Page 241 - ELT_1_1st April 2020_Vol 372_Part

2020 ] SHRI KRISHNA INDUSTRIES v. COMMISSIONER OF C. EX. & S.T., VADODARA-II 127

The record and the statement of the representatives of these tile manufacturers
are also inconclusive and not admissible as evidence since none of these persons
was allowed to be cross-examined and these persons were also in the nature of
co-accused. The main plank of investigation was that the excess amount was
routed through shroffs, angadias and dealers of tile manufacturers. However, no
instance of any money having been received through these agencies have been
cited in the show cause notice. Admittedly no evidence of the appellant having
received the huge amount in unaccounted manner from more than 26 customers
to whom frit was sold from February 2005 to February 2010 was found. Even the
cross-examination of persons whose statements has been relied upon to allege
undervaluation was not provided. Not a single instance of cash receipt at appel-
lant’s end is on record. In such case when the allegation is based upon the state-
ments of buyers which is not supported by even a single evidence and in the
light of the fact that no cross-examination of such persons whose statements
were relied upon was allowed, we are of the view that the demand does not sus-
tain. The revenue has relied upon the sale price of appellant to other manufac-
turer namely M/s. Surani Ceramics and others to whom the appellant has sold
goods at higher rate. The appellant has contended that the prices were based up-
on the quality of frit and the frit supplied to M/s. Surani Ceramics and other
buyers who were manufacturing Tiles for M/s. H & R Johnson or other reputed
concerns was of high quality. We find substance in the contention of the appel-
lant as the price of the frit would depend on quality of frit. It is obvious that the
reputed manufacturer with International brand would have high quality raw
material to be used whereas the local manufacturer whose product commands
low prices would not use high quality and high rate raw material. The prices to
different buyers based upon quality of goods cannot be made basis to allege un-
dervaluation. Also the appellant has adequately justified the increase in prices in
subsequent years due to increase in prices of raw material and change in ma-
chinery. We find that no adverse reasoning has been given against such conten-
tion of appellant. Even otherwise the allegation of undervaluation of goods is
based merely upon statements and not any evidence. We are thus of the view
that the demands on account of undervaluation which is based merely upon the
statement of some buyers are not sustainable.
10. A demand of Rs. 2,95,33,205/- has been made against the appellant
on the basis of gas consumption. We find that except alleging excess consump-
tion of gas no evidence in the form of procurement or excess consumption of raw
materials has been brought on record. Frit is manufactured from eight raw mate-
rials and none of the said raw materials has been shown to have been procured
in illicit manner or consumed in excess. In such case the demands has no legs to
stand. Pertinently in identical case of M/s. R.A. Castings Pvt. Ltd., 2009 (237) E.L.T.
674 (Tri. - Del.), the Tribunal has set aside the demands based upon electric con-
sumption. The Hon’ble High Court of Allahabad as reported in 2012 (26) S.T.R.
262 (All.) upheld the said Tribunal order. In such view of facts, we are of the
view that the demands based upon consumption of natural gas is not sustainable
as the same is not supported by procurement of any raw material, its processing
or transportation and identification of any buyer.
11. A demands of Rs. 81,784/- has been made against the appellant on
the ground that they have cleared goods on parallel invoices. We find that in case
of one of the invoices though the alleged consignee M/s. Swagat Ceramics has
accepted the receipt of goods, no evidence of such removal has been found from
the Appellant’s end. Even the format of such alleged parallel invoice is different
EXCISE LAW TIMES  1st April 2020  289