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2023 (8) TMI 989
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....ss and H.S. Education Cess, as determined under sub-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....
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....h the below mentioned confirmed demands and penalties in the impugned order, against the following three Appellants: 3.1 M/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. ....
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....nbsp; 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. 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 J....
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....,434 41,34,85,585 JBIL-IV Amount in Rs. Year Value Central Excise Duty payable. 2012-13 10,26,81,499 1,26,91,433 2013-14 50,91,071 6,29,257 2014-15 (upto 16-0-2014) 1,15,14,033 14,23,134 Total 11,92,86,603 1,47,43,824 5.1 The adjudicating authority passed the impugned 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 pe....
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....he second 4 GB pen drive, the department did not make any effort to ascertain from which computer the data was fed originally. The adjudicating authority has given a finding on this point in Para 22 of the Impugned Order that the computer on which the data was being fed had been identified, as the actual usage of the source was witnessed by the independent panchas in the act. Such type of findings do not fulfil the substantive and mandatory requirements 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 obtai....
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....s No. 65, 66, 68 and 71 were seized. The said pink slips 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 as under:- Sl. No. of the Pink Slip Date Lorry No. Party Gross Wt. Tare Wt. Net Wt. Quality 65 16.07.2014 WB37B7843 Girish Tikmani 20.210 6.840 13.370 Pig 66 16.07.2014 WB19A0954 Girish Tikmani 19.890 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 prep....
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....6-07-2014 four consignments of Pig Iron were cleared in clandestine manner, neither Shri. Girish Tikani nor Manoj Metals was confronted with the private records or the computer printouts or the pink weighment slips or the Report No.14. Pig Iron is a raw material in JBIL III. But no inquiry was conducted as to who consumed the said allegedly cleared Pig Iron without payment of Central Excise duty. If JBIL III would have clandestinely cleared 64.65 MT of Pig Iron on 16-07-2014, there was bound to be shortage of finished goods and raw materials on 17-072014 i.e. on 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 c....
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.... Pig Iron WB 39 8920 13.57 12. Pawan Bansal Pig Iron WB 41 7607 14.55 13. Pawan Bansal Pig Iron WB 03B 0055 20.94 14. Deepak Dalmia Pig Iron WB 41A 3149 14.44 15. Monoj Metal Udyog Pig Iron WB 37C 1635 26.06 16. Saran Alloys Pvt. Ltd. Pig Iron WB 39 5232 18.09 TOTAL 251.33 17. Direct Runner OR 09P 5670 36.81 18. Direct Runner OR 09P 5670 33.61 TOTAL 70.42 GRAND TOTAL 321.75 (xi) If we take into account the alleged clandestine clearance for the last sixteen days prior to the search of the unit, JBIL III was alleged to have cleared 129 consignments without payment of Central Excise duty during the said short period of time 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 in....
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....tions by JBIL III to JBIL IV as detailed in the chart below: Row Labels NET W.T AMOUNT EXCISE E.CESS H.E.CESS TOTAL DUTY INCLUDING CESS 100 LCEQ 20.310 682,416 68,242 1,365 682 70,289 100 MS 1598.140 51371411 5137141 102743 51371 5291255 100 MS 500 64.380 2,253,300 225,330 4,507 2,253 232,090 100 CRS 131.370 4,597,950 459,795 9,196 4,598 473,589 130 52Cr4MO2V 55.450 1,746,675 174,668 3,493 1,747 179,908 130 55SI7 359.180 13,821,444 1,573,499 31,470 15,735 1,620,704 130 CRS 536.210 18,954,901 2,068,557 41,371 20,686 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....
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....n 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 as provided under Section 9D. For undertaking this exercise, it is not necessary that a person should have retracted from his statement. If the argument of the Adjudicating Authority is accepted, then the provisions of Section 9D would become otiose. This cannot be the intention of the legislature. (xviii) The Tribunal in the case of Ambica Organics Vs. CCE & Customs, Surat-1, reported as 2016 (334) ELT 97 (Tri. - Ahmd), was dealing with a case where the entire case of clandestine removal was based upon some computer prints out and certain statements of buyers. The party therein requested for cross examination of 30 persons but Commissioner (Appeals) allowed cross examination of only four persons which were randomly selected. The said four witnesses resiled from their original statements and stated that they were made to sign on the promise that no action shall be taken against them. The Revenue h....
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.... unless the procedure laid down under Section 9D of the Central Excise Act is followed in letter and spirit, no statement including the statement of Director which was of inculpatory in nature can be relied. (xxi) The investigation officers did not conduct any investigation either from the mine owners or from the Railways or from any transporter to substantiate their allegation that JBIL III and JBIL IV have procured any unaccounted raw material from them or transported it without invoice. The Railways being a government organization, there was absolutely no scope for transportation of any unaccounted raw material. The entire quantity of Iron Ore and other minerals products/raw materials were transported through valid railway receipts and only a few raw materials were transported through trucks or similar transport vehicles. There was absolutely no investigation from any supplier of raw materials that they ever sold the raw materials either to JBIL III or JBIL IV without invoices and received any cash from them. Similarly, no investigation was conducted from any of the transporters to the same effect. It is on record that from the aforementioned basic raw....
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....Coal is mostly transported through Railways. Therefore, there is no scope for procurement of coal as a raw material in clandestine manner. (xxiii) With regard to JBIL IV, they have the facility of Coke Oven Plant. In Coke Oven Plant, the basic raw material is coking coal and the finished product is coke. JBIL IV have imported coking coal for the purpose of production of coke in coke oven Plant. Sometimes JBIL IV have also directly imported Coke for the purpose of production of Pig Iron in their Blast Furnace Plant. Coke is the basic raw material (Fuel) for the purpose of production of Pig Iron. During the alleged period of clandestine removal, JBIL IV have imported the coking coal and coke for the production of Pig Iron. No case has been made out that JBIL IV had procured various raw materials including coke in clandestine manner. (xxiv) The Adjudicating Authority has negated this very vital submission on an untenable ground at Para 28 of the impugned order by holding that during the course of search, some messages were found in the in-box of the mobile phone of Shri Diptendu Samui, Accounts officer, which indicated purcha....
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....ertake clandestine removal of such a huge quantity of finished goods, JBIL III would have indulged in cash transactions of around Rs. 700 Crores during a period of little over four years. There is not even an iota of evidence brought by the investigation to this effect. (xxvi) JBIL III & IV in their further submissions dated 27.05.2022 before the adjudicating authority cited the Final Order No. 75583-75585/2020 dated 12-11-2020 passed by this Tribunal in JBIL III's own case. In this case also, duty was demanded on the basis of some data relating to unaccounted transactions recorded in external Hard Drives recovered from the secret office of one of their buyers namely M/s .Shree Parasnath Re-Rolling Mills Ltd, Durgapur (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 25-122012 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 ....
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....acture and clearance and not merely inferences or unwarranted assumptions; vi. Evidence in support thereof should be of: a. Raw materials, in excess of that contained as per the statutory records; b. Instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty. c. Discovery of such finished goods outside the factory. d. Instances of sales of such goods to identified parties. e. Receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; f. Use of electricity far 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. It is submitted that the facts and circumstances of the present appeal are similar to that of the case w....
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..... In their further submissions dated 27.05.2022 he has categorically stated before the Adjudicating Authority that proper replies were given to all the summons. However, the Adjudicating Authority while passing the impugned order has not taken into consideration the submissions made by him. He was never summoned with regard to the present proceedings. Therefore, the findings of the Adjudicating Authority in the impugned order are factually incorrect. Without prejudice to the above submissions, he stated that there is no evidence on record to show that he was in any way concerned with transporting, removing, depositing, keeping, concealing, selling and purchasing of excisable goods, which he had knowledge, or reason to believe that they were liable for confiscation. JBIL III and IV have already made detailed submissions that the duty demand on both the units is not sustainable on various grounds. He reiterated the said grounds and contended that since no duty demand is sustainable against JBIL III and IV, the question of penal action against him does not arise at all. Accordingly, he prayed for setting aside the penalty imposed on him. 7. The Ld. A.R. stated that the ....
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....heir submissions, the Appellants cited various loopholes in the investigation and argued that the demands made in the impugned order are not sustainable. In order to analyze the evidences available on record to substantiate the allegations made by Revenue and the submissions made by the Appellants to counter the findings of the adjudicating authority in the impugned order, we frame the following questions: 10. The issues to be decided in this appeal are: (i) Whether evidences available on record substantiate that the Appellants are the owners of the two pen drives and the data contained therein? (ii) Whether the computer printouts taken from the pen drives recovered during the search can be relied upon as evidence to demand duty? (iii) Whether the conditions mentioned in Section 36B has been followed in this case or not, to rely upon the computer printouts as evidence? (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 t....
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....rtain files were created in the year 1996 or 1998 or 2000, whereas JBIL III had started its production only w.e.f. 30-03-2007. The Forensic Report dated 05.07.2021 reveal that some files were accessed on 17-072014, 28-11-2014 and 11-03-2015 but it did not show that on the said three dates any printouts were taken. The Appellant further stated that various files pertained to various individuals with whom the JBILIII or JBIL IV did not have any connection even remotely, were found in the Report dated 05.07.2021. We observe that the adjudicating authority has not given any findings on this Report. We observe that the entire duty demand is based upon the computer printouts taken from these two pen drives, The Forensic Report questions the very existence of the computer printouts and the adjudicating authority has not given any finding on this report. Not giving any finding on the Forensic Report dated 05.07.2021 would only lead to the conclusion that the said Report did not support the case of the department and hence the adjudicating authority ignored the same and has not give any finding on it. 11.1 We observe that one pen drive was recovered from the pocket of Shri. S....
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....hing contained in any other law for the time being in force, - (a) a micro film of a document or the reproduction of the image or images embodied in such micro film (whether enlarged or not); or (b) a facsimile copy of a document; or (c) a statement contained in a document and included in a printed material produced by a computer (hereinafter referred to as a "computer printout"), if the conditions mentioned in sub-section (2) and the other provisions contained in this section are satisfied in relation to the statement and the computer in question, shall be deemed to be also a document for the purposes of this Act and the rules made thereunder and shall be admissible in any proceedings thereunder, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible. (2) The conditions referred to in sub-section (1) in respect of a computer printout shall be the following, namely :- (a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to s....
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....e matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it. (5) For the purposes of this section.- (a) Information shall be taken to he supplied to a computer if it is supplied thereto in any appropriate form and whether it is no supplied directly or (with or without human intervention) by means of any appropriate equipment; (b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities; (c) a document s....
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....ame time, with fast development in the electronic techniques, the tapes/ cassettes are more susceptible to tampering and alterations by transposition, excision, etc. which may be difficult to defect any, therefore, such evidence has to be received with caution, though it, would neither be feasible nor advisable to lay down any exhaustive set or rules by which the admissibility of such evidence may be judged but it needs to emphasized that to rule out the possibility of any kind of tampering with the tape, the standard of proof about its authenticity and accuracy has to be more stringent as compared to other documentary evidence." 12.2 We observe that pen drive is not a substantial evidence in the absence of corroborative evidence. The Appellants contended that corroborative evidences such as consumption of unaccounted materials, production of unaccounted finished goods, extra labour, extra consumption of electricity, clearance of goods from the factory, receipt of cash on account of alleged clandestine sales are required to substantiate clandestine clearance. We observe that all the above factors are conspicuous by its absence in the present proceedings. The investigation ....
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....e truth. Even if the statements of director are considered inculpatory the same cannot be relied upon in absence of corroboration with material evidence as held in case of Tejwal Dyestuff Ind. v. Commissioner - 2007 (216) E.L.T. 310 (Tri.) and 2009 (234) E.L.T. 242 (Guj.). Thus the statement of directors cannot lead to inference that the goods stated in "Bombay Sales" ledgers are of Appellant. We also find that the brokers have even stated that they have taken the goods from Vasai Godown of M/s. SFPL. In such case there is no reason to hold that the Appellant has dealt with M/s. SFL. Thus in both cases i.e. "Bombay Sales" and "Smi Cash Sales" apart from the statements which are even contradictory no corroborative evidence. The Appellant has placed reliance upon various judgments to canvas their point that in absence of corroborative evidence no demand can be made. We find that no corroborative evidence has been stated in show cause notice in the form of receipt of unaccounted raw material, transportation of unaccounted such raw material to SFL factory, consumption of unaccounted raw material, production of unaccounted finished goods, production record of unaccounted finished goods,....
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.... We also find that the onus to prove clandestine clearances has "20. to be discharged by sufficient cogent, unimpeachable evidence as held in case of CCE v. Laxmi Engg. Works - 2010 (254) E.L.T. 205 (P & H), Shingar Lamps Pvt. Ltd. v CCE, 2002 (150) E.L.T. 290 (T), CCE v. Shingar Lamps Pvt. Ltd., 2010 (255) E.L.T. 221 (P & H), Ruby Chlorates (P) Ltd. v. CCE, 2006 (204) E.L.T. 607 (T), CCE v. Gopi Synthetics Pvt. Ltd., 2014 (302) E.L.T. 435 (T), CCE v. Gopi Synthetics Pvt. Ltd., 2014 (310) E.L.T. 299 (Guj.), Aum Aluminium Pvt. Ltd. v. CCE, 2014 (311) E.L.T. 354 (T), Sharma Chemicals v. CCE, 2001 (130) E.L.T. 271 (T), Resha Wires Pvt. Ltd. v. CCE, 2006 (202) E.L.T. 332 (T), Atlas Conductors v. CCE, 2008 (221) E.L.T. 231 (T), Vishwa Traders Pvt. Ltd. v. CCE, 2012 (278) E.L.T. 362 (T), CCE v. Vishwa Traders Pvt. Ltd. 2013 (287) E.L.T. 243 (Guj.), CCE Swati Polyester, 2015 (321) E.L.T. 423 (Guj.), Commissioner v. Swati Polyester - 2015 (321) E.L.T. A-217 (S.C.), Flevel International v. CCE, 2016 (332) E.L.T. 416 (Guj.), CCE v. Renny Steel Casting (P) Ltd., 2012 (283) E.L.T. 563 (T), CCE v. Akshay Roll Mills Pvt. Ltd., 2016 (342) E.L.T. 277 (T), Industrial Filter & Fabrics Pvt. Ltd. v. ....
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....omputer, but no statement was recorded from him. There is no statement from any Director either of JBIL-III or JBIL-IV accepting the authenticity of the said data. Even on the date of search Shri Gaurav Jajodia, Director of JBIL-III was present whose signature was obtained on the panchnama but his statement was never recorded. 12.5 We observe that JBIL-III and JBIL-IV have vehemently denied ownership of these two pen drives and the authenticity of the data therein. 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 regarding clandestine clearances in respect of entries in the computer printouts was not categorical. He had stated that in the computer printouts, when tax invoice number was not given some of them 'might be' without bill despatches because in some of such cases bills might have been issued from JBIL IV but entries were made in the pen drives only to keep account. In his statement, Shri. Sushil Kumar Roy only says that the entries without tax invoice number might be meant ....
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....r the purpose of proper appreciation of the case, the relevant portion of the findings of the Commissioner (Appeals) is reproduced below : - "4.5 Another contention of the appellant is that department has brought artificial evidence in the form of 30 statements from the buyer parties. The appellant stand is that the statements of the 30 parties are pre-drafted computer statements and involuntary. Four of the buyers (randomly selected) deposed before me. Three of them stated before me that they were made to sign a pre-drafted statement on a promise that no action shall be taken against them. One of them stated that his statement was voluntary. In the statements it has been recorded that these person stated that they received the textile auxiliary chemicals without invoice and against cash payments. Statement of these 30 persons (most of them Processors) are against their own interest as it makes them liable for penal action for purchasing dutiable goods on which duty was not paid. However, no show cause notice is given to these persons who have admitted to have received the impugned goods without bills. This fact gives credence to the allegations made by the appellant that ....
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....hat period by the person having lawful control over the use of the computer; (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was operational properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that 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 reproduced or is derived from information supplied, to the computer in the ordinary course of the said activities." Sub-section (4) of Section 36B requires issue a certificate in this behalf by a person occupying the responsible official position in relation to the operation of the relevant device or the management of the relevant activity (whichever is appropriate) shall be evidence in any matter stated in the certificate and for the purpose of the sub-section, which shall be sufficient for....
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....he rules made thereunder and shall be admissible as evidence of the contents of its original, if the conditions mentioned in sub-section (2) and other provisions of the Section are satisfied in relation to the statement and the computer in question. Subsection (2) reads as under : - "2. The conditions referred to in sub-section (1) in respect of the computer printout shall be the following, namely : - (a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly, carried on over that period by the person having lawful control over the use of the computer; (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was in operation properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that pe....
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....bruary, 1996 to September, 1998 only but the information contained therein was used for a finding of clandestine removal of waste and scrap for earlier period also, which, in any case, was not permissible in law. In the result, we hold that the entire demand of duty on waste and scrap is liable to be set aside." 11. Taking into consideration the overall facts and circumstances of the case, I find that the entire case was made out on the basis of statements of the buyers and the computer printout. Commissioner (Appeals) already held that the evidentiary value of the statements is weak. It is also noted that the statements of the 30 persons were mostly similarly pre-drafted. The investigating officers failed to comply with the conditions of Section 36B of the Act in respect of relying upon this computer printout. There is no adequate material available on record to establish the clandestine removal of goods. Therefore, the demand of duty solely on the basis of these materials cannot be sustained. Hence, as the clearance value was within the SSI exemption, the confiscation of the goods cannot be sustained. So, the imposition of penalties are not warranted 12.7. In the case....
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....re must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible t....
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....ever tax invoice number is not given some of them 'might be' for without bill dispatches because in some of such cases, bills might have been issued from JBIL-IV but entries were made in the pen drives only to keep account. We find that this statement is not very categorical about the clandestine clearances. 13.2 A statement of Shri Kanhaiya Agarwal, weighbridge in-charge of JBIL-III was recorded on 17.07.2014, wherein he inter alia stated that he used to make weighment of goods at the weigh bridge of all incoming raw material as well as of outgoing finished goods. On being asked to explain about the pink weighment slips and slip pad as recovered from JBIL-III, he stated that weight of the material which has to be cleared without invoices was being mentioned in these pink weighment slips which was later handed over to Shri Sushil Kumar Roy. This statement was later retracted y him during cross examination before the adjudicating authority. 13.3 On 17.07.2014, a search was also conducted at the Head Office of Jai Balaji Group in Kolkata. The officers took out printouts of some of the e-mails from company's mail -ID handled by Shri Diptendu S....
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....elied upon to demand duty. The cross examination conducted by the adjudicating authority and the replies given by the witnesses during cross examination are furnished below: 13.9 The gist of cross-examination of various witnesses is as under:- 13.9.1 Sushil Kumar Roy in respect of statement 17-07-2014 (i) The pen drive in question was provided to him by Mr Gautam Banerjee who was an associate like him in the company. (ii) All the entries, which were found in the pen drives, were not made by him. (iii) These entries were made by other associates like Shri Gautam Banerjee, Shri Samiran Bose and Shri Krishanu Bhattacharya. (iv) The data which was fed by him in the pen drives was fed on different computers. (v) He was pressurized to make these statements. (vi) He was told by the officers that if he did not make such statements, he would be arrested, but there would be no inconvenience if he stated as mentioned in the statements. (vii) That despite the entries in the pen drives about clearance of any consignments there was possibility of like order getting cancelled, the vehicle developing br....
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.... anyone not to record any production in the production records. He also denied having been asked by anyone not to record any raw material received in the factory. (ii) That there were instances where pink slips were issued but no invoice was issued as due to break down of vehicle or order having been cancelled. 13.9.5 Shri Diptendu Samul in respect of statement dated 1707-2014 Wherever some message of payment on cash was cited in the Show Cause Notice it was clarified by Shri Diptendu Samul that the said purchase was accounted for in their records. 13.9.6 Anup Kumar Agarwal in respect of statement 11-12-2014 (i) He was responsible only for procurements of raw materials. Hence he was not in a position to comment about dispatches. (ii) Denied having dealt with the sale of finished goods by JBIL or any dispatches of the goods. (iii) Stated that he had left JBIL at the time recording of his of the statement. He was advised by the DGCEI officials to tender the statement as they desire so that he was free from further investigation. (iv) Stated that his stat....
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....the retractions made by them during cross examination. 13.11. The Appellants stated that the procedure set out under Section 9D is a mandatory procedure and without following this procedure no reliance can be placed on any statement recorded under Section 14 of the Central Excise Act, 1944. We agree with the contention of the Appellants. In the case of G-Tech Industries Vs Union Of India reported in 2016(339) ELT 209 (P&H), the Hon'ble Punjab and Haryana High Court has given an elaborate findings regarding the procedure to be followed under Section 9D. The relevant Part of the judgement is reproduced below: 3. The petitioner seeks, by means of the present writ petition, to challenge Order-in-Original No. V(29)15/ce/Commr.Adj/ChdII/44/2015, dated 4-4-2016 issued by respondent No. 2 whereby respondent No. 2 has confirmed differential Central Excise Duty (hereinafter referred to "as duty") demand of Rs. 7,08,38,008/- with interest and equivalent penalty. It is contended that the impugned order-in-original has been passed in flagrant violation of Section 9D of the Central Excise Act, 1944 (hereinafter referred to as "the Act") by relying upon the statements recorded under S....
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....bout the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 8. As already noticed herein above, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a Gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 9. The consequence woul....
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....into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 14. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the Gazetted Central Excise officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 15.....
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.... witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. 19. Clearly, if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 20. Reliance may also usefully be placed on Para 16 of the judgment of the Allahabad High Court in C.C.E. v. Parmarth Iron Pvt Ltd., 2010 (260) E.L.T. 514 (All.), which, too, unequivocally expound the law thus : "If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements cannot be considered as evidence." 21. That adjudicating authorities are bound by the general principles of evidence, s....
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....corded during investigation, under Section 14 of the Act, whose makers are not examination-in-chief before the adjudicating authority, i.e., before Respondent No. 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No. 2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, would be open to the Revenue to rely on the said statements to support the case sought to be made out in the show cause notice. (iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating authority, i.e., on Respondent No. 2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evide....
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.... on the premise that all of them were under the pressure and control of the noticees. The other approach is to view this with some caution and ask what might be the case if the remaining witnesses were also produced for cross-examination? Importantly, what would be the prejudice caused to the noticees, in such circumstances, by their non-production for cross-examination? Thus a doubt is created in favour of the noticees when such witnesses do not turn up for cross-examination. It is the latter approach that has weighed with the CESTAT. That, in view of this Court, was a possible approach and does not render its order perverse on that score. 13.13. In the case of Hi Tech Abrasives Ltd Vs Commissioner of C.Ex and Cus, Raipur, reported in 2018 (362) ELT 961 (Chattisharh), the Hon'ble High Court has held that unless the procedure laid down in Section 9D of the Central Excise Act, 1944 is followed in letter and spirit, no reliance can be placed on any statement recorded under Section 14 of the Central Excise Act, 1944. The relevant part of the judgement is reproduced below: 9. Findings on Substantial Questions of Law (i) & (ii) : We shall decide the first two ....
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....Act, other than a proceeding before a Court, as they apply in relation to a proceeding before the Court. On scanning the anatomy of the said provision, we find that the statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of inquiry or proceeding under the Act shall be relevant for the purposes of proving truth of the facts which it contains only when it fulfills the conditions prescribed in clause (a) or as the case may be, under clause (b). While clause (a) deals with certain contingencies enumerated therein, clause (b) provides that statement made and signed would be relevant for the purposes of proving the truth of the facts contained in that statement only when the person whom made the statement is examined as witness before the Court. (her, the adjudicating authority). 9.2 At this juncture, we need to notice the provision contained in Section 9D which provides that sub-section (1) shall, as far as may be, applied in relation to the proceedings under the Act, other than the proceeding before the court, as they apply in relation to proceeding before the Court. This provision when read in ju....
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....edings before the adjudicating authority but the adjudicating authority is obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Therefore, we would say that even mere recording of statement is not enough but it has to be fully conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. The rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasa....
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....bsp; We observe that on the date of search statements were recorded only from Shri. Sushil Kumar Roy and Shri. Kanhaiya Agarwal. There was 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. 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 printout, if tax invoice number was not given some of them 'might be' without bill despatches because in some of such cases, bills might have been issued from JBIL IV but entries were made in the pen drives only to keep account. However, this averment of Shri. Sushil Kumar Roy was not probed further. They have all retracted their statements during the course of cross examination. The adjudicating authority has brushed aside the retractions as an afterthought. In view of the decisions cited above, we agree with the contention of the Appellants that the retracted statements have no evidentiary value, without any corroborating evidence. The corroborating evidence relied u....
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....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 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,. We observe that this fact was explained by Shri Sushil Kumar Roy and Sh. Kanhaiya Agarwal in their respective cross examination. They stated that pink slips were prepared for incoming raw materials also. However, the adjudicating authority has not accepted this submission that pink slips were made in respect of incoming raw materials and outgoing finished goods on the ground that no such pink slips were found on the date of search. We find that there is no evidence available on record to prove that pink slips were prepared only when the goods were to be cleared without invoices. 14.4. The Appellants stated that t....
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....n 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. No statement of any official of the JBIL III was ever recorded as to what is the purport of these documents. It has not been proved by any acceptable evidence that Report no. 14 was prepared by the production staff. No statement from any employee of production department was recorded. Even the scribe of this report has not been identified. Though it has been stated that on 16-072014 four consignments of Pig Iron were cleared in clandestine manner, three to Shri Girish Tikmani and one to M/s. Manoj Metal, no follow up action was taken. The consignments mentioned in the pink slips were said to have been cleared only day earlier. If the clandestine clearance has actually happened, this would have been easily verified with the customer....
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.... 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 Iron were cleared without invoice. Similarly two consignments weighing 26.53 of HPTM Cutting Pipes were cleared to JBIL IV. The officers of DGCEI had also visited simultaneously JBIL IV on 17-07-2014 and had drawn panchnama, but no discrepancy was found in the raw material or finished goods. If the JBIL III would have cleared 26.53 MT of HPTM Cutting Pipes, the same would have been available next day in JBIL IV, but no effort was made in this regard by the investigation to seize the said quantity of HPTM Cutting Pipes. Similarly, JBIL III allegedly cleared Rubber weighing 73.42 MT on 15-07-2014 to JBIL IV. No enquiries were conducted by DGCEI in this regard either on 17-07-2014 or thereafter. Similar is the c....
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....ed 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 of Rs. 96,45,018/- has been demanded from JBIL III and Rs. 14,62,149/- from JBIL IV on GR Slag. The Appellants contended that these demands are not sustainable as GR Slag is generated involuntarily during process of manufacture. It is on very few occasions the GR Slag fetches commercial value when the same is sold to a cement unit. Normally the GR Slag is used for land filling. Such type of Slag has no commercial value and cleared the same without any consideration. The transport vehicles which bring raw materials to the factory of JBIL III or JBIL IV after off-loading the said raw material, load GR Slag in the same vehicle. Annexure 1 to the Show Cause Notice contained names of the purported buyers but no enquiry was conducted from....
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....r 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 reported as2008 (229) ELT 273 (Tri.-Ahmd.) (para 6) (iv) Nidhi Auto Pvt Ltd Vs. CCE, Noida-1 reported in 2020 (33) GSTL 419 (Tri.-All) wherein, in para 6 it has been categorically held that if author of diary is not identified and if his statement is not recorded then such diary is not admissible evidence. (v) Principal Commissioner of CGST & Central excise Vs. Shah Foils Ltd reported in 2020 (372) ELT 632 (Guj), in this case under similar circumstances the Hon'ble Gujarat High Court has upheld the order of the Tribunal wherein duty demand on the charges of clandestine removal on the basis if pen drive data and sheets was set aside on the ground that there was no corroborative and subs....
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....ment 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 the proceedings for penalty against 8 merchant manufacturers in respect of clearance under 621 delivery challans (covering the demand of Rs. 26,94,890). This lends credence to the stand of the appellants that the charge of clandestine clearance is not satisfactorily established. We also note that no penal action was proposed against the merchant manufacturers in respect of payment of job charges shown in the diaries. In these circumstances, the material on record is not sufficient to hold that the department has discharged the burden of proving clandestine removal 14.15 In the case of Suntrek Aluminium P. Ltd Vs Commissioner of Customs and Central Excise, Ra....
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.... 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 inquiry officers have extracted my statement as per them version in nexus to above is retracted by this affidavit. Further, I make it clear by this affidavit that, the copy of statement is not given to me at the material time, so I exactly do not remember that what has been mentioned in the said statement recorded from me, because I was under the undue hardship and covered by beleaguered position of the Central Excise officers, I was in embracement situation at the material time. And hence, they have taken my signature on the statement or like wise on the other documents, was not exactly under my knowledge and belief. So I so....
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....tement 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 (S.C.) = 2009 (13) S.T.R. 337 (S.C.) by observing that it is trite law that evidence brought on record by way of confession, which stood retracted, must be substantially corroborated by other independent and cogent evidence. The Apex Court further observed as under : "A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. ....
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....he 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 statement could not be said to be a cogent and convincing piece of evidence which validly corroborate the confessional statement in the statement of the Director, more particularly when the said statement of M/s. Harish Metals was not referred to and discussed in the show cause. Therefore, it was the sole statement of the Director Sandip bhai which was uncorroborated, and which was taken as base for the action against the appellant, when no evidentiary value could have been attached in light of what is stated above. Moreover, the confessional statement was retracted within ....
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....e 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, they had clandestinely cleared goods to the tune of Rs. 20 lakhs upto that period. Therefore, their total clearance value up to 1-7-2008 should be considered as Rs. 96.65 lakhs. Thus, their total clearance value was well below the exemption limit. However, for confiscation of unaccounted goods and imposition of penalty there is no need to show leniency looking at the gravity of the case in light of the admission made by the Director of the notice under Section 14 of the Central Excise Act, 1944. 6.11 In the impugned order, the Tribunal....
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....es 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 independent source. The gist of all the decisions relied upon by the learned advocate is to the effect that the allegations of clandestine removal are required to be established beyond doubt, by production of positive, tangible and independent corroborative evidence and such findings should not be arrived at on the basis of assumptions and presumptions. As we have already observed that inspite of the availability of names and addresses of the buyers, the officers have not bothered to conduct investigations at their end, so....
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.... 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 Manganese (MT) 50,465.20 28,320.27 31,076.89 31.75 178.82 698.75 15.3. Similarly Annexure-15 is related to JBIL IV with regard to alleged clandestine removal of 4236.56 MT of Pig Iron. The various raw materials required for manufacture of this much quantity of Pig Iron are as under:- Quantity of Pig Iron (MT) Requirement of Iron Ore (MT) Requirement of Sinter (MT) Requirement of Coal & Coke (MT) ....
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.... 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 Central Government controlled and the coal linkage facility also allotted to JBIL under Fuel Supply Agreement (FSA) like Iron Ore, Coal. Coal is mostly transported through Railway. Therefore, there is no scope for procurement of coal as a raw material in clandestine manner. We observe that unless JBIL III and JBIL IV have received ....
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....stine 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 of order of the Tribunal, which reads as under :- "12. Be that as it may be, it is to be noted that there is no dispute that to manufacture of said final product 'Frit' requires the use of Quartz, Feldspar, Zinc, Borax Power, Calcium and Dolomite as inputs/raw material. On the date of visit of the officers to the factor....
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....hich 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 impugned Order has been passed by the Commissioner on remand by the Appellate Tribunal vide Final Order No. A/899-901/2000, dated 910-2000. The Tribunal had remanded the matter as the evidence produced by the Appellants from independent manufacturers and others "was not examined properly" and when ....
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....ps 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 manipulation of records of "power consumption. This finding is without any material brought on record. On the other hand the Appellants have brought on record a certificate dated 26-12-96 issued by the Divisional Engineer. Electricity Distribution Division, Unnao which mentions as under :- "O....
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....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 ferro-manganese and ferro-silicon as norms while dealing with "Norms for Important Parameters". The learned Consultant has also brought on record the Input-Output ratio fixed by the Ministry of Commerce for Import-Export purposes. As per these norms also Silico Manganese requir....
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....al 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 finished product. No statements have been obtained to show as to from whom raw materials were purchased. No evidence has been obtained for the use of electricity or receipt of sale consideration by the assessee to prove clandestine manufacture and sale. The de....
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....ne 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 of electricity. When the officers visited the unit, they had not found out any unaccounted stock of cut tobacco. In the present case, the charges are based purely on a theoretical working out based on the private documents, which are n....
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....he 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 unwarranted assumptions; (ii) Evidence in support thereof should be of : (a) raw materials, in excess of that contained as per the statutory records; (b) instan....
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....l 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) of the show cause notice it is clear that the figures of the alleged clandestine manufacture and r....
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....ction. 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 worked out to 1560 Kgs per day. Further, Mohan Lal Gupta had stated that there was Crill change....
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....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. 16. As regards the demand of Rs. 73,00,168/-, it is the contention of GSL ....
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....d 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 another company. No transporters' documents have been seized or ....
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....ble 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 cross-examination of these buyers have not been granted ....
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....scs 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 JBIL would have required huge quantity of raw ma....
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....acture 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....
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.... , had categorically stated 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....