TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 989
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....b-section 10 of Section 11A of the Central Excise Act, 1944 and order for recovery of the same. (ii) Interest under Section 11AA of the Central Excise Act, 1944 (previously Section 11AB of the Central Excise Act, 1944) should be charged and recovered on the above demand; (iii) I impose penalty of Rs.41,34,85,585/- Rupees Forty One Crore Thirty Four Lac Eighty Five Thousand Five Hundred Eighty Five only) on them in terms of provisions of Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. However, if the duty as determined under sub-section (10) of section 11A and the interest payable thereon under section 11AA is paid within thirty days of the date of communication of this order, the amount of penalty liable to be paid by such person shall be twenty five per cent of the duty so determined, subject to the condition that such reduced penalty is also paid within the period so specified. II. In respect of M/s Jai Balaji Industries Ltd., Unit-IV (i) I confirm the demand of Central Excise Duty amounting to Rs.1,47,43,824/- (Rupees One Crore Forty Seven Lac Forty Three Thousand Eight Hundred Twenty Four only) inclusive....
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..../s Jai Balaji Industries Ltd., Unit-III, Durgapur (JBIL III) - engaged in the manufacture of (i) Pig Iron (ii) MS Billets (iii) Alloy Billet (iv) Alloy Bloom (v) Sinter and (vi) Granulated Slag. Central Excise Duty of Rs. 41,34,85,585/- and equal amount of duty as penalty has been imposed on them in the impugned order. 3.2 M/s Jai Balaji Industries Ltd., Unit-IV, Durgapur (JBIL IV) - engaged in the manufacture of (i) TMT Bars (ii) Pig Iron(iii) MS Billets/Alloys Billets (iv) Sponge Iron (v) Ferro Alloy and (vi) Coke. Central Excise Duty of Rs.1,47,43,824/-and equal amount of duty as penalty has been imposed on them. 3.3 Shri Aditya Jajodia, is one of the Directors of both the companies JBIL III and JBIL IV. A penalty of Rs.5,00,00,000/- was imposed on him under Rule 26 of the Central Excise Rues, 2002. 4. Briefly stated facts of the case are as follows: 4.1 A search was conducted by the Directorate General of Central Excise Intelligence (hereinafter referred to as DGCEI) in the premises of JBIL-III on 17.07.2014. During the search, some loose papers/sheets were recovered and seized. In the dispatch section, five computers were found ins....
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....ubes Ltd on 3-04-2014 to which he stated that slip No. 77 & 78 was in his handwriting whereas slip No. 79 was in the handwriting of Rudra Tapas. 4.8 A statement of Shri Partho Sarkar, Associate Manager Excise of JBIL-IV was recorded wherein he stated that central excise duty was paid only on the invoices prepared and kept in statutory records. If invoice was not prepared for any consignment, no central excise duty was paid by JBIL-IV. 4.9 A statement of Shri Anup Kumar Aggarwal, former Vice President(Commercial) of Group Company was recorded wherein he, inter alia, stated that while working with Jai Balaji Group he was looking after procurement of raw materials; that while directing the dispatch plan as per the direction of Shri Rajiv Jajodia, Director, he used to interact with weighbridge supervisors namely Shri Kanhaiya at Unit-III; that whether a particular consignment was to be dispatched with bill or without bill was decided by the Directors only; and that the payment for such dispatches was received in JBIL group in cheque or cash respectively. 4.10 The DGCEI officers visited the premises of M/s. Laxmi Narain Metallic Pvt Ltd., Kolkata, who was one ....
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....ned order confirming the demands as mentioned in Para 1 supra. All the three appeals are against these demands confirmed in the impugned order dated 21.07.2022. 6. The Ld. Advocate appearing for the above said three Appellants advanced the following submissions: (i) The impugned order has been passed without following the principles of natural justice. (ii) The entire duty demand except for 01-07-2014 to 16-07-2014, is based on computer printouts which were retrieved from two pen drives on three dates i.e. on17-07-2014, 28-11-2014 and 11-032015. Forensic Examination of both the pen drives was conducted on 05.07.2021, at the back of the Appellants. A perusal of this report dated 05.07.2021 reveals that no printouts were taken from the said two pen drives on any of the above three dates. Some files were created in the years 1996, 1998 or 2000 and some files contain only pictures and videos. Some files pertained to various individuals with whom JBIL III or JBIL IV did not have any connection. Though the Appellants made detailed submissions in respect of this Forensic Report in their further submissions dated 27-05-2022, the same have not been taken into account by the adjudicatin....
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....ts of Section 36B. Section 36B(4) mandates that computer printouts taken from the computer must be signed by a person occupying a responsible official position in relation to the operation of the relevant device and a certificate is to be issued to that effect. No such procedure as mandated in Section 36B has been followed in this case. (vi) JBIL-III and JBIL-IV have denied ownership of these two pen drives and the authenticity of the data therein. There is no statement recorded from any Director either of JBIL-III or JBIL-IV accepting the authenticity of the pen drives and the data contained therein. On the date of search Shri Gaurav Jajodia, Director of JBIL-III was present and his signature was obtained on the panchnama but his statement was not recorded on that date. Only two statements of Shri. Sushil Kumar Roy, Associate (Commercial) of JBIL-III and one statement of Shri Kanhaiya Agarwal, Weighbridge in-charge of JBIL-III were recorded. The statement of Shri Sushil Kumar Roy was not categorical regarding clandestine clearances with respect to the entries in the computer printouts . He had stated that in the computer prin....
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....7.090 12.800 Pig 68 16.07.2014 WB- 618152 Manoj Matal 33.930 9.410 24.520 Pig 71 16.07.2014 WB- 395232 Girish Tikmani 20.980 7.020 13.960 Pig TOTAL QUANTITY 64.65 MT The Adjudicating Authority in para 23.1 of the impugned order has held that no invoices were issued against these pink slips, accordingly she concluded that the goods mentioned in these pink slips were clandestinely cleared. There is no evidence on record to prove that pink slips were prepared only when the goods were to be cleared without payment of duty. There were cases where even after preparation of pink slips, the goods were not transported due to several reasons such as break down of the vehicles, cancellation of orders etc, a fact which was explained by Shri. Sushil Kumar Roy and Sh. Kanhaiya Agarwal in their respective cross examination. The adjudicating authority has not accepted their submission that pink slips were made in respect of incoming raw materials as well as outgoing finished goods, on the ground that no other pink slips were found on the date of search. The investigation officers have not recorded any statement from either Sh. Girish T....
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....the date of search. But there was no such evidence of shortage of finished goods on record. Similar is the position with regard to document No. 58. The scribe of the document has not been identified and no inquiry was conducted as to what was the purport of the said document. However, Report No 14 and Document No 58, have been relied upon to demand duty, without any corroborative evidence. (x) Various findings of the Adjudicating Authority on clandestine removal of finished goods by JBIL III have not been corroborated with corresponding investigation at the receiver's end. Had JBIL III clandestinely cleared finished goods of such huge quantity every day prior to 17-07-2014, there should be shortage of finished goods as well as raw materials on 17-07-2014 in JBIL III, but no such evidence has been brought on record to that effect. According to the Adjudicating Authority on 16-07-2014, four consignments weighing 64.65 MT of Pig Iron were cleared without invoice. Similarly two consignments weighing 26.53 of HPTM Cutting Pipes were cleared without invoice to JBIL IV. The officers of DGCEI had simultaneously visited JBIL IV also on 17-07-2014 and had ....
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....me out of the total 743 consignments which were cleared during this period from 01.07.2014 to 16.07.2014. Even prior to the said period, they were allegedly clearing the goods without payment of Central excise duty during the last more than four years i.e. w.e.f. 1-4-2010, on regular basis. If such allegations are accepted to be true, it was the bounden obligation on the part of the investigating officers to have intercepted some consignments which were allegedly being cleared without payment of central excise duty. (xii) The duty demand of Rs.96,45,018/- from JBIL III and Rs. 14,62,149/- from JBIL IV is not sustainable on the GR Slag generated involuntarily during the process of manufacture. Even otherwise, GR Slag is exempt from Central Excise Duty in terms of Sl No. 6 of Notification 4/2006-CE dated 01.03.2006, superseded by Notification 12/12-CE dated 07.03.2012, serial no. 37. This Tribunal in the case of Aggarwal Channel Mills Pvt. Ltd. Vs CCE Raipur, 2015 TIOL 2372 and in JBIL Group's own case at their Raipur Unit as reported in M/s. Jai Balaji Industries Ltd Vs. CE and Service Tax, Raipur 2017-TIOL-2560-CESTAT-DEL has clearly laid down that GR Slag was only a ....
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....0,686 2,130,613 130 MS 3308.080 98,771,773 10,086,414 201,728 100,864 10,389,006 130 MS 500 13314.860 438,461,955 43,846,196 876,924 438,462 45,161,582 130 SAE 1008 19.470 654,192 65,419 1,308 654 67,382 130CRS 106.720 3,991,328 399,133 7,983 3,991 411,107 Grand Total 19514.17 0 635,307,345 64,104,3 92 1,282,088 641,044 66,027,5 24 (xv) Billet is a raw material to manufacture TMT Bars. JBIL IV apart from manufacturing Billets also manufactures TMT Bars. If JBIL IV would have received the alleged quantity of Billets from JBIL III, the same would have been used in the manufacture of TMT Bars. There is no duty demand on JBIL IV on proportionate quantity of TMT Bars which would duly demonstrate that no reliance could be placed on the computer printouts. Further, no inquiries were conducted either from JBIL III or from JBIL IV to this effect. (xvi) There is a duty demand on Tundish Jam to the extent of 5634.9 MT during the period 2010-11 to 2012-13 involving duty....
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....he promise that no action shall be taken against them. The Revenue had preferred appeal against this order before the Hon'ble Gujarat High Court, wherein it has been held that when the four witnesses had disowned their original statements, the Tribunal was justified in setting aside the demand, which was confirmed based on these statements. (xix) Once it came on record that various statements recorded from the witnesses were not of voluntary in nature but were obtained under pressure, the same could not be admitted in evidence by the Adjudicating Authority. The same clearly lost its evidentiary value. Once these statements are excluded from evidence, no reliance could be placed on the computer printouts and other evidences, as per the law laid down by the Hon'ble Delhi High Court in the case of CCE Vs Vishnu and Co. Ltd., reported in 2016 (332) ELT 796 (Del). (xx) Reliance is also placed on the following two High Court Judgments to stress their submission that the statements recorded without following the procedure as set out in Section 9D of the Central Excise Act, 1944 has no evidentiary value :- i) G-Tech Industries Vs. Union of India reported in 2016 (339)....
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....from the aforementioned basic raw material JBIL III or JBIL IV, manufacture Sponge Iron, Pig Iron, Ferro Alloys and Billets as the case may be. Sponge Iron and Pig Iron were their intermediate products and JBIL III was also selling large quantities of Pig Iron to outside parties on payment of Central Excise duty. As far as Billets were concerned the same were manufactured out of Sponge Iron or Pig Iron and also sometimes these two raw materials were mixed. The other raw materials required to manufacture Billets are Ferro Manganese& Ferro Silicon. The extraction and sale of Iron Ore are governed by various legislations both at the levels of Centre and State Governments. JBIL III and JBIL IV process the entire quantity of Iron Ore procured from the State of Orissa. The licensing and sale of Iron Ore in the State of Orissa is governed by the OMPTS Rules, 2007. They procure minerals by filing Form-L which allows them to remove Iron Ore from a particular mine. Thereafter, they have to file Form-I which is a permit for the license other than mine owners. It also mentions quantity and quality of minerals/ore which are to be transported. They also filed monthl....
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....cated purchase of a small quantity of 25 MT of scrap on payment of cash. The adjudicating authority considered these were enough evidences for the clandestine purchase and receipt of raw materials in cash, required for manufacture of such huge quantity of finished goods alleged to have been manufactured and clandestinely cleared. This finding has absolutely no credibility as Shri. Diptendu Samui was working as an Accounts Officer in the head office of Jai Balaji Group which owns five different units manufacturing various types of iron and steel products. It is submitted that since scrap/ melting scrap is purchased from very small suppliers, hence the payments to them are sometimes made in cash but the same are duly accounted for in their books of accounts. In the present proceedings there were only two messages showing purchase of scrap of only 15 MT and 10 MT, totally 25 M.T of scrap purchased in cash. Shri Diptendu Samui in his cross examination had categorically stated that both the above entries of purchase of 25 M.T. of scrap was accounted for in their books of records. It is strange and intriguing that the Adjudicating Authority has confirmed the duty demand of more tha....
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....om the secret office of M/s. SPRML. The duty demanded was confirmed by the Commissioner of Central Tax and GST, Bolpur, but on appeal this Tribunal has set aside the demands on the basis of the following findings:- i. That though the employees of the purchaser had accepted having received goods from JBIL III without payment of duty but when it was not accepted by the supplier it could not be concluded that there was any clandestine removal on the part of the supplier (JBIL III). Further, cross examination of those employees were not allowed, therefore, no reliance could be placed on their statements.( Cross examination was allowed in this case is the only difference. Otherwise, on facts, both cases are similar). ii. That JBIL would have required huge quantity of raw materials like iron ore, lam coke, steam coal, manganese and scrap. No evidence has been gathered to show the illegal and clandestine procurement of the said raw materials. The department did not produce any evidence of consumption of electricity, deployment of labour and production of such M.S. Billets. Without any investigation conducted in that direction, thereto without taking stock of ra....
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....ment against this order meaning thereby that the department has accepted the findings of the Tribunal which has attained finality. (xxvii) Accordingly, relying on the above said decision by this tribunal in their own case and the various other decisions cited by them in their written submissions, they prayed for setting aside the demand of duty and penalties imposed against the Appellants in the impugned order. (xxvii) The Appellant Shri. Aditya Jajodia made separate submission against imposition of penalty on him under Rule 26 of the Central Excise Rules, 2002. He stated that the Adjudicating Authority has discussed his role in commission of the offence in Para 37 of the impugned order and held that he has failed to participate in the investigation and also failed to come up with proper explanation regarding the documentary evidences recovered during the search and adduce proper evidence to establish that he was not involved in the act of clandestine removal of excisable goods. The adjudicating authority further stated that he is the Director and the key person of the Appellant companies and it is impossible that such large scale clearances of excisable goods without iss....
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....borated by the statements from Shri. Sushil Kumar Roy, Associate (Commercial) and Shri. Kanhaiya Agrwal, weighbridge in charge of JBIL III on the date of search. Regarding reliability of the data recovered in the form of computer printouts from the pen drives, he stated that the pen drives were taken from the shirt pocket of Shri. Sushil Kumar Roy and from the computer operated by him. So, he is the owner of the data and his statement has been recorded certifying the data, which satisfies the requirement for Section 36B to admit those computer print outs as evidence for demanding duty. Regarding the statements retracted during cross examination, he stated that the statements recorded were not retracted for a considerably long time, which establishes that the statements were not recorded under duress. The retraction during cross examination was only an afterthought. To comply with the provisions of Section 9D of the Central Excise Act, 1944, cross examination was allowed at the time of personal hearing by the adjudicating authority. Hence, the conditions required under Section 9D has been followed and the statements can be relied upon to confirm the demands. Accordingly, he prayed f....
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....ine clearance of finished goods by JBIL III and JBIL IV are sustainable without any corresponding investigation to corroborate the claim, at the receiver's end? (vii) Whether the demands confirmed in the impugned order on clandestine clearance of finished goods is sustainable in the absence of any evidence of procurement of the major raw materials such as Iron Ore and Coal, without invoices? (viii) Whether penalty is imposable on the Appellant companies and it's Director, on the basis of the evidences available on record? (i) Whether evidences available on record substantiate that the Appellants are the owners of the two pen drives and the data contained therein? 11. It is on record that the entire duty demand, except for 01-07-2014 to 16-07-2014, is based on the two pen drives recovered on the date of search on 17.07.2014, resumed from the shirt pocket of Shri. Sushil Kumar Roy. The computer printouts have been taken on three dates, namely, 17-07-2014, 28-11-2014 and 11-03-2015. The Forensic Examination of both the pen drives was conducted on 05-072021, though without the presence of the Appellants. A perusal of this report reveals that no printouts were taken from ....
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....s the owner of all the data available therein .It very clear from the statement dated 17.07.2014 of Shri. Sushil Kumar Roy that Shri. Gautam Banerjee also works on the computer, but no statement was recorded from him. No statement was recorded from Shri Gaurav Jajodia, Director who was available in the factory on the date of search to confirm the ownership of the pen drive. When the Forensic Report dated 05.07.2021 revealed that some files were accessed on 17-07-2014, 28-11-2014 and 11-03-2015 but it did not show that on the said three dates any printouts were taken, the investigation should have ascertained the reasons for this discrepancy. When the Appellant raised the issue before the adjudicating authority, she should have given a finding on this point, as the data available in the pen drives is the basis for the entire demand. However, the adjudicating authority has chosen not to give any findings on this report. In view of the above, we hold that the Revenue has not established the ownership of the pen drives and consequently the existence of such computer printouts and the data contained therein. Accordingly, the answer to question No (i) above is negative. (ii) Whether the....
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.... 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 contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of the said activities. (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether- (a) by a combination of computers operating over that period ; or (b) by different computers operating in succession over that period; or (c) by different combinations of commuters operating in succession over that period ; or (d) in any other manner involving the successive operation over....
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....nd 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.] " 12.1 A perusal of sub section (2) of Section 36B of the Act reproduce above, clearly mandates that the same can be admitted as evidence only when the computer in which the data was fed is owned by the person against whom the evidence is being used. We observe that the department did not identify any computer in which the information was allegedly fed by JBIL-III or JBIL-IV. The department relied upon the data resumed form two pen drives. The pen drive is a floating device and has no evidentiary value on its own and can be admitted as evidence only when it strictly fulfills the conditions specified in Section 36B of the Central Excise Act. We observe that the Hon'ble Apex Court in the case of Tukaram S. Dighole vs. Manikrao Shivaji Kokate reported in (2010) 4 Supreme Court Cases 329 held that electronic devices such as Pen Drive with fast development in the electronic techniques, are more susceptible to tampering and alterations by trans....
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....the aforementioned factors being present. The relevant part of the order is reproduced below: "6.8 Being aggrieved with the above O-I-O, the assessee and it's Directors, Shri Ramesh M. Shah and Shri Kartik R. Shah filed an appeal before the CESTAT, West Zone, Ahmedabad vide Appeals No. E/12274/2018; E/11436/2018 and E/11433/2018 respectively. The Hon'ble CESTAT vide Final Order No. A/10120-10125/2019, dated 18-1-2019 allowed all the appeals and set aside the impugned order dated 27-2-2018 mainly observing that : (i) the charges of clandestine removal on the basis of pen drive data are not sustainable; (ii) since already held that the pen drive data is not substantial evidence and no evidence of extra receipt has been produced in the form of person from whom such extra consideration was given, how it was given and how it was received by assessee, therefore, the demand on account of undervaluation is not sustainable. (iii) revenue has not proved the allegation with any evidence as it has to be shown by making investigation at the supplier's end, statements of suppliers and other corroborative evidences including receipt from suppliers, thus, the allegation on the ....
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....he ownership of M/s. SFPL, the officers should have made investigation. Thus in such circumstances, the demand on account of clandestine removal cannot be made. In case of Davinder Sandhu Impex Ltd. - 2016 (337) E.L.T. 99 (Tri. - Del.), the tribunal has held that - In this case during the course of investigation, the statement was 6. recorded and the statement given by Shri Baldev Singh, Managing Director admits that there is a shortage of 10 to 15% for manufacturing the final product and it is also admitted by Shri Baldev Singh that they have cleared certain goods without payment of duty, but the said statement was retracted by Shri Baldev Singh who claims to be that same has been recorded under influence and duress, thereafter, another statement was recorded on 3rd May, 2005 which was also retracted on the same day, where also same statement recorded which is a typed one and it is the claim of the Revenue that same has been typed by Shri Dinesh Kumar (who is an employee of the appellant) in the office of the Department. To that effect, Shri Dinesh Kumar filed an affidavit on 1st August, 2006 that the statement has been typed by the officers of the Department themselves no....
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....11) E.L.T. 529 (T), TGL Poshak Corporation v. CCE, 2002 (140) E.L.T. 187 (T). In view of said judgments we find that the charges of clandestine removal on the basis of pen drive data and sheets are not sustainable." 9. In view of the aforesaid findings of facts arrived at by the Tribunal, after considering the material placed before it, no question of law much less any substantial question of law arises for consideration out of the impugned order and accordingly, the appeals are summarily rejected. No order as to cost." 12.4. Section 36B (4) mandates that any computer printout has to be signed by a person occupying a responsible official position in relation to the operation of the relevant device and a certificate is to be given to that effect. This is required to establish the ownership of the data recovered from the computer device. In the present case, we observe that neither the mandatory conditions of Section 36B(2) have been complied with nor there is any certificate on record as mandated under Section 36B(4). During the course of panchnama dated 17-072014 drawn at the premises of JBIL-III, Shri Sushil Kumar Roy was found working on the computer lo....
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.... from the pen drives is not an admissible evidence, unless the mandatoty procedure prescribed in Section 36 B is followed, the Appellants cited various decisions. In the case of Ambica Organics Vs Commissioner of C.Ex& Cus, Surat-I reported in 2016(334)ELT 97(tri-Ahmd), It has been held as under: 7. After hearing both the sides and on perusal of the records, I find that the Central Excise officers while visiting the factory of the appellant, recovered a USB drive in the appellant's premises. The USB drive was connected with computer and a printout was taken by the computer expert accompanied with the Central Excise officers. The printout gives the details of the certain sales (datewise) commencing from 1-4-2005. The delivery challans for various chemicals for the month of December, 2005 and January, 2006 were found and seized during the search. The appellants disowned the contents of the printout and stated that it has manipulated the data base with motive, to take revenge from the partner and the firm for the refusal of the loan of Rs. 1 lakh sought by the Computer Operator. The appellant filed an affidavit disclosing this fact on 13-2-2006 i.e. immediately after the raid ....
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....nce in the form of electronic record (USB drive) the computer printout are strong evidence to establish the clandestine removal of the goods. It is seen that the said printout of the data in the USB drive contained the details of raw material and finished goods along with the names and addresses of the suppliers and the purchasers of the finished goods. It is seen that the statements were recorded to corroborate the contents of the printout and the Commissioner (Appeals) had held that the said statements has no strong evidentiary value. Shri Anil Gupta, Partner of the appellant firm had stated that he was not aware of the details contained in the USB drive. 10. Learned Advocate submitted that the clandestine manufacture and removal of the goods cannot be upheld based on the printout of the data contained in the USB drive without following the requirement of condition of Section 36B of the Central Excise Act, 1944. Section 36B of the said Act provides admissibility of microfilms, facsimile copies of documents and computer printouts as documents and as evidence. Clause (c) of Section 36B(1) states that the statement contained in a document and included in a computer printout would....
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...., it is difficult to accept the printout as an evidence to support the clandestine removal of the goods. It is noted that the requirement of certificate under Section 36B(4) is also to substantiate the veracity of truth in the operation of electronic media. In the case of M/s. Premier Instrument & Controls Ltd. (supra), the Tribunal has held that the printout of the personal computer of the company's officer, had not fulfilled the statutory condition laid down under Section 36B(2) of the Act and the demand is not sustainable. The relevant portion of the said decision is reproduced below : - "9. On the demand of duty on waste and scrap, again the appellants have made out a strong case on merits. The demand covering the period November, 1993 to September, 1998 is based on certain computer printout relating to the period February, 1996 to September, 1998. These printouts were generated from a personal computer of Shri G. Sampath Kumar, a junior officer of the Company, whose statements were also recorded by the department. Admittedly, whatever facts were stated by Shri Sampath Kumar, in his statements, were based on the entries contained in the computer printouts. The statements of ....
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....ed fact that Shri Sampath Kumar was the person having lawful control over the use of the computer. The computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the company. It was also not shown that information of the kind contained in the computer printout was regularly supplied by the Company to the personal computer of Shri Sampath Kumar in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, to show that the information contained in the printout had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. We have considered the Tribunal's decision in International Computer Ribbon Corporation v. CCE, Chennai (supra). In that case, as in the instant case, computer printouts were relied on by the adjudicating authority for recording a finding of clandestine manufacture and clearance of excisable goods....
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....twithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further 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....
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....65B of Evidence Act is parimateria with Section 36B of the Central Excise Act, 1944. From the above observation of the Hon'ble Apex Court, we find that unless the conditions of Section 65B(2) of the Evidence Act, which is parimateria with Section 36B(4) of the Central Excise Act are complied with, no reliance can be placed on any computer printouts . Admittedly, the procedure set out in Section 36B has not been followed in this case. Thus, following the judgement of the Hon'ble Apex Court and the other decisions cited above,we hold that the data resumed from the computer print out alone cannot be relied upon to demand duty, without any corroborating evidence. Accordingly, the answer to Question Nos (ii) and (iii) above are in the negative. (iv). Whether the procedure as set out in Section 9D of the Central Excise Act, !944 was followed in this case or not? If not followed, then whether the statements recorded under Section 14 of the Central Excise Act, 1944 can be relied upon to demand duty ? (v) Whether the statements not retracted within a reasonable time, but retracted at the time of cross examination, has any evidentiary value? 13. The next evidence relied upon by the ....
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.... of Shri Raghunath Jhunjhunwala, weighbridge in-charge of JBIL IV was recorded, wherein he, inter alia, explained the procedure of weighment of raw materials and finished goods. He uses a pink slip for final weighment. He was shown pink slip Nos. 77, 79 both dated 18-08-2013 recovered from M/s. Baba Strips & Tubes Ltd on 3-04-2014 to which he stated that slip No. 77 & 78 was in his handwriting whereas slip No. 79 was in the handwriting of Rudra Tapas. 13.6 A statement of Shri Partho Sarkar, Associate Manager Excise of JBIL-IV was recorded wherein he stated that central excise duty was paid only on the invoices prepared and kept in statutory records. If invoice was not prepared for any consignment, no central excise duty was paid by JBIL-IV. No further investigation was conducted to substantiate this evidence. 13.7 A statement of Shri Anup Kumar Aggarwal, former Vice President (Commercial) of Group Company was recorded wherein he, inter alia, stated that while working with Jai Balaji Group he was looking after procurement of raw materials; that while directing the dispatch plan as per the direction of Shri Rajiv Jajodia, Director, he used ....
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....t payment of duty. 13.9.2 Kanhaiya Aggarwal in respect of statement 17-07-2014 The pink slips were prepared in all cases where computer slips was generated. (i) The question of clearances of goods without payment of duty on the strength of pink slips did not arise as his role was limited to weighment of the goods and issuance of weighment slips. (ii) He categorically stated that he was asked to say that the goods were cleared without payment of duty. (iii) In some cases the goods were not cleared after weighment due to various reasons such as breakdown of the vehicle. (iv) Not responsible for the dispatch of the goods. 13.9.3. Raghu Nath Jhunjhunwala in respect of statement dated 17-11-2014 (i) That there were occasions when the vehicle broke down and when some orders were cancelled the goods did not leave the factory despite issuance of pink slips. (i) Pink slip number 77 which was in his handwriting he was subsequently informed by Shri Partho Sarkar that the said goods were rejected. (ii) Denied any practice that he used to write year 2003 instead of 2013. (iii) The purport of his answer to question ....
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....bsp; 13.10. From the above, we observe that during the course of cross examination, most of the persons who have given the statements retracted their statements. In the impugned order, the adjudicating authority has held that if the statements were recorded under threats and duress, it is not understood as to what prevented them from retracting their statements within a reasonable period of time. She further held that all the statements of the concerned persons were supported by documentary evidences. Accordingly, she justified in demanding duty by relying upon these statements. However, a perusal of Section 9D of the Central Excise Act, 1944 clearly establishes that unless a person who has made the statement is examined as a witness before the Adjudicating Authority, no reliance can be placed on any statement recorded under section 14 of the Central Excise Act. Any statement recorded under Section 14 of the Central Excise Act could be admitted in evidence only after the process of examination and cross examination is completed under Section 9D. For undertaking this exercise, it is not necessary that a person should have retracted from his statement. If the....
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.... 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 provision of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court." 5. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 6. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.&K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.) = 2011 (22) S.T.R. 225 (D....
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....n the presence of the person who made the statement cannot be obtained without unreasonable delay or expense. 12. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self-evident inference that the decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioner has also invited attention to an unreported short order of the Supreme Court in UOI and Another v. GTC India and Others in SLP (C) No. 21831/1994, dated 3-1-1995 [since reported in 1995 (75) E.L.T. A177 (S.C.)], wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challe....
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....D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 17. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. 18. It is only, therefore,- (i)....
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....ginal, dated 4-4-2016, passed by Respondent No. 2 is, therefore, clearly liable to be set aside. 24. In view of the above facts and circumstances, the impugned Order-in-Original dated 4-4-2016 passed by respondent No. 2 stands set aside. Resultantly, the show cause notice issued to the petitioner is remanded to respondent No. 2 for adjudication de novo by following the procedure contemplated by Section 9D of the Act and the law laid down by various judicial Authorities in this regard including the principles of natural justice in the following manner :- (i) In the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the show cause notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No. 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e., before Respondent No. 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e., to Ambika and J....
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....r safe to rely upon it as a substantive piece of evidence. The question is not so much as to admissibility of such statement as much as it is about its 'reliability'. It is the latter requirement that warrants a judicial authority to seek, as a rule of prudence, some corroboration of such retracted statement by some other reliable independent material. This is the approach adopted by the CESTAT and the Court finds it to be in consonance with the settled legal position in this regard. 42. The contention that it is the responsibility of the noticees to produce the witnesses for cross-examination is a strange one considering that they are witnesses of the Department and that their statements are being relied upon by the Department in support of the SCNs. Since it is relying on such statements, it is the responsibility of the Department to ensure their presence for cross-examination. As already mentioned, whenever such witnesses (i.e. six of them) were produced for cross-examination they resiled from their earlier statements. 43. It is not a matter of mere coincidence that none of the witnesses who were cross-examined stood by their earlier statements. It is one thing to overlook....
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....llate Tribunal, has been the statement of the Director as recorded by the investigation officer during investigation. Section 9D of the Central Excise Act of 1944 reads as under : Section 9D - Relevancy of statements under certain circumstances. A statement made and - (1) signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - When the person who made the statement is (a) dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or when the person who made the statement is (b) examined as a witness in the case before the Court and the Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. The provisions of sub-section (1) shall, so (2) far as may be, apply in relation to any proceeding under this Act, other than a proceeding be....
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.... to have been made to serve the statutory purpose of ensuring that the assessee are not subjected to demand, penalty interest on the basis of certain admissions recorded during investigation which may have been obtained under the police power of the Investigating authorities by coercion or undue influence. 9.5 Undoubtedly, the proceedings are quasi criminal in nature because it results in imposition of not only of duty but also of penalty and in many cases, it may also lead to prosecution. The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not mere directory. Therefore, unless the substantive provisions contained in Section 9D are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence on which a finding could be based by the adjudicating authority. A rational, logical and fair interpretation of procedure clearly spells out that before the statement is treated relevant and admissible under the law, the person is not only required to be present in the proceedings before the adjudicating authority but the adjudicating autho....
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....t of the Counsel for the Respondents cannot be accepted. This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not outcome of any duress." Accordingly, on the first and second question of law, we hold that the statement of the Director could not be treated as relevant piece of evidence nor could be relied upon without compliance of Section 9D of the Act. The two questions of law accordingly, stand answered in that mannert statements recorded without following the procedure as set out in Section 9D of the Central Excise Act, 1944 has no evidentiary value :- 13.14. From the above discussion and the decisions cited above, we observe that the statements recorded cannot be relied upon to demand duty, unless the procedure set out in Section 9D are followed. None of the statements recorded in this case conclusively establish any clandestine clearance. During cross examination all of them retracted their earlier statements. Hence, the evidentiary value of the statements have to be examined in the light of the decisions cited above. 13.15. We observe that on the date of search statements were recorded only from Shri....
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....relied upon by the adjudicating authority to confirm the demands in the impugned order. 14.2 On the date of search i.e. on 17-07-2014, 4 pink slips No. 65, 66, 68 and 71 were seized. The said pink slips allegedly showed clearances of four consignments of Pig Iron on which no central excise duty was paid according to the computer printout, the details of which are furnished as under:- Sl. No. of the Pink Slip Date Lorry No. Party Gross Wt. Tare Wt. Net Wt. Quality 65 16.07.2014 WB-37B-7843 Girish Tikmani 20.210 6.840 13.370 Pig 66 16.07.2014 WB-19A-0954 Girish Tikmani 19.890 7.090 12.800 Pig 68 16.07.2014 WB-61- 8152 Manoj Matal 33.930 9.410 24.520 Pig 71 16.07.2014 WB-39-5232 Girish Tikmani 20.980 7.020 13.960 Pig TOTAL QUANTITY 64.65 MT 14.3 In the impugned order, the Adjudicating Authority has held that against these pink slips no invoices were issued as has been clearly mentioned in the data retrieved from the pen drives 'No invoice issued'. The case of JBIL III is that there were cases where eve....
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....laced on a written sheet which contained the details of Pig Iron removed with "bill" and by "others" for the month of April, 2014 & May, 2014. Based on the entries of the above mentioned hand written sheet, a chart has been prepared by the investigation, which is as under:- 28.06.2014 Month Item Bill Others Total April Pig 9970.97 1707.61 11678.58 May Pig 6603.62 1053.11 7656.73 From the above chart, the adjudicating authority concluded that during the month of April 2014 and May 2014, 9970.97 MT and 6603.62 MT of Pig Iron respectively, had been sold with bills, for which proper Central Excise invoices has been issued. The case of the department is that in the month of April, 2014, 1707.61 MT of Pig Iron and in the month of May, 2014, 1053.11 MT of Pig Iron was found to be dispatched without invoices as reflected in page No. 58, supra. These figures were also matching with the computer printouts and the adjudicating Authority also concurred with this in her findings in the impugned order. 14.7. We observe that no inquiries were conducted with regard to the alleged clandestine removal on the basis of the aforementioned two private records.&nb....
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....ut one cannot make it whose signatures are there and no date is mentioned under the said signatures. It cannot be made out whether the said signatures were already there or obtained during investigation. Accordingly, they contended that no reliance can be placed on the private records purportedly seized on 17.07.2014 from JBIL-III. We observe that the Revenue has not conducted any investigation with any of the officers or staff of JBIL III, to identify the scribe and the source of the data. In the absence of any proof about the authenticity of the data, duty cannot be demanded based on this unverified data. 14.9. In the impugned order, the adjudicating authority has given the findings that JBIL III have clandestinely cleared finished goods of high quantity every day prior to 17-07-2014. The Appellants contended that had there been such clandestine clearance for such a long period, there bound to have been shortage of finished goods as well as raw materials during the course of search on 17-07-2014, but no such evidence has been brought on record to that effect. According to the Adjudicating Authority even on 16-07-2014 four consignments weighing 64.65 MT of Pig I....
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....A perusal of various Annexures to the show cause notice where the duty has been demanded shows that all sorts of vehicles were allegedly used to effect clandestine removal as the net weight of such consignments vary from 9 MT to 42 MT. Various types of vehicles ranging from 6 tyres to 14 tyre vehicles are used to transport such materials. A perusal of computer printouts and Annexure 1 to 3 to show cause notice reveal that against all the consignments allegedly cleared without invoices, vehicle numbers on which these consignments were allegedly transported have been duly mentioned therein. If the case of the DGCEI is treated to be true that the DGCEI had an intelligence that JBIL III indulged in clandestine removal of finished goods on regular basis, the investigating agency had an ample opportunity to intercept atleast some of these consignments which were being allegedly cleared without payment of duty. But, DGCEI did not make even a slightest attempt in this direction which was absolute necessary to give any credibility and veracity to these allegations. 14.11. Regarding some of the other demands confirmed in the impugned order, we observe that duty....
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.... waste materials. It was alleged that in some cases Ladle and Ladle Jam was cleared to one party by name M/s. SYM Single Alloy Pvt. Ltd. but no inquiries were conducted from them. HPTM Cutting Pipe arising during the manufacture of Ductile Pipe and same are recycled. No evidence was brought on record that JBIL IV had used these waste products in the manufacture of finished goods. 14.13. The Appellants cited the following judgments wherein it has been categorically laid down that when the names of the buyers were available in the seized records it would be incumbent on the investigation to make inquiries from the buyers for establishing clandestine removal:- (i) Vandana Art Prints Pvt. Ltd. & Others Vs. Commissioner of Central Excise, Surat-1reported at 2005-TIOL-1437-CESTAT- Mum- (para 4(iii). (ia) Commissioner of Central Excise &Customs Vs. Vandana Art Prints Pvt. Ltd., reported at 2008(221) ELT 27 (Guj.) (para 2) (ii) Suntrek Aluminium P. Ltd. Vs. Commissioner of Customs and Central Excise & Service Tax, Rajkot reported at 2013 (288) ELT 500 (Guj). (para 6, 7). (iii) Kumar Cotton Mills (P) Ltd. Vs. Commissioner of Central Excise, Ahmedabad reporte....
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.... demand calculated in Annexure-F to the show cause notice. These are (i) M/s. Sripati Synthetics, (ii) M/s. Annapurna Synthetics, (iii) M/s. Vardhaman Fabrics, (iv) M/s. Vipin Silk Mills and (v) M/s. Neha Synthetics. It is on record that Central Excise Officers searched the premises of merchant manufacturers and recorded their statements when they were only asked about the receipt of the goods under 621 delivery challans without payment of duty. The two diaries seized from Shri Maheshkumar Satyanarayan Jhawar, on the basis of which duty demand of Rs. 79,39,162/- has been calculated, were with the Department on 25-11-1998 and his statement was immediately recorded. The statement of Shri Sushilkumar Poddar was also recorded immediately thereafter and therefore, when the Officers visited the premises of the merchant manufacturers and recorded their statements, they were already in the possession of diaries, and the statements of Shri Jhawar and Shri Poddar had already been recorded. In spite of this, none of the five merchant manufacturers named above were questioned about the entries of job charges in those diaries. Another aspect to be noticed is that the Commissioner has dropped th....
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.... under coercion, threat and duress. The same is not accepted to me and I retract the same by this affidavit. Further, "the allegation of Central Excise Officers, regarding to our involvement in suppression of production and made clearance without issuing Bills/Invoices to our customers and recovered some over and above amount, by way of incriminate nature through "Angaliyas" is contrary to correct; facts. They have forcibly extracted my statement as per them palatable version, as according to above, is taken under the threat, coercion, duress and undue hardship of the department. The same is retracted and discarded by me through this affidavit. Furthermore, in proceeding my statement, the inquiry officer, forcibly extracted my statement in the matter of M/s. Sundhal Aluminum, Ahmedabad, M/s. Shreeji traders, Ahmedabad, M/s. Swami Aluminum, Surat, in context to supply of our product and for that we have received extra consideration from the said parties through Angaliyas, is totally unworthy and outlandish to the correct facts. The correct fact is that, we have received consideration from these parties, in normal practice, which known under commercial parlance. Hence, the inqu....
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....hence it has no tinge of inadmissibility in evidence if it was made when the person concerned was not then in police custody. Nonetheless the caution contained in law is that such a statement should be scrutinized by the court in the same manner as confession made by an accused person to any non-police personnel. The court has to be satisfied in such cases, that any inculpatory statement made by an accused person to a gazetted officer must also pass the tests prescribed in Section 24 of the Evidence Act. If such a statement in impaired by any of the vitiating premises enumerated in Section 24 that statement becomes useless in any criminal proceedings." 6.4 It was held that a statement recorded by the Customs Officer under Section 108 of the Customs Act, though admissible in evidence, the Court has to test whether the inculpating portions were made voluntarily or whether it is vitiated on account of any of the premises envisaged in Section 24 of the Evidence Act. 6.5 The law with regard to confession regarding the confession retracted afterwards was discussed by the Apex Court in Vinod Solanki v. Union of India and Others reported in (2008) 16 SCC 537 = 2009 (233) E.L.T. 157 (....
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.... effect that non-maintaining of accounts was with an intention to evade the duty. Having regard to the kind and nature of confessions mentioned in the statement, a bare reading thereof would give an impression that various statements were extracted by force and not voluntarily made. Apart that statement was retracted by the said Director by affidavit dated 26th July, 2008, it is also on record of the Appeal. 6.7 More importantly the statement in question was too weak to be relied on as evidence on law, in absence of any corroboration thereof by cogent evidence. The show cause notice mentioned the details of different firms such as Paresh Metals, Rajkot, M/s. Mangalm Metals, Ahmedabad, M/s. Krishna Metals, Ahmedabad, M/s. Sunil Metals, Ahmedabad, M/s. Harish Metals etc., to allege that the raw materials were received by the appellant from those firms. However, statement of none of the above parties was recorded which could have corroborated the statement relied on, except that the statement of the proprietor of M/s. Harish Metals, Morbi was recorded who stated that the scrape was sold to the appellant as per the credit practice and competition without bills. The solitary statemen....
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.... specified in the notification dated 1-3-2003. The clearance value of the goods alleged to have been clandestinely removed upto 1st July, 2008 was Rs. 76.65 lakhs and even if the maximum goods of the value of Rs. 20 lakhs is accepted as stated by the Director in his said statement dated 1-7-2008, the total value comes to Rs. 96.65 lakhs, which is well under the exemption limit. There is also force in the submission of the appellant that the finding regarding clandestine removal was on the basis of goods which were lying in the factory premises at the time of inspection, and that there was no material or evidence establishing the actual clearance of goods, much less clandestine clearance. 6.10 Curiously, the adjudicating authority in the Order-in-Original accepted the position recording in paragraph No. 18 of the order as under, yet ultimately passed the order of confiscation and penalty holding that the exemption notification benefit was not to be given to the appellant and that there was clandestine removal : "It is correctly contended by the notice that their clearance value was to the tune of Rs. 76.65 lakhs up to 1-7-2008 as per records and as admitted by the Director, th....
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....inst the appellant on the basis of entries made in the so-called lot register read with statement of the Director, though the appellants have denied that such lot register belong to them, in as much as they used the letter 'K' for allotting lot number and the word 'W' was never used by them, we find that said lot register, in any case, is a private document. We have seen the said lot register giving details of the clearances along with the name and address of the buyer. Surprisingly enough, neither of the buyers, whose names and addresses were available in the said register, stand contacted by the Revenue and no efforts have been made by them to find out and ascertain the correct position from the said buyers, by investigating them and by recording their statements. This failure on the part of the officers definitely act as fatal to the Revenue's case, in as much as it is well settled law that the entries in the private record cannot be made the sole basis for upholding the allegations of clandestine removal unless there is a corroborative independent evidence on record. Similarly, statement made by the Director does not stand corroborated in any material particular from any other ....
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....mentioned basic raw materials, JBIL III or JBIL IV might have manufactured Sponge Iron, Pig Iron, Ferro Alloys and Billets as the case may be. Sponge Iron and Pig Iron were their intermediate products and JBIL III was also selling large quantities of Pig Iron to outside parties on payment of Central Excise duty. As far as Billets were concerned the same were manufactured out of Sponge Iron or Pig Iron and also sometimes these two raw materials were mixed. The other raw materials required to manufacture Billets are Ferro Manganese& Ferro Silicon. 15.2 From the Annexures to the Show Cause Notice, we find that duty has been demanded on various finished goods said to have been cleared clandestinely. Annexure-14 to the Notice is regarding duty demand on Billets to the extent of 50,465.20 MT. This chart below shows the requirements of various raw materials as required to manufacture this much quantity of billets:- Quantity of Billets (MT) Requirement of Sponge Iron (MT) Requirement of Pig Iron (MT) Requirement of Ferro Manganese (MT) Requirement of Ferro Silicon (MT) Requirement of Silicon Mangan....
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....ther than mine owners. It also mentions quantity and quality of minerals/ore which are to be transported. They also filed monthly returns which contained consolidated quantity of various mineral products procured and consumed in a particular month. This return also contained opening and closing stocks. The Iron Ore or mineral products could be procured only under the signature of Deputy Director of Mines. An Inspector was always posted in each mine to oversee lifting of the Iron Ore and other mineral products, so that the sale was carried out strictly as per the form-L and Form-I. Thus, there is no possibility of procuring unaccounted raw materials which could enable JBIL III and IV to indulge in clandestine manufacture and clearance of finished goods. It is submitted that even procurement of coal, which is required to manufacture Sponge Iron is largely controlled by the Central Government. Both Pig Iron and Sponge Iron are used captively in JBIL III plant for the manufacture of MS Billets. The coal is largely procured from different sources like Eastern Coalfields Ltd. (ECL), Mahanadi Coalfields Ltd (MCL) and also through E-auction. Both ECL and MCL are Cen....
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.... than 41 Crores on the basis of the alleged purchase of 25 MT of scrap in cash. Even those two consignments of scrap were duly accounted for in their books of accounts. No other evidence was brought on record by the investigation regarding purchase of raw materials required for manufacturing such huge quantity of finished goods foe clandestine clearance. 15.8.. In support of this proportion, the Appellants placed their reliance on the judgment of Hon'ble Gujarat High Court in the case of CCE Vs. Vishwa Traders (P) Ltd. Reported in 2013 (287) ELT 243 (Guj), which has been upheld by the Apex Court as reported in 2014 (303) ELT A24(SC). The relevant part of the judgement is furnished below: 7. The Tribunal in Paragraph Nos. 12, 13 and 16 has recorded clear finding that when the premises of the respondent were visited, the stock of raw-material and finished goods were tallying with the recorded goods. Further, nothing on record was found by the authority, which showed that unrecorded raw-materials were purchased or consumed by the respondent or that the respondent had clandestinely manufactured or removed the goods. It is necessary to extract Paragraph Nos. 12, 13 and 16....
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....se, 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 this appeal, no substantial question of law arises for consideration of this Court. 15.9..In the case of Mohan Steels Ltd. Vs. Commissioner of Central Excise, Kanpur 2004 reported at (177) ELT 668 (Tri. Del.) it has been held 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. The relevant part of the decision is reproduced below: 9.1 We have considered the submissions of both the sides. The impugne....
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....rption & Adaptation Scheme by Ministry of Science & Technology. This study was initiated by the Department of Scientific & Industrial Research to assess and evaluate the existing technological norms in important sector of priority and corresponding international norms and to ascertain the gaps in technological levels. As per the Report the minimum and maximum consumption of Power in India was 600 to 1000 kwh per ton of billet/ingot. The Report has also mentioned that the consumption of power can be reduced by recent developments such as oxygen assisted melting, oxy-fuel burner, scrap pre-heating, water cooled roof and panels for wall lining, etc. The Report envisaged two model plants and the norms for the important parameters were worked out in order to establish the benefits of the phase of modernization. The norms for power was 670 kwh/per ton of billet for 10/12 t furnace and 630 kwh for 25/30t furnace. These norms regarding consumption of power have not been disputed by the Revenue. The Adjudicating Authority has come to the conclusion, merely on the basis of three furnaces found to be working by the visiting officers, that the Appellants had indulged in a systematic manipulati....
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....ub-station on direct feeder. There is nothing on record to show that the power required by the Appellants to manufacture the quantity of ingots and billets alleged to have been manufactured by them had been supplied by Sonik Sub-station to the Sub-station at the Appellants' end. Thus the Revenue has not succeeded in proving its allegation that the Appellants have manipulated their records of power consumption. 10.1 Regarding the quantity of ferro alloys required to manufacture 1 ton of ingot/billet, the Commissioner has confirmed the demand on the basis that 9 kgs. ferro alloys is required for manufacturing 1 kg. of ingot/billet. This is not supported by any technical data/literature on the subject. On the other hand, the Report on "Technology Evolution in Mini Steel Industry" clearly mentions that "Analysis of the ferro-alloy consumption in mini steel plants reveal that consumption of ferro-manganese varies from about 5 to 12 kg/t and that of ferro silicon from about 3 to 7 kg/t of billets. In general, it can be assumed that mini steel plants would consume about 10 kg/t of ferro manganese and 5 kg/t of ferrosilicon". The Report also fixes the same quantum of consumption of ferr....
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....s without account, allegation of manufacture of finished goods and its clandestine removal cannot be sustained. The relevant part of the decision is reproduced below: "21. It is seen that, apart from potassium chloride, Hydrochloric Acid was the other major chemical used in the manufacture potassium chlorate by the assessee. Several other chemicals 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 ....
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....he case of Hilton Tobaccos Pvt. Ltd. v. CCE, reported in 2005 (183) E.L.T. 378 (Tri.-Bang) the Tribunal while dealing with an order of the Revenue in a case of similar set of facts held as under in para 8 of their order : "We have gone through the records of the case carefully. The Revenue has come to the conclusion 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....
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....g of goods therein, security gate records, transporters' documents, such as L.Rs, statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by the consignees; (v) Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. In the instant case, no such evidences to the above effect have been brought on record. 15.12. In the case of Gupta Synthetics Ltd. Vs CCE, Ahmedabad-II, reported in 2014 (312) ELT 225 (Tri-Ahmd), it has been held that there should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions: "14. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are the following : (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarrant....
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....or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. In yet another decision of a co-ordinate Bench of the Tribunal [Pan Parag India v. CCE, 2013 (291) E.L.T. 81], it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory, cannot be adopted in cases of weak evidences of a doubtful nature. Where to manufacture huge quantities of final products the assessee require all the raw materials, there should be some evidence of huge quantities of raw materials being purchased. The demand was set aside in that case by this Tribunal. 15. We may now proceed to deal with the two demands of duty in the present case : It is the contention of GSL that the demand of Rs. 32,07,422/- was wholly illegal and without any justification because no evidence has been produced to the effect that GSL had actually manufactured the quantity of 91929.140 Kgs of DT Yarn, which is alleged to be cleared clandestinely without payment of duty. It was further submitted that as per Annexure A(1....
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....stantiate the case of the Revenue that A-21 was a register maintained for recording the actual production. Neither Mohan Lal Gupta's statement nor any evidence indicated that the details appearing in A-21 were in conformity with the details recorded in the Register titled as A-19. It is the contention of GSL that they had established during the adjudication proceedings that A21 and A-19 did not correlate to another and thus, the details shown in A-19 being corroboration to the case made out by the Revenue on the basis of A-21 was totally illegal and incorrect. Even the document titled as A-20 did not support the case of the Revenue as the loose papers found in this file were never examined by the Revenue. In reply to the submission made on behalf of GSL it was submitted by the learned Special Counsel, Mr P.R.V. Ramanan that the Adjudicating Authority has confirmed that the duty demand of Rs. 32,07,422/- on the basis of records recovered from the premises of the GSL. Mohan Lal Gupta, Director of GSL on 3-9-2003 has deposed that there are 156 positions on each Crill and on an average 10 Kgs of POY was loaded for processing each day. Thus, total average weight for each Crill were w....
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....and sale of excisable goods, mere entries in note books or diaries cannot establish the same. Proof of actual production, whether by direct evidence or corroborative evidence is a 'must', and the probative value of such evidence has to be established, especially when such a finding would lead to penal consequences. In our view, therefore, the present demand of Rs. 32,07,422/-, which has been confirmed against Nova by the impugned order, is not based on evidence which, as this Tribunal has repeatedly emphasized in cases of clandestine manufacture and clearance, would justify a finding against the appellant (GSL). Unless there is conclusive evidence that Nova did actually manufacture DTY and clandestinely clear them without payment of duty, liability cannot be placed on GSL on the basis of conjectures and surmises, as the Hon'ble Supreme Court emphatically declared in the Oudh Sugar Mills case (supra). We are of the view that there is no tangible evidence produced by the department to establish that GSL has clandestinely manufactured and cleared DTY on which the present demand has been made. We, therefore, set aside the demand of Rs. 32,07,422/- as being illegal and unjustified. ....
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....ly considered the statement of Mohan Lal Gupta. It is further submitted that the Adjudicating Authority has rightly concluded that on a combined reading of the statement of Mohan Lal Gupta and the Note Book marked as A-23, it can be concluded that the details of drawing of samples reflected in the Note Book marked as A-23 is an unimpeccable evidence to support the contention that the yarn was produced on DT machine on which random samples were shown to have been drawn. The Adjudicating Authority has rightly concluded that the private records maintained by the assessee are sufficient for arriving at the figures of production and clearance of GSL as the records A-19, A-20 were either maintained or duly signed by the Supervisor In-charge of the DT machine which means that the said records reflected the true and correct working on the DT machine. We have considered the submissions of both parties. We find that no evidence has been produced by the Revenue to show that GSL has effected sale of such huge quantities of DTY weighing 214.685 mtrs. There is no tangible evidence of GSL having actually produced all the DTY or Twisted Yarn from out of non-duty paid POY supplied by Nova or by ....
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.... DTY. In the absence of all such evidence, a finding that excisable goods have been clandestinely manufactured and cleared by GSL cannot justifiably be arrived at. The probative value of the entries needs to be established by independent corroboration, which is lacking in the present case. The long line of decisions referred to and relied upon by the ld. Senior advocate, appearing for Nova have laid down the parameters for a charge of clandestine manufacture and clearance to be established, which have not been satisfied in the present case. The present demand of Rs. 73,00,168/- is, therefore, unjustified and deserves to be set aside. Accordingly, we do so." 15.13. In the case of Nebha Steels Ltd. Vs Commissioner of Central Excise, Chandigarh, reported in 2016(344)ELT 561(Tri-Chan), it has been held that when the colluding parties have not been made parties to the Show Cause Notice, the same may be treated as defectice. The relevant para of the order is reproduced below: 22. We also observe that there are 28 buyers of the finished goods and the adjudicating authority has relied upon the statements of 16 parties and these statements are typed one and identically worded and ....
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....(M/s.SPMRL). Printouts of the contents of the hard discs were taken in the presence of authorized signatory of M/s. SPRML and independent witnesses. Certain statements were recorded. Duty was demanded from JBIL III alleging that during the period 01-02-2012 to 25-12-2012 they have cleared 13683.05 MT of M.S. Billets to M/s. SPRML without payment of duty. This case was made out on the basis of printouts taken from hard disc seized from the secret office of M/s. SPRML. The duty demanded was confirmed by the Commissioner of Central Tax and GST, Bolpur, but on appeal the Tribunal, Kolkata set aside the demands on the basis of the following findings:- 16.1. That though the employees of the purchaser had accepted having received goods from JBIL III without payment of duty but when it was not accepted by the supplier it could not be concluded that there was any clandestine removal on the part of the supplier (JBIL III). Further, cross examination of those employees were not allowed, therefore, no reliance could be placed on their statements.( Cross examination was allowed in this case is the only difference. Otherwise, on facts, both cases are similar). 16.2 That....
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....ture and clearance; q. Proof of actual transportation of goods, cleared without payment of duty r. Links between the documents recovered during the search and activities being carried on in the factory of production; etc." 16.7. It is submitted that the facts and circumstances of the present appeal are similar to that of the case wherein the Final Order No.75583-75585/2020 was passed by this Tribunal. No appeal has been preferred by the department against this order meaning thereby that the department has accepted the findings of the Tribunal which has attained finality. 16.8. Accordingly, relying on the above said decision by this tribunal in their own case and the various other decisions cited by them in their written submissions, they prayed for setting aside the demand of duty and penalties imposed against all the three the Appellants in the impugned order. (viii) Whether penalty is imposable on the Appellant companies and it's Director, on the basis of the evidences available on record? 17. We observe that penalty equivalent to the duty confirmed has been imposed on both the Appellant companies JBIL III and JBIL IV, in terms of provisions of Rule 25 of the Cent....
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....d that no details have been given as to what were the dates of these summons and whether these summons were served upon the said persons. We observe that if the investigating officers were of the view that repeated summons were issued to the Director and employees of M/s. JBIL III and IV, it was incumbent upon them to have given the details of the said summons. Therefore, such type of vague allegations did not advance the case of the DGCEI. Shri Aditya Jajodia , in the reply to the Notice, informed the Adjudicating Authority that all the summons and replies were given thereto. He categorically stated that these summons were not pertaining to the present proceedings. The Appellant stated that unfortunately the Adjudicating Authority has not taken the further submissions dated 27-05-22 made by them into consideration while passing the impugned order. Therefore findings of the Adjudicating Authority in para 37 of the impugned order are factually incorrect. Shri Aditya Jajodia was never summoned with regard to the present proceedings. 17.4 The Appellant further stated that there is no evidence on record to show that Shri Aditya Jajodia was concerned with ....