2022 (9) TMI 1210 - AT - Central Excise

Tribunal overturns demand & penalty on company & individuals due to procedural errors

The Tribunal set aside the Commissioner's order imposing a demand and penalty on M/s U.P. Bone Mills (P) Ltd., Shri Ajay Agarwal, and Shri Javed Rana. The ... Clandestine removal - MS Ingots - shortage of 623.275 M.T. of Ingots - statements were made voluntary or it was made under threat - reliability of panchnamas - pen drive is admissible evidence or not - mandatory procedure prescribed under section 36B, followed or not - HELD THAT:- When the statutory procedure was not followed, the pen drive is not admissible in evidence. Reliability of panchnamas - Stand taken is that Panch witnesses were not residents of the area and, therefore, the Panchnama itself was not proper - HELD THAT:- On a specific enquiry from the bench as to whether this issue was raised before the Original Authority in the reply to the show cause notice or during personal hearing, learned Counsel for the appellant showed us the reply dated 15.05.2018 to the show cause notice filed by the appellants before the Commissioner. The reply shows that the question of the address of the Panch witnesses was not raised before the Original Authority. Further, the Panch witnesses could have recorded their permanent addresses in the Panchnama and unless it was alleged that they were not residents of the area, and an opportunity was given to the department, the appellant cannot be permitted to raise this issue at this stage. Demand of Rs. 18,72,41,951/- made on the basis of the documents which were resumed as well as some demands raised on the basis of evidence in the Pen drive - HELD THAT:- Since the amount covered in the Pen drive was larger, they have been reckoned to subsume the demands raised on the basis of other documents which were resumed. Since it is found that as the mandatory requirement under Section 36B of the Central Excise Act was not followed in this case, the Pen drive cannot be taken as evidence, the Original Authority should be given an opportunity to examine the demands in respect of the other documents resumed de-hors the data derived from the Pen drive and determine, whether any duty liability can be sustained. The Adjudicating Authority should consider the documents, which were resumed and examine whether the said proposed demand can be confirmed on their basis - matter remanded to the Adjudicating Authority to decide the matter afresh ignoring the evidence in the Pen drive. Appeal allowed by way of remand. Issues:1. Imposition of penalty on the appellant by the Commissioner, Central Goods and Service Tax, Dehradun.2. Appeal against penalty imposed on Shri Ajay Agarwal.3. Appeal against penalty imposed on Shri Javed Rana.4. Admissibility of evidence from a Pen drive.5. Validity of Panchnama and addresses of Panch witnesses.6. Confirmation of demand based on documents and Pen drive data.7. Decision to set aside the impugned order and remand the matter.Analysis:1. The appellant, M/s U.P. Bone Mills (P) Ltd., challenged an order imposing a demand of Rs. 18,72,41,951/- and an equal penalty by the Commissioner. The appeal was filed against this decision.2. Shri Ajay Agarwal filed an appeal against the penalty of Rs. 1,00,00,000/- imposed on him as part of the same order.3. Shri Javed Rana, Ex-Director, also appealed against the penalty of Rs. 1,00,00,000/- imposed on him in connection with the same order.4. The main issue raised was the admissibility of evidence from a Pen drive. The appellant argued that the procedure under Section 36B of the Central Excise Act was not followed, making the Pen drive inadmissible as evidence.5. Another objection raised was regarding the validity of the Panchnama and the addresses of the Panch witnesses. The appellant contended that the Panch witnesses' addresses did not match the location where the Panchnama was drawn, questioning the validity of the Panchnama.6. The impugned order confirmed a demand of Rs. 18,72,41,951/- based on documents and data from the Pen drive. However, since the statutory procedure for the Pen drive was not followed, the Pen drive's data was deemed inadmissible. The Adjudicating Authority was directed to re-examine the demands based on the documents resumed.7. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for a fresh decision, excluding the evidence from the Pen drive for demands proposed based on other documents. The appeals were allowed by way of remand, and the miscellaneous applications were also disposed of.This detailed analysis covers the issues raised in the legal judgment and the Tribunal's decision on each matter, ensuring a comprehensive understanding of the case.