https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769041 https://www.taxtmi.com/caselaws?id=769041 Clandestine manufacture and removal - data contained in the CDs/Pen drive and Computer print out/CD print out/pen drive printout in the instant case do not satisfy the mandatory conditions of Section 36B of CEA, 1944 - reliability of evidence - cross examination of the persons - corroborative evidences or not - penalty imposed on the Director of the company under Rule 26 of the Central Excise Rules, 2002 - HELD THAT:- The proceedings against the present Appellant No. 1, namely, M/s. Vasundhara Metaliks Pvt Ltd. has been initiated on the basis of the documents recovered from the premises of one M/s Vasundara Power and Infra Pvt. Ltd. (VPIPL) and some loose sheets/private records recovered from the factory premises of the Appellant. It is observed that from the said office premises of M/s Vasundhara Power & Infra Pvt. Ltd., the Officers of DGCEI seized 16 Nos of CDs and 2 Nos Pen Drives. Scrutiny of the data recovered from the CDs, pen drives and loose sheets/private records revealed that the Appellant has been clearing the goods clandestinely. Thus, it is observed that the prime evidence of the Revenue is the documents retrieved from CDs, Pen drives and some statements recorded from various persons associated with the manufacturing and clearing, during the course of investigation. It is observed that the Appellants have raised the point about the reliability of the data recovered from the CDs/Pen drives recovered from the premises of VPIPL. A pen drive is a floating device and has no evidentiary value on its own and can be admitted as evidence only when it strictly fulfils the conditions specified in Section 36B of the Central Excise Act. Refence made to the decision of the Hon'ble Apex Court in the case of Tukaram S. Dighole vs. Manikrao Shivaji Kokate [2010 (2) TMI 1130 - SUPREME COURT] wherein it has been held that electronic devices such as Pen Drive with fast development in the electronic techniques, are more susceptible to tampering and alterations by transposition, excision, etc which may be difficult to detect and therefore such evidence has to be received with caution. In the present case, it is observed that the officers had not obtained any certificate as required under Section 36B(4) of the said Act. It is also noted that none of the conditions stipulated under Section 36B(2) of the Act, 1944 have been followed. In such situation, it is difficult to accept the printouts retrieved from the sixteen CDs and two pen drives as evidence to support the clandestine removal of the goods. It is pertinent to note that the requirement of certificate under Section 36B(4) is also to substantiate the veracity of truth in the operation of electronic media - the data recovered from the sixteen CDs and two pen drives cannot be relied upon in the proceedings in the absence of Certificate as mandated under Section 36(4) of the Central excise Act, 1944. In the present case, therefore, the only other evidence is the data retrieved from the sixteen CDs and two pen drives, which is also not as per the procedure prescribed under Section 36B of the Act. The entire case has been built with no corroborative evidence brought in whatsoever, there are no hesitation to apply the ratio of the case laws cited supra in respect of reliability of data recovered from Compact Disks / Pen drives, non-allowing of cross-examination of the persons recording the statements, non-production of corroborative evidence, and consequently, set aside the impugned order on these counts in respect of the confirmed demands. Penalty imposed on Shri Kamalpat Dalmia, Director of the Appellant-company / Appellant No. 2 - HELD THAT:- The Department has not brought in any evidence against him warranting imposition of penalty under Rule 26 of the Central Excise Rules, 2002. Accordingly, the penalty imposed on him set aside. Conclusion - i) Without a certificate as mandated under Section 36-B (4) of the Central Excise Act, the computer print-out, Compact Discs, and pen drives cannot be relied upon by the Department in the adjudication proceedings. ii) The denial of cross-examination of persons whose statements are sought to be relied upon under Section 9D of the Central Excise Rules results in such statements losing their evidentiary value and renders them irrelevant for adjudication. iii) In the absence of compliance with mandatory provisions of Sections 36B and 9D, and without any corroborative evidence, the confirmed demands of duty, interest, and penalties cannot be sustained. iv) Penalty imposed on a Director under Rule 26 of the Central Excise Rules without evidence implicating him is unsustainable and liable to be set aside. The impugned order is set aside - appeal allowed. Case-Laws Central Excise Wed, 16 Apr 2025 00:00:00 +0530