2022 (12) TMI 908 - HC - Central Excise

Compliance with Electronic Evidence Rules Key in Tax Appeal Decision

The Court upheld the Tribunal's decision in favor of the Respondent-Assessee, dismissing the appeals brought by the Appellant-Department. It emphasized ... Clandestine removal - corroborative evidences - admissibility of evidences - Investigating Officers have never taken the print out of Sundarlal ledger account from the computer, rather seized the said document from the residential premises of the Accountant of the Respondent - whether the said document cannot be used as evidence for not satisfying the conditions laid down in Section 36-B (2) of the Central Excise Act, 1944 - HELD THAT:- The title of Section 36-B of the CE Act itself refers to admissibility of ‘computer print outs as documents and as evidence’. It is mandatory in terms of Section 36-B (1), for a computer print-out to be admissible without further proof of production of the original, to satisfy the conditions set out in Section 36-B(2) read with Section 36-B (4) of the CE Act. The said conditions are more or less similar to the conditions stipulated in Section 65-B (4) of the EA. Since it is the Department which is seeking to place reliance on the seized computer print-out, the burden is on the Department to ensure that the requirements of the law as regards its admissibility are fulfilled. Even if the Department did not seize the computer from where the print-out was taken, it would still not relieve the Department, if it seeks to rely on such computer print-out, from the burden of ensuring that the mandatory requirement of Section 36-B(2) read with Section 36-B(4) of the CE Act is fulfilled. If the Department is for any reason not in a position to furnish the certificate as envisaged under Section 36-B(4) of the CE Act, then the person who in charge of the computer and aware of its working would have to give such certificate. The long and short of this discussion is that without a certificate as mandated under Section 36-B (4) of the CE Act, accompanying the computer print-out, it cannot be relied upon by the Department in the adjudication proceedings. Decided in favour of the Respondent-Assessee and against the Appellant-Department - appeal dismissed. Issues Involved:1. Admissibility of computer print-outs as evidence under Section 36-B(2) of the Central Excise Act, 1944.2. Application of the Supreme Court's observations in Anvar P.V. v. P.K. Basheer to the present case.3. Deletion of penalties imposed under Rule 26 of the Central Excise Rules, 2002.Issue-wise Detailed Analysis:1. Admissibility of Computer Print-outs as Evidence:The primary issue revolved around whether the computer print-out of the 'Sunderlal' ledger account, seized from the residential premises of the accountant of the Respondent, could be used as evidence. The Department argued that the Tribunal erred in observing that the document was inadmissible for not satisfying the conditions laid down in Section 36-B(2) of the Central Excise Act, 1944 (CE Act).The Court noted that the document in question is electronic evidence, and its admissibility is governed by Section 65-B of the Indian Evidence Act, 1872 (EA). The Court explained that for such electronic evidence to be admissible, the requirements of Section 36-B of the CE Act must be satisfied, which are similar to those in Section 65-B(4) of the EA. The Supreme Court in Anvar P.V. v. P.K. Basheer emphasized that a certificate must accompany the electronic record, detailing its production and the particulars of the device involved.The Court further referenced the Supreme Court's decision in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal, which reiterated the mandatory nature of Section 65-B(4) and clarified that the certificate must be furnished to ensure the source and authenticity of the electronic record.In the present case, the Department did not produce the requisite certificate under Section 36-B(2) read with Section 36-B(4) of the CE Act. Consequently, the CESTAT concluded that the computer print-outs were inadmissible in evidence. The Court concurred with this view, emphasizing that the burden of ensuring compliance with the law's requirements lies with the Department, even if the computer itself was not seized.2. Application of Supreme Court's Observations in Anvar P.V. v. P.K. Basheer:The Department contended that the Tribunal incorrectly applied the observations of the Supreme Court in Anvar P.V. v. P.K. Basheer without considering the specific facts of the case. The Court, however, found that the Tribunal correctly applied the legal principles established in Anvar P.V. v. P.K. Basheer, which mandated the production of a certificate for the admissibility of electronic evidence.The Court reiterated that the conditions specified in Section 65-B(4) of the EA (and by extension, Section 36-B(4) of the CE Act) are mandatory and must be fulfilled for electronic evidence to be admissible. The Tribunal's reliance on these principles was, therefore, appropriate and justified.3. Deletion of Penalties Imposed Under Rule 26 of the Central Excise Rules, 2002:The appeals also questioned the Tribunal's decision to delete the penalties imposed on the Respondent under Rule 26 of the Central Excise Rules, 2002. The Department argued that the Tribunal did not consider the relevant facts and materials on record while deleting the penalties.The Court noted that the Tribunal's decision was based on the inadmissibility of the computer print-outs as evidence. Since the primary evidence relied upon by the Department was deemed inadmissible, the penalties imposed based on that evidence could not be sustained. The Tribunal's decision to delete the penalties was, therefore, consistent with its findings on the admissibility of evidence.Conclusion:The Court answered all the questions of law framed in the affirmative, in favor of the Respondent-Assessee and against the Appellant-Department. The appeals were dismissed, with no order as to costs. The Court upheld the Tribunal's decision, emphasizing the mandatory nature of compliance with the requirements for the admissibility of electronic evidence under Section 36-B of the CE Act and Section 65-B of the EA.