TaxTMI 
TaxTMI 
2016 (5) TMI 656
X X X X Extracts X X X X
X X X X Extracts X X X X
....est + Equivalent penalty 3. Shri Ajay Bansal, Director of Appellant No.2. E-224/2009 -do- Rs.25.00 lakh penalty 4. Shri Ajay Bansal, Partner of Appellant No.1 E-478/2009 CCE/BBSR-II/No.27/COMMISSIONER/2009 dated 29.05.2009 Rs.50.00 Lakh penalty 5. Shri Rajendra Agarwal, Partner of Appellant No.1 E-477/2009 -do- Rs.25.00 Lakh penalty 2. Brief facts of the case are appellant M/s.Bajrang Steel & Alloys (P) Ltd. (Appellant No.2) is the manufacturer of M.S.Ingots falling under Central Excise Tariff Heading (CETH) 7206.90 of the Central Excise Tariff Act, 1985 (CETA, 1985). Appellant M/s. Shivam Steel Corporation (Appellant No.1) is the manufacturer of M.S. Bars, M.S. Flats, Pipes, Angles, Channels, Profiles etc. falling under Chapter 72 & 73 of the CETA, 85. Shri Ajay Bansal is the Director of Appellant No.2 and is also a partner of Appellant No.1. Appellant Shri Rajendra Agarwal is also a partner of Appellant No.1. On 11.08.2006 simultaneous searches were carried out by the officers of Directorate General of Central Excise Intelligence (DGCEI) in the premises of Appellant No.1, 2 and some residential premises. Another premises o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... documents recovered from his residential premises. At the same time Sh.Maity also stated that he does not know how the seized papers/documents came to his residence and also that these documents contain some rough projections of Appellant No.1 for bank loan purposes. After completing the investigations separate show cause notices were issued to the appellants and decided under separate Order-in-Original as tabulated in para 1 above. 2.1 After making the Bench go through the findings of the Adjudicating authority learned Advocate made the following submissions/arguments during the course of the proceedings as well as through written submissions filed on behalf of the appellants:- (i) That it is wholly incorrect to hold that Shri Sunderlal, mentioned in the documents recovered from the residential premises of Sanatan Maity, was the pseudo name of appellant No.2. That documents recovered no where says that the same were the sale proceeds of re-rolled products manufactured by appellant No.1 and that the same were manufactured out of ingots procured from appellant No.2. That nowhere in the statements of Shri Sanatan Maity is stated that these records were prepared at the in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ral Excise Act, 1944. That the procedures under Section 36B of the Central Excise Act, 1944 were not followed and also the documents were not recovered from the premises belonging to the appellants. (vi) That certain entries made in the Sunderlal ledger tallying with the cheque receipts of appellant No.2 will only raise a strong suspicion regarding the clandestine activities of the appellants, but it cannot be said that all these entries were ingots received from appellant No.2. That it is a well settled legal proposition that a strong suspicion/grave doubt can not take the place of a legal proof. Learned Advocate relied upon the following case laws in support of his arguments:- (a) Anjlus Dungdung vs. State of Jharkhand - [2005 (9) SCC 765] (b) Sakeen Alloys Pvt.Ltd. v. CCE, Ahmedabad - [2013 (296) ELT 392(Tri-Ahmd.) [upheld by High Court (2014 (308) ELT 655 (Guj.)] (c) UOI v. MSS Foods Products Ltd. [2011 (264) ELT 165(MP)] (d) Mahesh Silk Mills vs. CCE, Mumbai [2014 (304) ELT 703(Tri.Ahmd.) [ upheld by Gujarat High Court 2015(319)ELT A- 52(Guj.)] (vii) That entire statement of a relied upon document has to b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Chowdhury, Supdt.(AR) appearing on behalf of the Revenue made the following arguments in these appeals:- (i) That all the Cheque entries made in the name of Sunderlal in documents at page 215 & 229 of Appeal No.E/477/09 were received into a bank account of appellant No.2. That Shri Ajay Bansal (Partner of appelaltn No.1 and also the Director of Appellant No.1) in his statement dated 11.08.2006 admitted that though as per the documents the ingots have been purchased by one Sunderlal but actually the said goods have been purchased by M/s.Bajrang Steel & Alloys (P) Ltd. (Appellant No.2). Learned AR made the Bench go through the important extracts of this statement as reflected in Para 2.4 of show cause notice dated 26.11.2007. (ii) That as per the documents recovered from the residential premises of Shri Sanatan Maity the electricity consumption shown in each month tallies exactly with the electricity consumed by Appellant No.1. That investigation conducted revealed that for entries made against M/s.Bajrangbali Industries (P) Ltd. were actually confirmed to have been received by these recipients of goods from Appellant No.1. iii) That as per the docume....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... documents recovered from the residence of Shri Sanatan Maity, Accountant of Appellant No.1. The case of Revenue against Appellant No.2 is that the name Sunderlal, mentioned in the diary and computer printouts recovered from the residence of Shri Sanatan Maity, is a pseudo name of Appellant No.2 as admitted by Shri Ajay Bansal in his statement dt.11.08.2006 and 06.09.2007. However, on perusal of statement dt. 11.08.06 of Shri Ajay Bansal it is observed that he has never stated that Sunderlal is the pseudo name of Appellant No.2. It is also observed from answer to Question No.39 of this statement that questions were asked with respect to document No.2/DGCEI/RRU/SSC/FAC/2006 and not on the issue that the entire amounts against Sunderlal, shown in the records recovered from the residence of Shri Sanatan Maity, are received from Appellant No.2. Statement dt. 11.08.2006 is recorded in Hindi and the same pertains to one document but while doing its English translation the word has been translated as documents as per para 2.4 of the Show Cause Notice dt.30.01.2009. Statement dt. 11.08.2006 of Shri Sanatan Maity, Accountant of Appellant No.1 does not say that the name Sunderlal mentioned i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions Under Section 65B(2). Following are the specified conditions Under Section 65B(2) of the Evidence Act: (i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv)The information contained in the record should be a reproduction or derivation from the information fed int....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eliance placed on the computerized printouts, without following statutory procedures and conditions of Section 36B, are not acceptable as evidence. It is observed that none of the statements recorded by the investigation convey that the entries made in the documents recovered from the residence of Shri Sanatan Maity are actually manufactured and cleared clandestinely by either Appellant No.1 and Appellant No.2. The conclusions arrived at by the Adjudicating Authority are based on his own analysis. 7.2. In para 6.4. of the Order-in-Original dt. 29.05.2009, in the case of Appellant No.2, it is observed by the Adjudicating Authority that since an amount of Rs. 1,88,00,000/- was received by Appellant No.2 from Sunderlal, therefore, the remaining amount of Rs. 3,04,21,230/- appears to be attributable to the sale proceeds of M.S.Ingots clandestinely received by Appellant No.1. The findings of the Adjudicating Authority are thus clearly based on presumptions, assumptions and surmises when the computerized documents relied upon by the Revenue are not admissible evidences as recorded in para-7.1 above. Further, in the case of Oudh Sugar Mills Ltd. vs. Union of India [1978(2) E.L.T. (J ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parated from the chaff but in the instant case, except for the statement of Shri R.K.Gupta, there is no corroboration by the Revenue during the investigation. The part of the statement of Shri R.K.Gupta is in favour of the Revenue and part of it not. If the statement of Shri R.K.Gupta is to be believed then it has to be believed in entirety. The scrutiny of the statement of Shri R.K.Gupta reveals that he has stated that about 50% of the transactions were bogus and the transactions where Tempo Nos., were same as in the purchase invoices of the same date, the transactions were genuine and actual delivery of goods took place and further, the transactions were genuine where material supplied was less than 6 tons." 8.3. In the present proceedings there is no confessional statement recorded during investigation that Appellants have indulged in any clandestine manufacture and clearance of goods based on documents recovered from the residential premises of Shri Sanatan Maity. There is also no evidence on record as to from where the raw materials for manufacturing of M.S. Ingots and Re-rollable products manufactured by appellants were procured. Alternately there is also weight in the arg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oof of production of goods, their removal from the factory by any mode of transportation and clandestine clearance to the buyers. Mere doubts, howsoever strong cannot take the place of evidence required to be produced by the Revenue. The onus to establish such clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by production of sufficient evidences. Again, it is to be proved by the Revenue that the raw materials required for production of huge quantity of final product were obtained by the assessee in a manner which is not in its regular course of its business. It stands held by the Tribunal in the case of Mohan Steels Ltd. reported in 2004 (177) E.L.T. 668 (Tri.), that duty demand cannot be confirmed unless it is shown that the manufacturer had procured all the raw materials required to manufacture the goods. There is a long list of decisions and reference to refer to all of them may not be necessary as it is a settled law. Similarly, the Tribunal in various cases, as detailed below, has held that charges of clandestine removal cannot be leveled or confirmed on the basis of private records, th....