2023 (12) TMI 299 - AT - Central Excise

Company wins appeal as duty demands for alleged clandestine removal of M.S. Rods set aside due to procedural violations

M/s Prinik Steels (P) Ltd., Sri Ghanshyam Das Agarwal, Shri Mukesh Agarwal, Sri Rajeev Agarwal Versus Commissioner of Central Excise, Customs & S. Tax, Bhubaneswar-I.

M/s Prinik Steels (P) Ltd., Sri Ghanshyam Das Agarwal, Shri Mukesh Agarwal, Sri Rajeev Agarwal Versus Commissioner of Central Excise, Customs & S. Tax, ... Issues Involved:1. Admissibility of Computer Printouts as Evidence2. Compliance with Section 36B of the Central Excise Act3. Compliance with Section 9D of the Central Excise Act4. Corroborative Evidence for Clandestine Clearance5. Evidence of Procurement of Raw Materials6. Imposition of PenaltiesSummary:1. Admissibility of Computer Printouts as Evidence:The case involved the admissibility of computer printouts as evidence. The Appellants contended that the computer printouts were not admissible under Section 36B of the Central Excise Act, as the necessary conditions were not satisfied. The Tribunal agreed, noting that the printouts were not certified by a responsible person as required by Section 36B, and thus could not be relied upon to demand duty.2. Compliance with Section 36B of the Central Excise Act:The Tribunal observed that the computer printouts were taken in the presence of a telephone operator, not a responsible official. The Tribunal held that the requirements of Section 36B were not met, making the computer printouts inadmissible as evidence.3. Compliance with Section 9D of the Central Excise Act:The Appellants argued that statements recorded during the investigation were not examined in chief or allowed cross-examination as per Section 9D. The Tribunal agreed, citing that the provisions of Section 9D were not followed, thus the statements could not be relied upon to confirm the demands.4. Corroborative Evidence for Clandestine Clearance:The Tribunal noted that the demand was based solely on private records without corroborative evidence. There was no evidence of manufacture or removal of finished goods, no examination of production contractors, and no verification of buyers mentioned in the invoices. The Tribunal held that without corroborative evidence, the allegations of clandestine clearance were not substantiated.5. Evidence of Procurement of Raw Materials:The Tribunal found no evidence of procurement of major raw materials without invoices. The investigation failed to examine raw material suppliers, transporters, production staff, or dispatch staff. The absence of such evidence made the demands unsustainable.6. Imposition of Penalties:Penalties were imposed on the Appellant company's Managing Director, Shareholder & Constituent Attorney, and Chief Accounts Officer for abetment of the offense. However, the Tribunal found no evidence to establish their involvement in clandestine activities. Consequently, the penalties were set aside.Conclusion:The Tribunal set aside the impugned order and allowed the appeal, concluding that the demands of duty, interest, and penalties were not sustainable due to the lack of admissible evidence and corroborative proof.