TaxTMI 
TaxTMI 
2019 (8) TMI 1022
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....ilania Steels Private Limited, Maa Santoshi Industries, Bhagwati Power & Steel Limited, J S Forge Private Limited, Maheshwari Steels, Sandeep Agarwal, Bhagwan Das Agarwal, Shri Santosh Agarwal, M/s Jai Balaji Industrial Limited, Crest Steel & Power Private Limited, M/s Hariom Ingots & Power Private Limited (The main appellant) Versus Pr. Commissioner of Central Tax Per Bijay Kumar: 1. These appeals are filed by M/s. Hari Om Ingots and Powers Pvt. Ltd.(hereinafter referred to as 'the main appellant/company') and other appellants against Order-in-Original No. RPR/EXCUS/000/COM/087/2018 dated 10.12.2018 wherein the learned Commissioner has confirmed the demand of Rs. 13,62,40,831/- under Section 11A(4) of the Central Excise Act,1944(hereinafter referred to as 'the Act') alongwith Interest under Section 11AA of the Act. Further a demand of Rs. 3,57,289/- has also been confirmed against the main appellant in respect of shortage of goods detected at the time of verification of the stocks. Penalty of equivalent amount is also imposed the appellant under Section 11AC(1) (c) of the Act. Separate penalties of Rs. 10,00000/- each have been imposed against Shri Sandeep Agarwal,Shri Santo....
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....ious statements, from Director of the main appellant, their Accountant, seller of the Raw Material, purchaser of the furnished goods, were also recorded by the department. On the basis of the loose documents recovered from the aforesaid Car and on the basis of the Computer Data, the department concluded that the appellant has cleared the goods valued at Rs. 70,52,63,430/- during the stipulated period 2011-12 clandestinely, and thus evaded Central Excise duty to the tune of Rs. 7,26,42,133/-. Similarly, it was concluded by the department that the appellant has cleared goods valued at Rs. 51,45,52,577/- without payment of Central Excise duty during the disputed period (2012-13) and evaded the Central Excise duty to the tune of Rs. 6,35,98,698/-. Accordingly, a Show Cause Notice F. No. IV(6)INV/Hari Om/44/ 2012-13/P/4123 dated 06.05.2016 was issued to the main appellants for demand of Central Excise duty amounting to Rs. 13,62,40,831/- under Section 11A(4) of the Act alongwith Interest, and penalty under Section 11AC of the Act. Central Excise duties were also demanded from the other appellants along with penalties as per show cause notice separate penalties were imposed on the Direct....
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....liers and purchaser of the goods was also imposed along with duty demanded by the learned Commissioner under the provisions of the Act and the Rules. 6. Shri Anurag Mishra, learned Counsel of the appellants submitted that the entire search and seizure operation was made in the appellants factory in violation to Section 100 of CrPC read with Section 18 of the Act. He submitted that one of the witnesses, namely Shri K.Shrinu, was panch witness both at the search proceedings in factory premises as well as on the residential premises on the same day and almost on the same time. The learned Counsel has submitted that the residential premises of the Director and the factory premises of the appellant are far away and it was not possible for a person to be present on the same time on both the places. The learned Counsel also submitted that the panchnama and recovery proceedings made in the residential premises of the Director was without any search warrant and the document resumed there from cannot be relied upon in the proceedings. The learned Counsel also relied upon the judgment of Hon'ble Karnataka High Court in case of Nenmal Shankarlal Parmer Vs. Assistant Commissioner of Income T....
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....n their letter dated 05.02.2018 e) Absence of any certificate of authorization to support the fact that printouts were produced by the computer during the period over which the computer was used regularly to store or process information. f) Absence of any certificate of authorization to support the fact that printouts were produced by the computer over that period by the person having lawful control over the use of the computer. g) Absence of signature by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities. 8. The learned Counsel submitted that the Computer printout which has been relied upon by the department against the appellant to prove the charges of clandestine removal are not an admissible evidence in according to the provisions of Section 36-B due to above cited reasons. He heavily relied upon the judgment of Hon'ble Apex Court in case of M/s. Anwar P.V. Vs. P.K. Basheer- reported at 2017 (352) ELT 416 (S.C) wherein the Hon'ble Supreme Court has set certain fundamentals to accept electronic documents as an evidence. The learned Counsel has also relie....
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....se Act are pari material. It is evident from the Appeal that the investigation officers while seizing has failed to take safeguards as mandated under Section 36B of Central Excise Act. Further the cloning process of the hard-disks and retrieval of the data is admissible for want of cross-examination of Sh. Vipul Saxena, who has done cloning of the data from the computer system. We, therefore, hold that the computer printouts cannot held to admissible evidence in terms of Section 36B(2) & (4) of the Central Excise Act in the case at hand." 10. As regard to the loose papers sheets recovered from Car with Registration No.CG04H1321 of Shri Om Prakash Sai, Accountant, the learned Counsel submitted that these are third party documents. Also, there are glaring infirmities in respect to the documentary evidence. These infirmities are as follows: (i) Hand-writing expert not consulted to verify the authorship of the loose sheets and documents. It was important, since the documents were recovered from a third party. Moreover, the sets of documents were un-related and also un- authenticated. (ii) The investigating authority has not mentioned the manner and approach adopted....
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....s. Laxmi Engineer Works reported in 2001 (134) E.L.T. 811 (Trib.Del) wherein it is held that mere recovery of certain loose slips from the premises of the appellant would not prove that the goods were clandestinely removed from the factory. The said judgement of the Tribunal was approved by the Hon'ble Punjab & Hariyana High Court as reported in 2001 (254) E.L.T. 205 (P & H). He submitted that private records are not reliable and thus not admissible in evidence as there is no tangible evidence to conclusively relate them to the appellant. The Accountant, from whose Car the said loose records were recovered as initially accepted that the said records pertained to production and clearance activity of the appellant; but the said statements were not only retracted by him but also during his cross-examination he denied that the said records related to the production activity of the appellant company. The department failed to recover any other documents so as to prove that those documents related to the production and clearance made by the appellant company. These documents are thus not reliable accordingly to learned advocate placing reliance on the following judgments; • K....
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.....P. Steels Industries Vs. CCE Jaipur-1995 (78) E.L.T. 492 (Tribunal), (vi) CCE Lucknow Vs. Kundan Casting (P) Ltd.-2008 (227) E.L.T. 465 (Tri. - Del.), (vii) RHL Profiles Vs. CCE Kanpur reported in 2013 (290) ELT 247 (Tri. - Del.), 14. Ld. Advocate further submitted that the learned Commissioner has not permitted the cross examination of 9 witnesses and their statements were relied by him without conducting the examination in chief. In such a scenario, their oral statement cannot be relied upon. He further submitted that appellant was allowed cross examination of few of the witnesses, who has categorically deposed that their statements were extracted under coerosion threat and under duress. He further submitted that the Adjudicating Authority had failed to follow the mandate of Section 9D of the Act regarding examination of witness in chief placing reliance on the following judgments:- (i) G-tech Industries Vs. Union of India- reported at 2016 (339) ELT 209. (ii) C.C. Vs.. Bussa Overseas Properties Ltd., reported at 2007 (216) E.L.T. 659 (S.C.) (iii) J.&K. Cigarettes Ltd. Vs. CCE, reported at 2009 (242) E.L.T. 189 (Del.) = 2011 (22) S....
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....llogical conclusions of the department. These demand were based on mere assumptions and presumptions and could not be sustained in absence of evidence. He submitted that penalty against the appellant from Sl. No.5 to 21 is not sustainable and liable thus to be set aside. 17. The learned Authorised Representative reiterated the findings of the learned Commissioner and submitted that the search were made under proper authorisation in the form of search warrant and the panchnamas proceedings were made in the presence of independent witnesses which was not only signed by the proper officers; but also by the representative of the company. No objection as regard to the panchanama proceedings were made by the appellant on the date of the search. He further submitted that Directors of the company were present and witnesses the entire search and seizure operation and they have not objected that Shri K. Shrinu is witness to the both of the panchnama at the office as well as residential premises. The learned AR submitted that Shri K.Shrinu and Shri Sunil Kumar Pandey, who were the panch witnesses to the panchnama were not the employees of the appellant company, as the appellant could not p....
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....ther submitted that the statement of the transporters and raw material suppliers clearly established that the appellant company was engaged in the manufacture and clandestine removal of the goods. He stated that if the said loose documents were not related to the sale and purchase of the appellant then why both the Accountant as well as the Directors as made an admission that the said documents were related to production and clearance activity of the appellant. 20. Learned Authorised Representative further submitted that the statements of the raw material suppliers clearly established that the appellant has purchased the goods from them without payment of Central Excise duty. The learned AR submitted that it is a sufficient proof to establish that the appellant is procuring the raw material without payment of Central Excise duty and manufacturing the goods out of the said non duty paid goods for clandestine removal. The learned AR submitted that recovery of computer data, loose paper sheets from the accountant and the confessional statement of various persons clearly established that the appellant company were engaged in illicit manufacture and clandestine removal of the goods w....
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....ave also seen Annexure-A to the panchnama dated 07.08.2012, which contained the details of documents resumed but there is no mention of any CD(s) where the data was burnt. We agree with the contention of the learned Advocate that at the time of the burning of CD(s), a certificate should have been obtained as per the provision of Section 36-B. The panchanama dated 19.02.2016 not only speaks of 2 CD(s) but also that computer data was retrieved after a gap of 4 years which itself creates a suspicion. Further also no certificate from the competent authority was obtained by the officers even at this point of time. The Hon'ble Apex Court in case of M/s. Anwar P.V. Vs. P.K. Basheer reported at 2017 (352) E.L.T. 416 has clearly laid down that the computer printout can be admitted in evidence only if the same are produced in accordance with the provisions of Section 65B(2) of the Evidence Act. A certificate is also required to accompany the said of computer printouts as prescribed under Section 65B(4) of Evidence Act. It has been clearly laid down in para 15 of this judgement that all the safeguards as prescribed in Section 65B(2) & (4), of the Act be met with to ensure the source and authe....
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....ative evidence. The investigating authority failed to elucidate the system adopted for the preparation of the relied upon documents which were allegedly based on these documents. The details contained on the loose sheets and third party documents are actually not comprehensible and, therefore, cannot be accepted as admissible piece of evidence. Moreover, the Panchnama proceedings have been challenged on the ground of that the Panch-witnesses were not present at the time of the resumption of the evidence. Also, during the cross-examination the Accountant has categorically stated that he has already retracted his earlier statements and he has never stated that the said document pertains to production and clandestine removal of the goods from the appellant factory. In C.C.E. Vs. Kuber Tobacco Product Ltd. [2016(339) E.L.T. A-130] the Hon'ble Delhi High Court has held that without any corroborative evidence, loose papers, documents cannot be a sufficient to prove charges of clandestine removal. The Hon'ble Delhi High Court in case of C.C.Ex. Vs. Vishnu & Co. Pvt. Ltd.[2015-TIOL-2792-HC-DEL-CX] has also held that merely on the basis of statement made by the third party including transpo....
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....aw materials for clandestinely manufacture of finished goods. manufactured of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, amount received by the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. All these material evidence are missing in the present case and the evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence to prove charges of clandestine removal. 27. The shortage which was detected by the officers is the on average weight method basis and, therefore, mere admission by the directors, who deposited the duty for the shortage, is not enough to proof that the goods were clandestinely cleared from the appellant factory. We have also considered the judgement cited by the appellant in case of C. C. Ex. Lucknow Vs. M/s.Sigma Castings reported at 2012 (282) E.L.T. 414 (Trib.Delhi), M/s. AAR Kay Industries Vs. C. C. Ex., Chandigarh reported at 2004 (165) E.L.T. 412 (Trib.-Del.), M/s. Micro Forge (I) Pvt. Ltd. Vs. C. C. Ex. Rajkot reported in 2004 (169) E.L.T. 251 (Trib.- Mumbai), C.C.Ex. I....