AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 645
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....y and thus indulged in evasion of Central Excise Duty by clearing/removing their goods clandestinely. Four dispatch slips were recovered which were kept in file which is marked as Annexure 'A' to the Panchnama dated 17/7/2012. A follow up raid was conducted at the factory of M/S. WILSON PAPER MILLS PVT. LTD. on 20-21/7/2012. Two delivery challans were recovered during search. The Investigating Officers conducted the Stock taking and recovered various documents which they found that a) There was alleged shortage of finished goods i.e. as per daily stock account 87,845 KGs. of Kraft paper was recorded whereas physical stock was found as 65,364 KGs. Therefore, there was shortage of 22,481 KGs. of kraft paper. b) Four dispatch slips claimed to have been recovered from M/s. Gajanand Packaging, Morbi. c) Two delivery challans claimed to have been recovered from factory of M/s. Wilson Paper Mill Pvt. Ltd & d) Print outs claimed to have been obtained from computer CPU available at residence to one of the directors M/s. Wilson Paper Mills Pvt. Ltd. 2.1 After retrieving the same with the help of Computer forensic expert, a Show Cause Notice No.V.48/AR-M....
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....ation. At the best if at all, quantity of kraft paper as mentioned in the said two delivery challans, four dispatch slips would be 48,813 KGs. valued at Rs. 9,24,110/- and it would attract Central Excise Duty along with Cesses valued at Rs. 58,302/- only. However, by no stretch of imagination such huge demand could be supported. He submits that the statements are not admissible in evidence and could not be relied as they are full of confliction. As far as statements of Rajesh P. Detroja billing clerk and Pritesh P. Vadhadiya, Loading supervisor both dated 20/7/2012 are concerned it is important to note that panchnama dated 20-21/07/2012 states that it started at 9:30 PM of 20/7/2012 and completed on 7:35 AM on 21/7/2012. However, the panchnama did not make any mention about recording of statements of the Billing Clerk and Loading Supervisor. It is not known as to when were the statements recorded. 4.2 The statements of Director are also far from truth, they are not supported by any corroborative evidence. Signatures were obtained under pressure, threat and duress without even allowing the director to read the contents of the statements which were prepared by officers themselves.....
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....IONER OF C.EX., KANPUR Versus MANOJ KUMAR PANI- 2010 (260) E.L.T. 92 (Tri.Del.) • COMMISSIONER OF CENTRAL EXCISE, RAIPUR V/S. ANIL AGRAWAL-2013 (287) ELT 489 (TRI-DEL). 5.1 He also invited our attention to the judgments of Hon'ble Gujarat High Court in case of COMMISSIONER OF CENTRAL EXCISE Vs. SAAKEEN ALLOYS PVT. LTD.- 2014 (308) ELT 655 (Guj.). He submits that the statements were recorded only in respect of seventeen customers, the statements of many more alleged customers were not recorded. This is also the reason that the allegation of clandestine removal would not sustain. He further submits that the entire demand was worked out on the basis of computer print out. It is not clear from Annexure 'A' to the panchnama that which CPU was seized and which files are containing said data. It is also mentioned that computer print outs taken from seized CPU and said three files contains different data than what is discussed in panchnama. The data of the computer was not retrieved/recovered in accordance with Section 36B (2). He submits that print outs could be admissible only when it is produced in computer during the period for which computer was used regularly to store....
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....not used after 28/3/2012. He further submits that the investigation would obviously record relevant history of computer i.e. 1. Under whose control 2. Who entered data. 3. On what basis such data was entered. 4. Who deleted data immediately after completion of search. 7. However, all these things are mentioned in the statements dated 1.7.2013 of Girishbhai (i.e. after nearly one year from panchnama dated 20- 21/07/2012) just to fill up the lacuna and clear the lapse. He submits that CPU was not seized in accordance with proviso of law as there is no mention about the Model, make, Configuration of CPU or its Hard Disc anywhere in the panchnama. Without establishing identity of hardware no reliance can be placed on alleged printouts. He submits that there was serious lacuna as regard computer forensic expert as how is Alpesh Vyas identified as Computer Forensic Expert? No certificate or authorization of Government approved agency was obtained. Panchnama does not disclose that Alpesh Vyas was informed of deleted program yet he is claimed to have recovered data. Software used by Alpesh Vyas is not identified. It is not confirmed that it was authen....
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....of illicit clearance in security gates records, etc. Therefore, since there is no aforesaid evidence the charge of clandestine removal will not sustain. He takes support from the following judgments:- • AARYA FIBRES PVT. LTD. V/s. COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-II-2014 (311) ELT 529 (Tri.-Ahmd.) • AMBICA CHEMICALS V/S. COMMISSIONER OF CETRAL EXCISE, CHENNAI, 2002 (148) ELT 101 (TRI-CHENNAI) • R.A. CASTINGS PVT. LTD. V/S. COMMISSIONER OF CENTRAL EXCISE 2009 (237) ELT 674 (TRI-DELHI). • SAID JUDGMENT IS UPHELD BY HON'BLE HIGH COURT IN 2011 (269) ELT 337 (ALL) • SAID JUDGMENT IS FURTHER UPHLED BY HON'BLE SUPREME COURT IN 2011 (269) ELT A108 (SC) • PAN PARAG INDIA LTD. V/S. COMMISSIONER OF CENTRAL EXCISE, KANPUR - 2013 (291) ELT 81 (TRI-DELHI) • RAMA SHYAMA PAPERS LIMITED V/S. COMMISSIONER OF CENTRAL EXICSE, LUCKNOW 2004 (168) ELT 494 (TRI-DELHI) 9. Shri Trivedi, Learned counsel further submits that the appellant M/S. WILSON PAPER MILLS PVT. LTD. was also actively involved in trading of kraft paper as such. It is on record the printouts clearly reveal that kraft papers were produced....
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....39 (Tribunal) • JAY LAMINART LIMITED v/S. COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD 1998 (102) E.L.T. 402 (Tribunal) • PRABHAVATI SAHAKARI SOOT GIRINI LTD V/s. CCE 1990 (48) E.L.T. 522 (T) • ROXY ENTERPRISES P. LTD. V/s. CCE 1992 (40) ECR 361 (T-NRB) • V.K. THAMPY V/s. COLLECTOR OF CENTRAL EXCISE, KOCHI 1994 (69) E.L.T. 300 (Tribunal) 11. In absence of above evidence merely on the basis of computer printouts the clandestine manufacture and clearance cannot be established. It is his submission that statements of seventeen buyers were arbitrarily taken, this seventeen buyers are said to have admitted the panchnama drawn at premises of M/s. Wilson. It is important because panchnama contains narration pertaining to M/s. Wilson and supplies made to various other parties. A particular person cannot admit and accept allegation and sale made to other parties. Not only that but after long time of more than three years nobody can accept and admit documents recovered from suppliers when no documents are recovered from their premises. Therefore it clearly shows that the statements were recorded as per the version of Investigating Officers ....
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....SSIONER OF CENTRAL EXCISE, MADURAI V/s. RATNA FIRE WORKS 2005 (192) E.L.T. 382 (TRI-CHENNAI) • COMMISSIONER OF CENTRAL EXCISE, LUDHIANA V/s. RENNY CASTINGS (P) LTD. 2011 (274) ELT 94 (TRI-DELHI) • SAID JUDGMENT IS AFFIRMED BY HON'BLE PUNJAB & HARYANA HIGH COURT 2013 (288) ELT (P&H). • OUDH SUGAR MILLS LTD. V/s. UNION OF INDIA- 1978 (2) ELT (J172) (SC). • RUTVI STEEL & ALLOYS V/s. COMMISSIONER OF CENTRAL EXCISE, RAJKOT 2009 (243) ELT 154 • BANCO PRODUCTS (INDIA) LTD. V/S. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, VADODARA-II, 2008 (232) ELT 762 (TRI-AHMD) 12.1 He submits that despite making categorical submission in reply to show cause notice before the adjudicating authority that the appellant have no manufacturing facility and capacity to manufacture such huge quantity of alleged clandestine removal. He submits that the adjudicating authority has brushed aside the same. The Learned Counsel referred to various documents such as ER7, ER1, electricity bill project report whereby he submits that the appellants' unit's manufacture capacity is 10,000 MTs P/A, therefore, it is beyond imagination that huge quantity of all....
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....s that since all the statements were recorded under the threat and duress and the same were not voluntarily given by the witnesses and the copies of the statements also not supplied at the time of recording the statements and the same was provided along with the Show Cause Notice. Since the appellants were not accepting their statements, the appellants have requested for cross-examination of witnesses before the adjudicating authority in respect of those statements recorded and relied upon in the Show Cause Notice in the appellant's reply dated 28/10/2014 and also in submission dated 11/05/2015. The adjudicating authority has arbitrarily denied the cross examination. He submits that provisions of Section 9D requires for cross examination of person whose statements are relied upon in the Show Cause Notice must be allowed. If the same is not allowed despite that their being a specific request such statements could not be admissible in evidence. He takes support for this submission from the following judgments :- • J & K CIGARETTES LTD. v/S. CCE 2009 (242) ELT 189 (DEL) • BASUDEV GARG V/S. CCE 2013 (294) ELT 353 (DEL) • CCE V/S. GOVIND MILLS LTD.....
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.... fabricated and tailor made. The format of all the statements are copy paste therefore, the same could not be true because at no place any goods alleged to have been received without invoice were seized. There is absolutely no seizure either of any document or any goods. The said buyers of alleged clandestine goods have categorically in their respective replies before the Adjudicating Authority as well as in Appeal Memorandum filed before this tribunal that their signatures were obtained forcefully against their will on the statements which were prepared by the officers of the department themselves. He submits that even otherwise the statements could not be true because a perusal of the same could show that all of them were shown panchanama drawn at the factory premises of M/s. Wilson and all of them have admitted the entire panchnama, it means no mention that said buyers are not expected to know and admit the details pertaining to the other parties. Such blind admission itself suggests that the statements are fabricated. 14. In view of the above factual submission of the co-appellants also deserve waiver of penalties. 15. On the other hand Shri H.K. Jain, Learned Assistant C....
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....en from the seized computer cannot be relied upon in accordance with the provision of Section 36B(2) of the Central Excise Act, 1944. He submits that the adjudicating authority has given detailed finding at Para 35.1 to 35.6 wherein it was held that the condition mentioned in section 36B (2) have been fulfilled and the printouts taken from the seized CPU/computer are admissible evidences which are correctly relied upon by the Adjudicating Authority. 16.1 He submits that the adjudicating authority has given detailed finding that the buyers have categorically admitted their role in the clandestine removal of finished goods by the appellant during the relevant time. He also referred to Para 42 &43 of the impugned order. He submits that the order has discussed the establishment of cash flow through clandestine sale of finished goods by the appellant through confessional statement deposed by the person of Angadia firm. The raw material were supplied to the appellant without invoice as per the evidence collected during investigation therefore, the adjudicating authority has rightly imposed penalties under Rule 26 of the Central Excise Rules, 2002 on buyers, raw material suppliers and ....
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....-2019 (365) ELT 42 (Guj.) 16.4 He submits that in case of clandestine removal of excisable goods, the revenue has to discharge initial burden of proof through documents recovered, voluntarily statements given by the assessee's director and statements recorded from buyers thereafter onus is on the assessee to prove by evidences that there are no clandestine removal. In this regard he placed reliance on the following judgments:- • Hon'ble High Court of Madras in the case of C.EX, SALEM reported at 2019 (366) ELT 647 (Mad.) • N.R. SPONGE PVT. LTD. V/s. COMMISISONER OF C.EX, RAIPUR- 2020 (372) ELT 321 (Del.) • RELIANCE CABLE IND. v/S. COMMISSIONER OF CST (East) Delhi- 2019 (365) ELT 788 (Del.) • AAKASH FABRICS V/s. COMMISSIONER OF C.EX. & CUSTOMS, DAMAN- 2019 (368) ELT 22 (Guj.) 17. With his above submission he prays for dismissal of the appeal filed by the appellant. 18. We have heard both the sides and perused the records. The case of the departments is that the appellant have clandestinely manufactured and cleared 1,41,72,571 KGs of kraft paper which was valued at Rs. 24,71,33,466/- by evading excise duty to the tune of Rs....
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....rther proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible. (2) The conditions referred to in sub-section (1) in respect of a computer print out shall be the following, namely:- (a) the computer print out containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; (b) during the said period, there was regular supply to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of period was not such as to affect the production of the document or the accuracy of the contents; and (d) the information conta....
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.... course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities; (c) a document shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment. Explanation.-For the purposes of this section,- (a) "computer" means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and (b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process." 19. As per the above section printed material produced by the computer shall be admissible as evidence only when the condition mentioned in Sub-section (2) and other provision contained in the said section 36B are satisfied. As per the conditio....
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....no doubt placed much reliance on the provisions of Section 36-B, to sustain the admissibility of the computer print outs for proving the charge of clandestine receipt of raw material and manufacture of the final products by the appellants, but admissibility of the printed material under the said Section, has been made subject to the fulfilment of certain conditions, detailed therein. The condition in respect of the computer print out laid down in that Section, as is evident from the reading of its clause (ii), is that, the computer print out containing the statement was produced by the computer during the period over which the computer was used regularly to store or possess the information. In the instant case, the print outs were not produced by the computer. Peripherals were picked up by the Officers from the Head Office-cum-Sale Depot of the appellants and they were inserted into the computer, and that too, not all but certain informations from the part of two zip discs were taken in the absence of the appellants. Certain zip discs were copied out by the Officers in the computer of the Department and that too without associating any authorized person of the appellants' company. ....
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....a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub- section (1) shall, so far as may be, apply in relation to- any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court." 24. As per the above section even if the person against whom the statements of witnesses are used as evidence does not ask for cross-examination. The adjudicating authority if wish to rely upon such statement he must examine the witness before adjudication of case. In the present case despite the specific request by the appellant the adjudicating authority denied the cross-examination. The adjudi....
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....aders as also brokers, whose statements are being relied upon against them. While making the request for cross examination, they submitted that there were number of contradictions in the statements of the said suppliers and as such cross examination is required to be allowed so as to test the veracity of their statements and to bring true and correct facts on record. Such cross examination request stand rejected by the adjudicating authority on the ground that cross examination of 35 persons have been sought but no justification for the same has been given. He also rejected the request for cross-examination on the ground that no statement made by the said suppliers stand retracted. We do not find any justification for denial of such request. If the statements of traders (whether retracted or not) is sought to be relied upon in the show cause notice it was incumbent on the part of the Revenue to tender the above witnesses for cross examination. The statements of traders being in the nature of statement of coaccused, cannot be relied upon without putting the same through the test of cross examination. However, we do not feel inclined to remand the matter on this ground inasm....
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....are of the view that all the statements which were retracted in the form of reply to Show Cause Notice and without allowing the cross-examination of the witnesses cannot be used as admissible evidence, therefore all the statements are discarded. We find that the major demand is based on the computer printout and various statements. Since both are not admissible evidence as discussed above the charge of clandestine removal is not established against the appellant. We also find that except the above inadmissible evidences there is no evidence on the following:- i.) No evidence of physical manufacture of alleged clandestinely removed goods. ii.) There is no evidence of transportation of such removals. iii.) No evidence of receipt of cash against the alleged supply of huge quantity of goods valued at Rs. 24,71,33,466/- In absence of any of the above evidence the clandestine removal is not established. 27. The above position was considered by this tribunal in identical case which was upheld by the Hon'ble Gujarat High Court in the case of VISHWA TRADERS PVT. LTD. V/S. COMMISSIONER OF C.EX, VADODARA-2013 (287) ELT 243 (GUJ). The relevant order portio....
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....f the ld. AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manufacture and clearance of the finished goods. The investigation has not proceeded further to bring on record unaccounted purchases of all the raw materials required for manufacturing of 'Frit'. 16. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the factory premises of M/s. VTPL, in the peculiar facts and circumstances of this case, we hold that the impugned order which confirms the demand on the appellant M/s. VTPL and imposes penalty on them is not sustainable and is liable to be set aside and we do so." 8. From the aforesaid findings of the Tribunal, it is clear that the appellant has not made any clandestine manufacture, which he has removed clandestinely and on which the duty was payable. 9. It is well settled that the findings of the Tribunal can be interfered only if it is perverse or some material evidence is ignored. In such circumstances, only the Court may exercise jurisdiction on issue which may give rise to any substantial question of law. In th....
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....sih/Shri Avtar Singh. How Shri John Masih was concerned with maintaining the heat records of the furnace has not come out during investigation. Shri John Masih was only a kanda in charge. In an affidavit dated 16-9-2002, he had stated that he had no exact knowledge about the production of the goods in the factory. Further, there is no evidence relied upon to show that Shri Avtar Singh was contractor working for the respondent-company. It has been claimed that there was no written contract between Shri Avtar Singh and the company for engaging Shri Avtar Singh as contractor. In view of the matter as above, the authorities below have rightly held that the private records said to have been maintained by them cannot be relied upon. 6.3 It is not the case of the department that these entries were got explained by the authorized signatory or the director or any other responsible person of the company. It is also not the case of the department that the entries mentioned in the private records were corroborated by conducting investigation with the transporters or the recipient of allegedly clandestinely removed goods. It is not the of the department that evidence was produced in re....
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....n along with various documents that the capacity of their plant is for producing 30 MT Per day which comes to approximately 10,000 MT P/A. In this regard the adjudicating authority has rejected the submission on the ground that the appellant have not produced any evidence. We find that the appellant have relied upon their ER-7 & ER-1 returns along with other documents, these returns were very much available with the department which were filed from time to time. The ER-7 return clearly shows the production capacity therefore, it cannot be said that the department did not have any evidence regarding production capacity of the appellant's unit. 30. We find strong force in the submission of the appellant that they did not have production capacity of more than 10,000 MT P/A. Accordingly, the allegation of clandestinely manufactured and clearance over and above the production capacity is beyond imagination. The submission of the appellant is not much in dispute on the following points:- i) No investigation to find out how alleged surreptitiously procured raw material was transported there is nothing on record for illicit receipt of raw material. ii) The appellant ha....
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....al of their final product, I find no justification in upholding the confirmation of demand of duty or imposition of penalty on both the appellants. Accordingly, the impugned orders are set aside and both the appeals are allowed with consequential relief to the appellant." • KUBER TOBACCO PRODUCTS LTD. v/S. COMMISSIONER OF C.EX., DELHI- 2013 (290) ELT 545 (Tri.-Del.) "135. There is no dispute on the fact that in adjudication proceedings, the charge of clandestine removal and under-valuation is definitely to be established on the basis of preponderance of probabilities. However, it cannot be merely on the basis of presumptions and assumptions. Suspicion however grave cannot replace the proof. As rightly pointed out by the Hon'ble President with detailed findings, the link between the documents recovered in search and the activities of the appellants in their factory is required to be proved. However, I find that due to various reasons as recorded above, the Revenue has failed to prove the same. 136. The loose sheets, Kachcha Challans and hisaba books were not recovered from the factory of the appellant-company or from any of their office or residential ....
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....icals also were used. The case of clandestine production and clearance had been attempted to be made out with the figures of use of Potassium Chloride and no effort was made to investigate such use of Hydrochloric Acid or any other raw material. The settled legal position is that when several raw materials are involved, when a case of clandestine production and clearance is built on clandestine use of raw materials, the same should be proven with reference to unaccounted use of all such major raw materials. 22. In a case of clandestine removal the department should produce positive evidence to establish the same. In the absence of corroborative evidence, a finding cannot be based on the contents of loose chits of uncertain authorship. Department has not produced evidence of use of inputs to prove that there was manufacture of unaccounted finished product. No statements have been obtained to show as to from whom raw materials were purchased. No evidence has been obtained for the use of electricity or receipt of sale consideration by the assessee to prove clandestine manufacture and sale. The department had obtained a statement from M/s. Dhanalakshami Traders, dealer in Pota....
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....ion that 41,777 kgs. of raw tobacco was unaccounted and the appellant had manufactured cut tobaccos out of it and removed it clandestinely. The inference is based on certain private documents only. There is no corroborative evidence recorded. If such huge quantity of cut tobacco was manufactured during the period from April 1998 to September 1998 when the factory is under physical control and removed, either the officer in charge has connived with the appellants or he closed his eyes to whatever was happening. In either case, the department should have proceeded against the officers. There is absolutely no indication in the investigation regarding any complicity of the officers posted in the appellants' unit. Moreover, the investigation has not found out at least a few buyers who have received the goods cleared clandestinely. There is no evidence of excessive consumption of electricity. When the officers visited the unit, they had not found out any unaccounted stock of cut tobacco. In the present case, the charges are based purely on a theoretical working out based on the private documents, which are not statutory. The Hon'ble CEGAT, in the case VST Industries Ltd. (cited supra), h....
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.... as evidence had been rendered by staff of third party such as SSL, SIL and Proprietor, Jaiganesh Transport. There is no material evidence corroborating the third party statements. The statement by the proprietor of the transport company was relied on to find that scrap imported by SSL had been delivered to the respondents. Record of the transporter however showed delivery at a place different from the location where the respondent's unit is situated. Shri N. Kuppusamy, Proprietor of Jaiganesh Transport deposed that false destination was recorded in their register at the instance of the involved parties. We do not find this explanation to be genuine as we find no necessity for creating a false account in a private record of the transporter. The Department could not identify and obtain a statement from the person who maintained the register of the transport company showing transport of raw material to the respondents. As these witnesses were not allowed to be cross-examined by the respondents their depositions could not have been relied on by the original authority. We find that in the instant case Revenue could not produce any evidence for receipt of the raw material and sale o....
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....icity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessee's appeal is allowed." (iii) In Chennai M.T.K. Gurusamy v. CCE, Madurai - 2001 (130) E.L.T. 344 (T), it was held that quantity of excisable goods clandestinely removed calculated on basis of transport companies' records was not sustainable. (iv) In Sanket Food Products Pvt. Ltd. v. CCE - 2005 (188) E.L.T. 107, the Tribunal held that when the proceedings agains....