TaxTMI 
TaxTMI 
2018 (11) TMI 1033
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....er Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985. Their factory was visited by the Central Excise officers on 16.10.2007, which was put to search. The officers also searched the business premises of the related buyers, transporters and the residence of the Directors of the manufacturing unit. 2.2. During the course of checking of the appellant‟s factory in the presence of their Director Shri Tarun Aggarwal and Supervisor & Authorized Signatory Shri Vinod Kumar Mishra and in the presence of two independent witnesses, physical stocks of the Cenvatable inputs as also the final product were verified. Such verification resulted in shortages of the raw material as also the final product. The appellant‟s representatives admitted such shortages detected by the officers and promised to deposit the duty there on. 2.3. During the course of further checking, the officers recovered certain records and by entertaining a bona fide belief that the same contained entries relating to clandestine activities of the appellant, the records were put under seizure vide Panchnama dated 16.10.2007. 2.4. The appellant‟s were issuing their invoices by generating ....
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....rded on various dates during the course of investigation the appellant‟s authorised representatives as also Shri Tarun Aggarwal, Director admitted the fact that the computer software installed in their factory computer was customized and was capable of generating the invoices over and over again. It was admitted by them that the said software was so designed that the same was capable of regeneration of invoices subsequent to deletion of original one and that was the reason for some missing number of invoices in the said computer. Shri Tarun Aggarwal, Director also explained that the data relates to clandestine removal of the goods by the company and he agreed with the statement of Shri Vinod Kumar Mishra. On comparing all the computer printout data with the invoices recovered vide file No.24, it was found that the invoices showing the removal of the goods initially were subsequently deleted from the said computer and invoice of the same number was again regenerated. For further strengthening their case Revenue recorded the statement of Transporters, whose premises was also put to search and their incriminating records were recovered on 15.10.2007 itself. The authorized repres....
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.... view that the appellant was clearing their goods in a clandestine manner by adopting the modus operandi by preparing a parallel copy of computer generated invoice bearing same serial number. Accordingly, it was viewed that after the delivery of the goods the invoices were being destroyed by appellant and related data was deleted from the computer system. The fact of deletion of invoices from the computer system was evidenced from the data retrieved from the computer. 2.10. On the above basis proceedings were initiated against the appellants by way of issuance of said show cause notice dated 03.06.2010 proposing confirmation of demand of duty and imposition of penalties resulting in passing of present impugned order by the Commissioner. 3. Heard the learned counsel for the appellant, who has submitted the following grounds:- Grounds for charge of clandestine removal and demand of duty against M/s Kuwer Industries Ltd. (KIL), as recorded in the Order-in-Original are:- (i) Printouts of data retrieved from the CPU, resumed on 16.10.2007 from the factory premises of KIL, reveals the details of actual quantum of clearance of finished goods, as CPU allegedly contained a softw....
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....referred to under sub-section (4) of Section 36B by a person occupying responsible official position, was never produced and hence condition of sub-section (4) are not satisfied Section 36B is identical to Section 65B of Evidence Act, 1872, which was considered by Apex Court in the case of Anvar P.V vs. P.K Basheer (2014) 10 SCC 473 and it was held that:- "15. Under Section 65-B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied: (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65-B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 16. It is furthe....
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....vidence Act, there was no requirement to even go into the issue of Section65B of the Evidence Act. This is the settled position in law. Recently the Supreme Court, in Shafhi Mohammad v. State of Himachal Pradesh, [SLP(Crl.) No. 2302/2017 dated 30th January, 2018], has held that the requirement of Section65B of the Evidence Act is not always mandatory and that requirement of the said certificate, which is a procedural requirement, can be relaxed by Courts in the interest of justice. The Supreme Court observed as under: "11. The applicability of procedural requirement under Section65B(4) of the Evidence Act of furnishing certificate is to be applied only when such electronics evidence is produced by a person who is in a position to produce such certificate being in control of the said device and not of the opposite party. In a case where electronic evidence is produced by a party who is not in possession of a device, applicability of Sections 63 and 65 of the Evidence Act cannot be held to be excluded. In such case, procedure under the said Sections can certainly be invoked. If this is not so permitted, it will be denial of justice to the person who is in possession of authe....
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....'Court' has been defined under Section 3 of Evidence Act to include all persons, legally authorized to take evidence. Section 14 of Central Excise Act confers power upon Central Excise Officer (definition of which includes Ld. Commissioner) to take evidence, hence Section 45A of Evidence Act is applicable in respect of proceedings before Ld. Commissioner. In the present case, no such expert opinion was taken and Ld. adjudicating authority erroneously reached to the conclusion of software permitting regeneration of invoices. At any rate, Order-in-Original records taking help of Shri Virendra Sharma, Tax Assistant, Central Excise, Noida, who has not been shown to an expert in computer systems and therefore the conclusion reached by learned Adjudicating Authority regarding software used in CPU is without any basis and completely erroneous. C. STATEMENT DATED 16.10.2007 & 10.12.2007 OF SHRI VINOD KUMAR MISHRA, NOT ADMISSIBLE AS EVIDENCE- Impugned Order-in-Original extensively relies upon statements dated 16.10.2007 & 10.12.2007 tendered by Shri Vinod Kumar Mishra, who was never produced for cross-examination. Once Revenue failed to provide opportunity of cross-examinatio....
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....bove, if revenue chose to reply upon statements of these persons, it was for the revenue to produce these persons for cross-examination and since the same has not been done, statements of these persons cannot be read as evidence against Appellant. At any rate, statements of these persons are to the effect that Shri Vinod Kumar Mishra used to provide them documents relating to goods and purchee for freight. Hence, it was necessary to ascertain this fact from Shri Vinod Kumar Mishra, who, inspite of specific request made by Appellant, was never produced for cross-examination. Further, it is highly impractical to presume that a truck driver, will remember even after a period of more than a year, the number of invoice, in respect of goods transported by him. Thus, the statements of truck drivers appear to be tutored and hence it was necessary for the revenue to produce them for cross-examination, which has not been done, hence statements given by them, cannot be read as evidence against Appellant. E. STATEMENTOFSHRI SATISH KUMAR NOT RELEVANT - In view of the law referred to above, if revenue chose to reply upon statements of Shri Satish Kumar, it was for the revenue to prod....
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.... cases of K.L. Steels Ltd vs. CCE, Meerut 1998 (100) E.L.T. 406 (Tribunal), Sisco Industries Ltd vs. CCE, Allahabad 2013 (297) E.L.T. 457 (Tri. - Del) and Roll Tubes Ltd vs. CCE, Kanpur 2013 (294) E.L.T. 458 (Tri. - Del). Further, mere deposit of Rs. 4,99,024/- by Appellant, cannot lead to inference of admission by Appellant, in absence of any evidence on record to show that weighment of stock was done on the date of search. H. ALLEGED ADMISSION OF SHRI TARUN AGGARWAL, DIRECTOR- It is submitted that at no point of time, Shri Tarun Aggarwal, admitted regarding parallel invoices or regeneration of invoices or any clandestine removal and therefore finding to the contrary in the Order-in-Original is incorrect. In his statement dated 16.10.2007 i.e. on the date of search, he could not explain the alleged shortage, as the shortage was alleged on eye estimation basis without any weighment. Similarly, in his statement dated 6.2.2008, he stated that Shri Vinod Kumar Mishra was working for KIL from the last 3 to 4 months only and therefore the findings recorded in Order-in-Original on the strength of statement of Shri Vinod Kumar Mishra for the period 2006-07 is without any basis....
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....the said data during statement dated 06.02.2008 without offering any comments. Neither the director nor the authorized signatory disowned the contents of retrieved data. The signing of the data by Director of the appellants without any comments implies certification under sub Section (4) of Section 36B. (b) Lack of expert opinion regarding capability of CPU to generate same number of invoice repeatedly. The regeneration of invoices by computer is specifically admitted by Shri Vinod Kumar Mishra, Authorized Signatory and Shri Tarun Aggarwal, Director in their statements. The file resumed at sl.no.24 of Annexure C to the Panchnama dated 16.10.2007 contained invoices which had been regenerated after dispatch of the goods to various parties, subsequent to the receipt back of the original invoices. Invoices bearing serial Nos.455, 456 and 457 were also found in the file. Hence, lack of expert opinion regarding regenerating capacity of the computer to generate same number of invoice repeatedly does not affect the findings of Order-in-Original/investigation. (c) Regarding cross-examination of officers. The request for cross-examination of Shri Vinod Kumar Mishra, Authori....
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....ence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects: (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions." 6. We further note that Section 45A of Evidence Act, 1872 requires opinion of examiner of electronic evidence in respect of any matter relating to any information stored in any computer resource. On the back ground of above stated provisions of law and rulings by Hon‟ble High Court and Supreme Court we find that Shri Vinod Kumar Mishra and the other transporters were not produced for cross examination by the appellant and that it was responsibility of Revenue to produce them for cross examination since same were prosecution witnesses. As ruled by Hon‟ble Allahabad High Court it can be inferred that unless the....