UNDER SUMMONS DATED 17 -09-2009. ACCORDINGLY, ON 24.12.2009, M/S. GROWMORE SUBMITTED DATA CONTAINING DETAILS OF GAS CONSUMPTION AND TOTAL QUANTITY OF FRIT MANUFACTURED DURING THE PERIOD FROM JANUARY'2005 TO OCTOBER'2009. THE. OFFICERS OF DGCEI PREPARED A CHART WHICH INDICATES THE SUMMARY OF THE DATA FURNISHED BY M/S. GROWMORE, WHICH IS ATTACHED TO THIS NOTICE AS 'ANNEXURE- B. ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 23 11.1.2. COL. NO. 2 OF THE CHART INDICATES THE TOTAL QUANTITY OF FRIT SHOWN TO HAVE BEEN MANUFACTURED BY M/S. GROW/MORE IN EACH MONTH ALONGW ITH TOTAL QUANTITY FOR EACH FINANCIAL YEAR. COL. ATO. 3 SHOWS THE TOTAL QUANTITY OF NATURAL GAS CONSUMED IN STANDARD CUBIC METERS DURING EACH MONTH. COL. NO. 4 HAS BEEN WORKED OUT TO ASCER TAIN THE QUANTUM OF GAS CONSUMED EACH MONTH FOR MANUFACTURING ONE MT OF FRIT. 11.1.3 DURING THE COURSE OF RECORDING HIS STATEMENT ON 24.12.2009, SHRI HARSHADBHAICHIMANBHAI PATEL, THE DIRECTOR OF M/S. GROWMORE, WHO ALSO LOOK S AFTER PRODUCTION WORK, HAD EXPLAINED THE DETAILS REGARDING ACTUAL GAS CONSUMPTION REQUIRED F OR MANUFACTURING ONE MT OF FRIT IN HIS FACTORY. HE STATED THAT THEY ARE HAVING 3 KILNS, OU T WHICH THEY GENERALLY USE TWO KILNS AND ONE IS KEPT AS STANDBY, ON AN AVERAGE, 500 SCM NATURAL GAS IS USED TO MANUFACTURE 1 MT OF FRIT .11.1.4 THE ANALYSIS OF MONTH WISE CO NSUMPTION OF NATURAL GAS AND CORRESPONDING QUANTITY OF I RIT MANUFACTURED BY M/S. GROWMORE R EVEAL THAT M/S. GROWMORE CAN MANUFACTURE 1 MT OF FRIT BY CONSUMING AS LOW AS 374.65 SCM OF NAT URAL GAS IN THE MONTH OF APRIL'2008. IN FACT, DURING THE MONTH OF FEBRUARY 2005, M/S. GROWMO RE HAS MANUFACTURED 111.0 MT OF FRIT BY CONSUMING 226894 SCM OF NATURAL GAS, WHICH WORKS OU T TO 2044.49 SCM OF NATURAL GAS FOR 1 MT OF FRIT. .11.1.5 .1 THEREFORE, IN ORDER TO PHYSICALLY ASCERT AIN THE CONSUMPTION OF : NATURAL GAS IN THE DAY-TODAY PRODUCTION OF FRIT CARRIED OUT BY M/S GROWMORE, A .STUDY OF CONTINUOUS FOUR BATCHES OF PRODUCTION DURING THE DAY WAS CARRIED OU T BY THE OFFICERS OF DGCEI UNDER PANCHNAMADTD. 27 & 28-01-2010 DRAWN IN PRESENCE OF TWO INDEPENDENT PANCHAS, SHRI HARSHADBHAICHIMANBHAI PATEL, THE DIRECTOR OF M/S G ROWMORE CERAMICS PVT. LTD. AND SHRI RAMESHBHAICHHAGANBHAI PATEL, THE PRODUCTION INCHARG E OF M/S GROWMORE. IT WAS NOTICED THAT. M/S GROWMORE HAD TOTAL THREE ROTARY KILNS, OUT OF W HICH TWO WERE IN THE WORKING CONDITION IN WHICH PRODUCTION BATCHES WERE UNDER PROCESS AND THE THIRD KILNS WAS NOT WORKING, KEPT AS STAND- BY, AS EXPLAINED BY SHRI HARSHADBHAICHIMANBHAI PATE L, THE DIRECTOR OF M/S GROWMORE. THE ENTIRE PRODUCTION PROCESS WAS OBSERVED BY THE OFFICERS OF DGCEI AND SIMULTANEOUS CONSUMPTION OF NATURAL GAS WAS RECORDED FROM THE NEARBY ONGC GAS S TATION. DURING THE COURSE OF SAID PANCHNAMA, THE 'TR FOR FAST FIRING' GRADE WAS UNDER PRODUCTION AND THE DETAILS OF PRODUCTION IN THE FOUR BATCHES OBSERVED DURING THE COURSE OF ABOV E-MENTIONED PANCHNAMA ARE AS UNDER: ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 24 BATCH PRODUCTION IN LOST ROTARY KILN PRODUCTION IN FIRST ROTARY KILN BATCH CHARGING TIME BATCH DIS- CHARGING TIRNA NO. OF BAGS FILLED QUANTITY OF FRIT PRODUCED (KGS) BATCH CHARGING TIME BATCH ; DIS- CHARGING TIME NO. OF BOGS FILLED QUANTITY OF FRIT PRODUCED (KGS) 1ST 430 HRS 9. 15 HRS 3'/ 1850 05. 45 HRS 10. 30 HRS 36 1800 LLND 10.30 HRS IS. 15 HRS 36 1800 11. 30 HRS 16.30 HRS 36 1800 LLIRD 16.05 HRS 2 1.00 HRS 36 1800 1 7. 30 HRS 22. 15 HRS 36 1800 IV TH 21.45 HRS : 02. 30 HRS 36 1800 23.15 HRS 04.00 HRS 37 1850 TOTAL 145 7250 TOTAL 7250 11.1.5.2DURING THE COURSE OF ABOVE-MENTIONED PRODUC TION IN FOUR BATCHES, THE READING AT ONGC, GGS STATION, SHOWED THE RECORDING OF 7017 SCM OF NA TURAL GAS. THUS, THE TOTAL GAS CONSUMED OBTAINED FROM M/S ONGC, GGS, PALIYAD, WAS 7017 SCM FROM 06.00 OF 27 01-2010 TO 04.00 HRS. OF 28-01-2010 AND THE QUANTITY OF FRIT MANUFACTURED AN D PACKED WAS 14500 ML, AS PER THE PRODUCTION CARRIED OUT IN THE ABOVE EIGHT BATCHES ( FOUR BOTCHES EACH OF TWO ROTARY MACHINES). SHRI HARSHADBHAI PATEL, THE DIRECTOR OF M/S GROWMOR ECERAMICS .PVT. LTD., AGREED WITH THE FIGURES OF GAS CONSUMPTION RECORDED FROM M/S ONGC AND THE P RODUCTION OBTAINED. LLIL.5.3 CONSIDERING THE CONSUMPTION OF /017 SCM OF NATURAL GAS AND PRODUCTION OF 14.500 MT OF 'TR FOR GAST FIRING GRADE' FRIT, IT WAS NOTICED THA T, AGAINST THE AVERAGE CONSUMPTION OF 500 SCM GAS AS STATED BY SHRI HARSHADBHAICHIMANBHAI PATEL, THE DIRECTOR OF M/S GROWMORE; 483.93 I.E. 484 SCM OF GAS CONSUMPTION HAS BEEN WORKED OUT. THE SAME HAS BEEN APPLIED IN WORKING OUT THE EXACT PRODUCTION BY M/S GROWMORE, DURING THE PERIOD FROM JANUARY'2005 TO OCTOBER'2009, THE DETAILS OF WHICH ARE GIVEN UNDER ANNEXURE-D-2 TO TH IS SHOW CAUSE NOTICE. 7.6 INVESTIGATION REGARDING THE ACTUAL PRODUCTION CAPACITY OF M/S. GROWMORE:- 12.1.1. INVESTIGATION REVEALED THAT THE CRUCIAL MA CHINERY WHICH IS REQUIRED FOR MANUFACTURING FRIT IS THE FURNACE [KILN/. THEREFORE, INVESTIGATION WAS EXTENDED TO ASCERTAIN THE DETAILS REGARDING SUCH KILNS INSTALLED IN THE FACTORY OF M/S. GROWMORE. IN PURSUANCE OF A SUMMONS DATED 14-12-2009, SHRI HARSHADBHAICHIMANBHAI PATEL, DIRECTOR OF M/S. GROWMORE SUBMITTED THE DETAILS OF ALL ITEMS OF PLANT AND MACHINERY INSTALLED IN HIS FACTORY IN HIS STATEMENT DTD. 24-12 2009. SI. [NO. ITEM DESCRIPTION NO. MACHINES OF 1 ROTARY KILN (14 FEET IN LENGTH) 3 NOS. 2 MIXTURE (2 MT CAPACITY) 1 NOS 3 GENERATOR (NATURAL GAS BASED CAPACITY) 1 NOS ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 25 4 SILO 2 NOS. ' 5 BUCKET (1 MT) 2 NOS. 6 TROLLEY 1 NOS . 7 OVERHEAD CRANE (1 MT) 2 NOS. 8 ELECTRIC MOTORS 3 NOS. : 12.1.4. THE AFORESAID ANALYSIS OF THE PRODUCTION CA PACITY OF THE KILNS VIS-A-VIS THE RECORDED QUANTITY OF PRODUCTION AS WELL AS THE ACTUAL GAS CO NSUMPTION, THU$ APPEARS TO SUBSTANTIATES THE FACT THAT M/S. GROWMORE WAS NOT ACCOUNTING-FAR THE ENTIRE QUANTITY OF FRIT MANUFACTURED IN THEIR FACTORY, AND WAS CLEARING THE SAME SURREPTITIOUSLY WITHOUT ISSUANCE OF CENTRAL EXCISE INVOICES AND WITHOUT PAYMENT OF CENTRAL EXCISE DUTY 12.1.5. HOWEVER, THE AFORESAID INVESTIGATION CONDUC TED BY DGCEI FROM DIFFERENT ANGLES, I.E. CONSUMPTION OF NATURAL GAS, PRODUCTION CAPACITY AS WELL AS THE ACTUAL PRODUCTION QUANTITY WHICH WAS VERIFIED UNDER PROPER PANCHNAMG, ETC. CONCLUSIV ELY ESTABLISHES LARGE SCALE SUPPRESSION OF PRODUCTION AND CLANDESTINE REMOVAL OF FRIT BY M/S. GROWMORE. ALTHOUGH, THE ANALYSIS CONDUCTED FROM THESE DIFFERENT ANGLES ALSO CORROBORATED TO EA CH OTHER, IT APPEARS THAT THE CONSUMPTION OF NATURAL GAS IS THE BEST PARAMETER FOR QUANTIFYING T HE ACTUAL PRODUCTION CARRIED OUT BY M/S. GROWMORE, AS THE ENTIRE QUANTITY OF GAS PROCURED BY THEM WERE THROUGH ONGC AND WHICH ARE TOTALLY ACCOUNTED FOR IN THEIR BFFICIAL RECORDS. 12.1.6. INVESTIGATION CONDUCTED ON THE BASIS OF T HE CONSUMPTION OF NATURAL GAS AS WELL AS THE ACTUAL PRODUCTION CAPACITY OF M/S. GROWMORE, AS DIS CUSSED ABOVE INCONTROVERLIB/Y ESTABLISH THAT M/S. GROWMORE HAD MANUFACTURED FRIT FAR IN'EXCESS-O F THE QUANTITY RECORDED BY THEM IN THEIR STATUTORY RECORDS ON WHICH EXCISE DUTY WAS PAID BY THEM. THE MONTHLY ANALYSIS OF GAS CONSUMPTION BY M/S. GROWMORE, AS DISCUSSED ABOVE IS FULLY CORROBORATIVE TO THE ABOVE FACT. THE CONSUMPTION OF NATURAL GAS WAS FOUND IN EXCESS OF T HEIR NORMAL REQUIREMENTS DURING EACH MONTH, IF THE QUANTITY OF FRIT MANUFACTURED SHOWN IN OFFIC IAL RECORDS ALONE IS CONSIDERED. 12.1.7. CONSEQUENT UPON THE INVESTIGATIONS INITIATE D BY.DGCEI AGAINST MOST OF THE TILE MANUFACTURERS AS WELL AS FRIT MANUFACTURERS, THESE FRIT MANUFACTURERS HAVE STARTED SHOWING HIGHER ASSESSABLE VALUE OF THEIR FRIT IN THE INVOIC ES LAND HIGHER PRODUCTION OF FRIT IN THEIR STATUTOR Y RECORDS AS COMPARED TO! THE ASSESSABLE VALUE AND PR ODUCTION BEING SHOWN BY THEM PRIOR TO THE INVESTIGATION BY DGCEI. ANALYSIS OF THE MONTHLY PRO DUCTION QUANTITY DECLARED BY M/S. GROWMORE IN THEIR OFFICIAL RECORDS VIS-A-VIS THEIR CONSUMPTI ON OF NATURAL! GAS DURING THE PERIOD FROM ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 26 JANUARY'2005 TO OCTOBER, 2009, CONCLUSIVELY ESTABLI SHES SUPPRESSION OF PRODUCTION AND CLANDESTINE REMOVAL DURING THE PRECEDING PERIOD. TH US, INVESTIGATION REGARDING CLANDESTINE REMOVAL CONDUCTED BY DGCEI IS FULLY SUBSTANTIATED F ROM THE DOCUMENTARY EVIDENCES RECOVERED FROM THE VARIOUS PREMISES AS WELL AS THE ORAL EVIDE NCES RECORDED FROM VARIOUS WITNESSES.....' { 8.0 ON GOING THROUGH ABOVE FINDINGS OF THE EXCISE D EPARTMENT IT IS CLEARKHAT THE RATE TAKEN FOR VALUATION OF FRIT BY THE EXCISE DEPARTMENT IS NOT B ASED ON MERE ASSUMPTION, AS CLAIMED BY THE ASSESSEE IN HIS REPLY. THE EKCISE DEPARTMENT H;IS A RRIVED AT THE PRICE BY VIRTUE OF A DEEP INVESTIGATION AND THE FACTS ACCEPTED BY THE DIRECTO R OF THE ASSESSEE AND VARIOUS BUYERS OF THE ASSESSEE. FURTHER IT IS ALSO REVEALED THAT AFTER TH E SEARCH PROCEEDINGS THE ASSESSEE, SUDDENLY STARTED SHOWING SALE VALUE OF FRIT ON INVOICES UPTO RS.23.30/- PER KGS. WHICH WAS PREVIOUSLY SHOWN AL RS.7/- TO 15/-PER KGS. THE VALUE OF THE FRIT AS TAKEN BY THE F.XCISO DEPARTMENT, FOR WORKING UNDERVALUATION, IS VERY NEAR OR LESS TO THE VALUE A S SHOWN IN THE INVOICES BY THE ASSESSEE ITSELF AFTER THE INVESTIGATION. THE QUANTUM OF CLANDESTINE GOODS WORKED OUT BY THE : EXCISE DEPARTMENT IS ALSO BASED ON FACTS AND FINDINGS DURING THE INVE STIGATION, WHICH IS WELL ACCEPTED BY THE DIRECTOR AND PRODUCTION IN-CHARGE OF THE ASSESSEE COMPANY. T HE EXCISE DEPARTMENT, BEFORE ARRIVING AT THE QUANTUM OF CLANDESTINE GOODS, HAS GONE THROUGH THE CAPACITY OF PRODUCTION OF THE FIRM, CONSUMPTION OF RAW MATERIAL AS WELL AS NATURAL GAS AND ELECTRICITY. THE EXCISE DEPARTMENT HAS DONE A PHYSICAL VERIFICATION OF PRODUCTION VIZ-A-VI Z GAS CONSUMPTION ON 27 & 78.01.20.10. THE EXCISE DEPARTMENT ALSO FOUND PARALLEL INVOICES ISSU ED BY THE ASSESSEE TO TWO BUYERS FOR TWO DIFFERENT QUANTITY OF PRODUCT. \ 9.0 THE ABOVE FIND INGS OF UNDERVALUATION AND CLANDESTINE REMOVAL OF GOODS HAS BEEN ACCEPTED IN THE STATEMENT S GIVEN BEFORE THE EXCISE DEPARTMENT ON OATH, OF THE DIRECTOR, PRODUCTION IN CHARGE AND VAR IOUS BUYERS OF THE FIRM. THE RELEVANT PORTIONS OF THE STATEMENTS ARE REPRODUCED AS UNDER: I '13.5STAT EMENT DATED 30-0.1-2010 OF SHRI HARSHADBHAI CHIMANBHAI PATEL, DIRECTOR OF M/S. GROWMORE :- Q. 6; HOW MUCH IS THE CONSUMPTION OF NATURA L GAS PER UNIT PRODUCTION OF GLAZE FRIT? A.6: SIR, AS STATED IN MY EARLIER STATEMENT DTD. 24 -12-2009, TO MANUFACTURE ONE MT OF GLAZE FRIT, AVERAGE 500 CU MTR GAS IS CONSUMED. SO, ON CONSUMPT ION OF 500 CU. MTR. GAS, 1000 KGS GLAZE FRIT ISPRODUCED. Q.9: ON SCRUTINY OF THE INVOICES WITHDRAWN UNDER PA NCHNAMADTD. 29-08-2008 AND FURNISHED BY YOU ON 24-12-2009, IT IS FOUND THAT DURING THE YEAR 2008-09 AND 2009-10, IN THE INVOICES ISSUED BY YOU; YOU HAVE MENTIONED THE QUALITY OF FRIT WITH DI FFERENT PRODUCT CODES AS SUFFIX TO EITHER 'OPAQUE' OR 'TRANSPARENT' QUALITY PLEASE EXPLAIN TH E DETAILS OF THE DIFFERENT PRODUCT CODES ALLOTTED BY YOU DURING THE YEAR 2008-09 AND 2009-10 ? A.9: SIR, AS STATED IN MY EARLIER STATEMENT DTD. 24 -12-2009, DURING THE PERIOD FROM 2004-05 TO 2007-08, IN OUR FACTORY, WE. WERE MANUFACTURING ONL Y TWO DIFFERENT GRADES OF GLAZE FRIT I.E. ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 27 'OPAQUE' & -'TRANSPARENT' AND WE WERE CLEARING THE SAME MENTIONING OUR PRODUCT DESCRIPTION AS 'CERAMIC GLAZE MIXTURE' AND QUALITY AS EITHER 'OPAQ UE' OR '77?' IN ACCORDANCE WITH THE QUALITY CLEARED. SO, DURING THE ABOVE PERIOD, WE WERE NOT A LLOTTING ANY CODES AT THAT TIME AND RATES CHARGED WERE MUCH LOWER THAN THE ACTUAL SELLING PRI CE I.E..WE WERE CHARGING LESS SELLING PRICE IN THE INVOICES ISSUED FROM OUR FACTORY AND COLLECTING CASH AMOUNT OVER AND ABOVE THE INVOICE AMOUNT. THEREAFTER, IN THE MONTHS OFJANUARY'08 AND FEBRUARY'08, DGCCI INITIATED INVESTIGATIONS AGAINST THE CERAMIC TILE MANUFACTURERS, IN 2008-09, WE INTRODUCED DIFFERENT CODES LIKE 'R', 'STD', 'H', 'I' AND 'L' TO OUR PRODUCT AND ALSO INCREASED THE SELLING RATES. THEN IN 2009-10, WE AGAIN CHANGED THE CODES AND INTRODUCED NEW CODES LIKE 111 , 0022, 2118, 222, GFO, GFT, GFT-, ETC. THIS ACT WAS CARRIED BY US IN ORDER TO MISLEAD THE INVES TIGATING AGENCIES. ... Q.16: PLEASE PERUSE THE STATEMENTS DTD. 14 09-2009 AND 24-12-2009 OF SHRI B IMALCHANDRAKANTCHANDIBHAMAR, THE DIRECTOR OF M/S AKASH CERAMIC PVT. LTD., MQRBI AND EXPLAIN THE DETAILS MENTIONED THEREIN ? A. \16: AFTER PERUSAL OF THE ABOVE-MENTIONED STATEM ENTS DTD. .14-09-2009 AND 24-12-2009 OF SHRI BIMAL CHANDIAKANT CHONDIBHUMAR, THE DIRECTOR OF M/S AKASH CERAMIC PVT. LTD., MORBI, IN TOKEN OF MY AGREEMENT WITH IT, I PUT MY DATED SIGNATURE ON I T. FURTHER, I STATE THAT FROM OUR FACTORY, WE USE TO CLEAR 'OPAQUE' GRADE FRIT TO M/S AKASH CERAM ICS PVL. LTD. DURING THE FINANCIAL YEARS 2006- 07 AND 2007-08. I FURTHER CONFIRM THAT AS STATED BY . SHRI BIMALBHAI CHANDRAKANT CHANDIBHAMAR, THE DIRECTOR OF M/S AKASH CERAMICS PVT. LTD., WE US E TO UNDERVALUE THE FRIT CLEARED BY US, BY SHOWING LOWER PRICES IN THE INVOICES ISSUED BY OUR COMPANY AND THE REMAINING AMOUNT IN CASH WAS COLLECTED BY ME. THIS ACT WAS CARRIED OUT BY US AS PER THE UNDERSTANDING BETWEEN US. Q.I 8.: SHRI HARSHADBHAI PATE/, YOU ARE BEING SHOWN THE 'OR IGINAL FOR BUYER' COPY FURNISHED BY SHRI ASHOKBHAIJAYRAMBHAISOVIANI, PARTNER OF M/S UDAY IND USTRIES AND M/S UDAY GOLD CERAMICS, OF INVOICE NO. 132 DTD. 08 08-2007 ISSUED BY YOUR COMP ANY IN FAVOUR M/S UDAY INDUSTRIES FOR SUPPLY OF 200 BAGS I.E. 10000 KGS OF CERAMIC GLAZE MIXTURE CHEMICALS, DESCRIBING THE QUALITY AS '77?', AT THE RATE OFRS. 7/- PER KG., HAVING VALUE OFRS. 70,0 00/-, SHOWING CENTRAL EXCISE DUTY AS NIL IN VIEW OF BENEFIT OF 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/-. F URTHER, YOU ARE ALSO BEEN SHOWN THE OFFICIAL LEDGER OF M/S UDAY INDUSTRIES IN YOUR FAVOUR FOR TH E YEAR 2007-08, WHEREIN ON LEFT HAND SIDE, SHOWING THE DETAILS OF VALUE, DATE OF PURCHASE AND INVOICE/BILL NO. OF SUPPLIER I.E. M/S GROWMORE CERAMICS .P. LTD. AND ON RIGHT-HAND-SIDE, SHOWING T HE PAYMENTS, THE DATE OF PAYMENT MADE. CHEQUE NOS.& DATE, FOR THE PURCHASES MADE BY YOU. A LONGWITH THIS, YOU ARE SHOWING THE INVOICE NO. .1.32 DTD. 10 08-2007 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. S4,000/, AND 4000 KG S CERAMIC GLAZE MIXTURE CHEMICALS '77?' GRADE, @> RS. IF PER KGS., HAVING ASSESSABLE VALUE OF\ RS. 28,000/-, TOTAL VALUE AS RS. 82,000/- AND ITA NOS. 2204 & 2205/AHD/2017 . A.YS. 2009-1 0 & 2010- 11 28 SHOWING CENTRAL EXCISE DUTY AS NIL CLAIMING THE BEN EFIT OF NOTIFN. NO. 8/2003-S.T. (LTD. 01-03- 2003. A/ONGWITH VAT @ 4 % AMOUNTING TO RS. 3.280/, TOTAL AMOUNT OF RS. 85.280/-. COPIES OF BOTH THE INVOICES ARE SCANNED HEREIN-BELOW. PLEASE EXPLAIN THE SAME IN DETAIL? \ A. 18: SIR. AFTER CAREFULLY GOING THROUGH THE ABOVE TWO DOCUMENTS, I PUTL MY DATED SIGNATURE ON EACH OF IT. I STATE THAT VIDE THE 'TRIPLICATE COPY OF ASSESSEE' COPY OF INVOICE NO. 132 DTD. 10-08-2007 OF M/S CROWMORE CERAMICS PVT. LTD., ISSUED IN THE NAME OF M/S SERON CERAMICS PVT. LTD. FOR 6000 KGS OF CERAMIC GLAZE MIXTURE CHEMICALS 'OPAQUE' GRADE @ RS .
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