TaxTMI 
TaxTMI 
2020 (11) TMI 549
X X X X Extracts X X X X
X X X X Extracts X X X X
....covered from their secret office at Shantiban Park, Durgapur. Print outs of the contents of the hard discs were taken in the presence of authorized signatory of M/s SPRML and independent witnesses; Shri DeabashishSasmal, CFO of M/s SPRML accepted that the data contained actual receipts and dispatches by M/s SPRML; however it was written in code language such as 2002 for 2012; 1,000 for one Lakh etc.; the data included the details of transactions of M/s SPRML with M/s Jai Balaji Industries Ltd(Unit-III), the appellant, for the period 01-02-2012 to 25-12-2012; it appeared that appellant No. 1 cleared 13683.05 MT of M.S. Billets during the above period to M/s SPRML. The data prepared in respect of the appellant was shown to Shri SankarshanMohapatra, General Manager (Taxation) and his statement was recorded on 12-01-2017. On the conclusion of investigation, Commissioner of Central Excise and Service Tax issued a Show Cause Notice dated 27-02-2017 was issued, to M/s Jai Balaji Industries Ltd(Unit-III), seeking to recover Central Excise duty of Rs. 6,29,50,545 under Section 11A(4) of Central Excise, Act, 1944 from them along with interest under Section 11AA ibid; impose penalty under Rul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e principles of natural justice; Commissioner should not have confirmed the duty demand merely on the basis of untested oral evidence without bringing on record the documentary evidence showing unaccounted clearances by the Appellant No.1; Commissioner should not have relied upon these statements unless he examined these witnesses under Section 9D of the Central Excise Act, 1944; he relies on the following judgments wherein it was held that the procedure contained in Section 9D has to be construed strictly. (i). High Tech Abrasives Ltd Vs CCE, Raipur 2018 (362) ELT 961 (Chhattisgarh). (ii). G. Tech Industries Vs UOI 2016 (339) ELT 209 (P&H) (iii). CCE, Delhi-1 Vs Kuber Tobacco India Ltd 2016 (338) EL 113 (Tri. -Del). (iv). Andaman Timber Industries Vs. CCE, Kolkata-II 2015 (324) ELT 641(SC) (Hon'ble Supreme Court has clearly laid down that no reliance can be placed on the statement of a witness unless he is made available for cross examination). 2.1. Learned Advocate for the appellants submits that as per show cause notice, during the course of search of one secret premises of Ms SPRML on 27- 12-2012 two external hard drives were ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ature and was prone to manipulation and therefore, Section36 B allows printouts to be used as evidence, with strict conditions; the conditions, inter alia, provide that the printout should be produced by a computer/hard disc during the period over which the computer was used regularly to store or process information for the purpose of any activity regularly carried on over that period by the person who was in lawful control over the use of the compute/hard disk; further, the computer on which the data was fed was not under the control of the Appellant no 1; therefore, primary condition itself is not satisfied and therefore, no reliance can be placed on computer printouts; he relies on the following judgments:- (i). Anvar P.V. Vs P.K. Basheer 2017 (352) ELT 416(SC) (ii). Ambica Organics Vs. CCE &C Surat-I 2016(334) ELT 97 (Tri.-Ahmd) (upheld by the Gujrat High Court 2016 (334) ELT A67 (iii). Popular Paints & Chemicals, Final Order No. A /52718/2018-EX (DB) dated 06-08-2018. 4.Learned Advocate for the appellants submits that Appellant No. 1 would have required corresponding huge quantity of raw materials like Iron ore, Lam Coke, Steam Coal, Manganese, sc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ems and Components Pvt Ltd - 2004 (165) ELT 136(SC). (ii). Siemens Ltd Vs CCE, Calcutta - 1994 (70) ELT305. (iii). Columbia Electronics Ltd Vs CCE, Indore - 2002 (143) ELT 635 (Tri-Del) (iv). Collector of Customs Vs D. Bhoormul - 1983 (13) ELT 1546(SC). (v). Gulabchand Silk Mills Vs CCE 2005 (184) ELT263. (vi). CCE Vs Rishabh Velveleen Pvt Ltd 2006 (201) ELT 437 (CESTAT). 6. Learned Advocate submits that these judgments are being consistently relied upon by the department which are wholly inapplicable to the facts of the present case; Tribunal, Higher Courts and the Supreme Court have consistently held that these judgments are not applicable to the case of alleged clandestine removal of goods; he places reliance on law laid down by the Delhi High Court in the case of CCE, Delhi Vs. Vishnu & Co PvtLtd.2016 (332) ELT 793 (Del) and R.A. Castings (P) Ltd (supra). 7. Learned Advocate for the appellants further submits that the demand was confirmed on the basis of third party records that too electronic records which are even not admissible as evidence against the Appellant No. 1; onus of proof of alleged clandestine removal is always on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....des and perused the records of the case. Brief issues concerning this case are as follows:- (i) Whether in the facts and circumstances of the case the evidence in the form of print out taken from the computer of a third party would constitute enough evidence to allege clandestine removal by the appellants? Whether the appellants can be proceeded against independently without involving the company from whom the alleged evidences were obtained? (ii) Whether the electronic evidence relied upon in the instant case is correctly obtained so as to have evidentiary value and stand judicial scrutiny? (iii). whether the evidences collected by the investigation are enough to substantiate the allegation of clandestine removal by the appellants? (iv). Whether different show cause notices covering the same period and invoking the extended period can be issued to the appellants? (v). whether the imposition of penalties on the appellants is justified? 12. The genesis of the case is in the search conducted by officers of DGCEI Headquarters, New Delhi in all the premises of M/s. SPRML on 27.12.2012. It is alleged in the show cause notice that evidence ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to prove the charge of clandestine removal; department has slapped the demand on Unit-III without any investigation or evidence; penalty was levied on the Managing Director even without recording his statement. 14. We seek to examine the contentions of the appellant vis-à-vis the show cause notice and the adjudication order. We find that learned Commissioner finds that all the relied upon documents were given to the appellants and other documents not being relied upon need not be provided; during the personal hearing on 22.11.2017, the appellants were given time till 30.11.2017 to make submissions mentioning that no further personal hearing will be given; Right to cross-examination is not absolute right and in view of the facts of the case and also the scheme adopted by notices he disallowed cross-examination; the incriminating records were accepted by the CFO of M/s. SPRML and Shri Anil Kr. Jain, Director of M/s. SPRML. On-going through the records of the case we find that the learned Commissioner has seriously erred in his findings as far as supply of documents is concerned. It is not for the Commissioner to decide which of the documents are necessary and which ones ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....landestine activity persons try their best not to leave evidence; department is not required to prove its case with mathematical precision but it is enough if it is established with a reasonable degree of probability. He relies upon the following cases:- (i) Systems and Components Pvt Ltd. [2004 (165) ELT 136 (SC)] (ii) Siemens Ltd. Vs. CCE, Calcutta [1994 70) ELT 305] (iii) Columbia Electronics Ltd. Vs. CCE, Indore [2002 (143) ELT 635 (Tri.-Del.)] (iv) Collector of Customs Vs. D. Bhoormul [1983 (13) ELT 1546 (SC)] (v) Gulabchand Silk Mills Vs. CCE [2005 (184) ELT 263] (vi) CCE Vs. Rishabh VelveleenPvt.Ltd. [2006 (201) ELT 437 (CESTAT)] 16. It is seen that the learned Commissioner, as discussed above, has certainly adopted some principles enunciated on the basis of the case law cited therein by him. We find that learned commissioner, relying on Systems and Components Pvt Ltd (Supra), finds that what is admitted need not be proved. On going through the records, in the instant case, we find that there is no acceptance by the appellant. What the learned Commissioner is referring to could at best be the acceptance by the CFO and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oods supplied by you without payment of duty and without issuance of Central Excise invoice, being not recorded in your books of accounts, how your payment shall be based on your books of accounts please explain. Ans. Since the documents seized from SPRML, I have no idea. I am concerned what saying my documents and records. 17. From the above it can be seen that Shri Mohapatra in his statement on 12.01.2017, neither confirmed the documents recovered from M/s. SPRML nor accepted any wrongdoing on the part of the appellant. This being the case, it is not correct on the part of the adjudicating authority that the appellants have accepted their liability and that what has been accepted need not be proved. In spite of the above statement, the show cause notice proceeds to allege that Shri Mohapatra emphasized against the quantum of authorised sales made under invoice to M/s. SPRML completely and deliberately bypassing/overlooking the hard fact of clearance of huge quantity of unaccounted sales made in clandestine manner without issuing any Central Excise invoice, as conclusively detected by the DGCEI and proved from the documents so retrieved. We find, from the show cause no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned. Only Sh. Mohapatra who is an authorised signatory of the appellants has been questioned who did not accept any misconduct on their part. The allegation is only based on the data set to have been recovered from the secret office of M/s SPRML and no other evidence has been put forth. We find that as averred by the learned Counsel for the appellants, reliance cannot be placed only on the evidence available with the Third Party as held in CCE, Delhi Vs Vishnu & Co. Pvt. Ltd. 2016 (332) ELT 793 (Delhi) 19. Moreover, cross examination of the Punch witness in whose presence the external hard drives were recovered and printouts taken, Sh. Debasis Sasmal, CFO of M/s SPRML and Sh. Anil Kumar Jain, Director of M/s SPRML was requested. The request for cross examination was not allowed. In the instant case, cross examination was required as no evidence recovered at the end of the appellant was made available and no one from the appellant have agreed to the contents thereof. The appellants also contended that commissioner has not examined the witnesses under the provisions of Section 9D of Central Excise Act, 1944. We find that in any other case, the same would not have constituted any g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Receipt of sale proceeds, whether by cheque o by cash, of such goods by the manufacturers or persons authorized by him; (f) Use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity cleared on payment of duty (g) Statements of buyers with some details of illicit manufacture and clearance; (h) Proof of actual transportation of goods, cleared without payment of duty (i) Links between the documents recovered during the search and activities being carried on in the factory of production; etc. 21. We agree to the proposition of the learned Commissioner that the department is not required to prove clandestine removal by mathematical precision. However, the instant case, we find that not even single evidence has been brought on record to show clandestine removal, conclusively establishing at least in a sample transaction. We find that the Annexure-H contains alleged receipts by M/s SPRML date wise from the appellants. The Annexure contains Truck Nos. We do not find any investigation regarding the transportation at least, of which some evidence, in the form of Truck numbers, was available with t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... unit no. (iii). No reasons, whatsoever, have been given. It is seen from the records that Annexure- H which was prepared giving month-wise, date-wise quantity, rate, value of the alleged clandestine clearances along with the Truck numbers. It is repeated to be "statement of clearance and payment received from M/s SPRML for unaccounted sales of MS Billets by M/s Jai Balaji Industries Ltd, Banskopa, P.O. Raj bandh, Durgapur during the period 01.02.2012 to 27.12.2012". The extract does not mention as to which unit of the appellant, the transactions were from. Under these circumstances, we find that demand cannot be slapped on a particular unit, in this case unit (iii), without any evidence and without any substantiation. On this count too, the demand of duty from the appellants fails. 23. We find that learned Commissioner has relied upon few cases as cited above and has given findings to the affect that "right to cross examination is not an absolute right"; admitted facts "need not be proved"; "clandestine removal need not be proved with mathematical precision" and "it will be humanly impossible to establish every link in the chain of clandestine activity without a break". We find....