TaxTMI 
TaxTMI 
2024 (10) TMI 672
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....tral Excise Act have also been ordered. The order also confirms the demand of central excise duty on the castings articles found short in the factory premises of Trikoot Iron & Steel. The order also directs for confiscation of MT End cutting and MT Miss-roll (TMT), with an option to the appellant to redeem the same on payment of redemption fine. 2. Trikoot Iron & Steel is engaged in the manufacture of MS Girders, Rounds, TMT Bars, MS Ingots, Castings. On 04.07.2013 the Directorate General of Central Excise Intelligence DGI, pursuant to an intelligence, conducted simultaneous searches at the factory premises of Trikoot Iron & Steel at Muzaffar Nagar, the office premises of Trikoot Iron & Steel at New Delhi, and the residential premises of Vaibhav Goel, Director of Trikoot Iron & Steel. During the search of the residential premises of the Director some loose slips, hard disks and pen-drives were seized. Printouts were also taken from the seized hard disk No. WD5000AZRX. During the course of search of the factory premises on 04.07.2013, the officers found shortage of 450.625 MTTMT Bar, 268.340MT Griders and 140.18 MT Casting Articles, having total value of Rs. 7009000/-. The office....
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....lear them without payment of duty and hence, the same were seized on 04.07.2013 at the factory premises of M/s. TISCL:- S. No. Commodity Quantity found excess (MT) Value (Rs.) Duty involved (Rs. @ 12.36% 1. End cuttings (+)7.710 2,15,880/- 26682.77 2. Miss-rolls (TMT) (+)577.615 1,61,73,220/- 1999009.99 3. MS Ingots (+)438.805 1,31,64,150/- 1627088.94 Excess 2,95,53,250/- 3652781.70 (emphasis supplied) 6. The aforesaid show cause notice refers to a Panchnama dated 04.07.2013 drawn at the residential premises of the Director. The relevant portion of the Panchnama is reproduced below:- "xxxxxxxxx. While this entire episode was going on, the officers found Shri Vaibav Goel removed a hard disc from his kitchen and tried to throw it away. xxxxxxxxx. The officers during the search found that three computer monitors installed in a room, on the first floor of rear side of the house above the dog house, in which some documents and 07 pen-drive were also found. One Shri Mohit Vaish who introduced himself as accountant, who was also available there. However, no CPU was found in the said roo....
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....Mohit and Shri Vaibhav, since the printouts are large in number, these were affixed with stamp of the company by Shri Mohit. The whole process of taking of print out of the data contained in the said CPU and the one pen-drive took a lot of time and printed started mal-functioning, the other hard discs and pen drive could not be scrutinized. Therefore, the officers discontinued the process of taking printouts on the spot and seized the said three Hard disks and seven pen drive properly. The said hard discs were separately sealed with paper seals and pendrives were sealed in a small card board box by the officer in the presence of we the panchas, Shri Mohit Vaish and Shri Vaibhav Goel duly signed by all concerned and we the panchas. Details of seized hard discs and pen drives are mentioned in Annexure-A of this panchnama. Since, the CPU and printer were specially configured to run the said hard discs, the officers also sealed the CPU (without hard disc) and the printer as detailed in Annexure-A. The officers also resumed some documents related to their enquiry as detailed in Annexure-A to the panchanama. xxxxxxxxxxx" No other documents/articles/things taken....
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....drives/pen drives and satisfied himself that these were the same items which were taken in possession by the officers on 04.07.2013. 3. Then Shri Rathore in the presence of Shri Mohit Vaish and we the witnesses attached harddrive No. WD5000AZRX (mentioned at S. No. 1 above) with the CPU and printer (both also resumed from the residence on 04.07.2013 and identified by Shri Mohit Vaish). After that the hard drives and pen drives were attached with the above mentioned CPU one by one. By using the CPU and printer resumed from the residence of Shri Vaibhav Goel, Director, the office took printouts of the data stored in the harddrive No. WD5000AZRX and Toshiba 4 GB pendrive white colour (mentioned at S.No. 1 & 7 above respectively). All the printouts were dully signed by Shri Mohit Vaish in our presence. These printouts were placed in different box files and those details are as under: xxxxxxxxxxxx The officers also examined other hard drives and pendrives (S.No. 2 to 6 and 8 to 10 as mentioned above) but as no relevant data was found in these drives, no printouts was taken from these hard drives. Shri Mohit Vaish confirmed that the printouts taken today are re....
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....9 April 2013 to June 2013 143,00,79,413 24,30,32,518 118,70,46,895 14,67,18,996 1st to 3rd July 2013 4,53,84,447 30,77,206 4,23,07,241 52,29,175 TOTAL 521,91,97,320 109,17,21,054 412,74,76,266 49,69,16,243 Therefore, it appears that M/s. Trikoot Iron and Steel Casting Ltd., Meerut Road Industrial Area, Near ITI, Muzaffarnagar (U.P.) evaded Central Excise duty amounting to Rs. 49,69,16,243/- on the goods cleared clandestinely by them during the aforesaid period." (emphasis supplied) 10. The main submissions made by the appellant in response to the show cause notice are: (i) The Panchnama proceedings were conducted under threat, coercion and use of physical force. The same are in violation of the principles laid down for conduct of such proceedings and are not truthful. There are also apparent inconsistencies in the proceedings recorded in the Panchnamas. Hence, the Panchnamas and the documents said to have been resumed cannot be relied upon against the noticee. The proceedings at the residential premises of the Director of the Noticee were conducted by use of physical force and the records allegedly resumed were no....
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....T. 545 (Tri. - Del.). Thus I find that the panchnama lists the electronic gadgets and documents recovered and has recorded the search proceedings in detail and therefore the said panchnama can be relied upon in this case. Thus, the contentions of the Noticee do not have feet and are accordingly rejected. xxxxxxxxxx 40.7 The Noticee has contended that since the contents or relevance of particular document was not mentioned in the panchnama, the credibility of the evidentiary value of these papers is doubtful, is again not tenable as discussing a resumed or seized document in the body of panchnama is not a legal requirement. xxxxxxxxxx 40.8 The Noticee has contended that the panchnama records the serial numbers of the Seagate and the Simmtronics hard drives, whereas in the case of hard drive WD5000AZRX, only the model number is recorded not its serial number. This contention is not relevant as the panchnama dated 15.7.2013 (RUD41) regarding taking the printouts clearly states that the printouts were taken from hard drive No. WD5000AZRX and Toshiba 4 GB pen drive white colour (sl. No. 1 and 7 of panchnama). The panchnama dated 15.7.2013 was drawn in....
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.... Let me examine if the above stipulated condition are satisfied in the instant case. The first condition is that computer printout are produced by the computer which was used regularly to store information of an acitivity regularly carried out over that period by the person having lawful control over the use of the computer. In the instant case the computer was found installed in the residential premises of the Directors of M/S TISCL. During the search proceedings conducted in the residential premises on 4.7.2013 the officer also found one hard disk hidden in a corner lying near the dog house. The officers also found two hard disks from the cupboard of the kitchen of the said premises. The officers connected the hard disk found in the corner near dog house with the CPU installed in the kitchen. On scrutiny of the data, it was found that there was a program in MSDOS and it was informed by Shri Mohit Vaish, Accountant present at the residence of the Directors of M/s TISCL, that the said software was a financial software in which accounted for and unaccounted for sales, purchase and cash transaction details of M/s TISCL were captured by them. He revealed the password as 'i....
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....ds, as the impugned order deserves to be set aside for the sole reason that the provisions of section 36B of the Central Excise Act have not been complied with. In this connection learned counsel submitted that: (i) The quantification of duty payable by the appellant has been calculated on the basis of the total value of clearance determined from the computer printouts taken from the hard disk and pen drive recovered on 04.07.2013, after deducting value of clearances of the goods as declared in ER-1 returns. It was, therefore, obligatory on the part of the department to establish the admissibility of the documents; (ii) The Panchnama does not mention the vital details of the recovery of hard disc and pen drives; (iii) The conditions stipulated in section 36B of the Central Excise Act have not been observed in recovering the electronic records/documents. The printouts, therefore, could not have been taken into consideration; (iv) The requirement of issuance of a certificate under section 36B of the Central Excise Act has not been satisfied; (v) The adjudicating authority could not itself have examined the conditions stipulated in section ....
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....was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of 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 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 computers operating in succession over that period; or ....
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....a) "computer" means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and (b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process." 16. Section 3 of the Evidence Act defines "document" as follows: "Document. -- "Document" means any matter expressed or described upon any substance by means of letter, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter." 17. "Evidence" in section 3 of the Evidence Act is defined as follows: "Evidence." -- "Evidence" means and includes - (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; Such statements are called oral evidence; (2) all documents including electronic records produced for the inspection of the Court; such documents are called documentary evidence." 18. Section 36B of the Central Excise Act deals with cases wher....
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....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, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. ....
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.... court in Navjot Sandhu case (supra), does not laydown the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements under Section 65B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible. xxxxxxxxxxxxx 24. The situation would have been different had the appellant adduced primary evidence, by making available in evidence, the CDs used for announcement and songs. Had those CDs used for objectionable songs or announcements been duly got seized through the police or Election Commission and had the same been used as primary evidence, the High Court could have played the same in court to see whether the allegations were true. That is not the situation in this case. The speeches, songs and announcements were recorded using other instruments and by feeding them into a computer, CDs were made therefrom which were produced in court, without due cert....
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....ontents" of electronic records being proved once admissible into evidence. With these prefatory observations let us have a closer look at Sections 65A and 65B. 20. It will first be noticed that the subject matter of Sections 65A and 65B of the Evidence Act is proof of information contained in electronic records. The marginal note to Section 65A indicates that "special provisions" as to evidence relating to electronic records are laid down in this provision. The marginal note to Section 65B then refers to "admissibility of electronic records". 21. Section 65B(1) opens with a non-obstante clause, and makes it clear that any information that is 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, and shall be admissible in any proceedings without further proof of production of the original, as evidence of the contents of the original or of any facts stated therein of which direct evidence would be admissible. The deeming fiction is for the reason that "document" as defined by Section 3 of the Evidence Act does not include electronic records. ....
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.... to information contained in an electronic record, admissibility and proof thereof must follow the drill of Section 65B, which is a special provision in this behalf - Sections 62 to 65 being irrelevant for this purpose. However, Section 65B(1) clearly differentiates between the "original" document - which would be the original "electronic record" contained in the "computer" in which the original information is first stored - and the computer output containing such information, which then may be treated as evidence of the contents of the "original" document. All this necessarily shows that Section 65B differentiates between the original information contained in the "computer" itself and copies made therefrom - the former being primary evidence, and the latter being secondary evidence. 32. Quite obviously, the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where "the ....
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.... of the Evidence Act,..." With this clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to revisited. (c) The general directions issued in paragraph 62 (supra) shall hereafter be followed by courts that deal with electronic evidence, to ensure their preservation, and production of certificate at the appropriate stage. These directions shall apply in all proceedings, till rules and directions under Section 67C of the Information Technology Act and data retention conditions are formulated for compliance by telecom and internet service providers. (d) Appropriate rules and directions should be framed in exercise of the Information Technology Act, by exercising powers such as in Section 67C, and also framing suitable rules for the retention of data involved in trial of offences, their segregation, rules of chain of custody, stamping and record maintenance, for the entire duration of trials and appeals, and also in regard to preservation of the meta data to avoid corruption. Likewise, appropriate rules for preservation, retrieval and production of electronic record, should be framed as indicated earlier, after considering the report of the ....
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....Computer Ribbon Corporation - 2004 (165) E.L.T. 186 (Tri.-Chennai) wherein this Tribunal has held that "computer printout were relied on by the Adjudicating Authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that printouts were neither authenticated nor recovered under Mahazar... The Tribunal rejected the printouts... Nothing contained in the printout generated by the PC can be admitted as evidence." In this case also, we find that the parallel situation as to the decision of Premier Instruments & Controls (supra). 13. Therefore, the printout generated from the PC seized cannot be admitted into evidence for nonfulfillment of statutory condition of Section 36B of the Central Excise Act, 1944." (emphasis supplied) 24. In Popular Paints and Chemicals vs. Commissioner of Central Excise and Customs, Raipur , the Tribunal observed: "15.2. Thus, it has been clearly laid down by the Supreme Court that the computer printout can be admitted in evidence only if the same are produced in accordance with the provisions of Section 65B (2) of the Evidence Act. A certificate is also required to accompan....
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....rom the Hard Disk drive by connecting to the computer. The officers had not obtained any certificate as required under Section36B of the said Act. It is also noted that none of the conditions under Section 36B (2) of the Act, 1944 was observed. In such situation, it is difficult to accept the printout as an evidence to support the allegations of the revenue. 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. We also agree with the contention of the appellants that at the time of sealing and de-sealing of the external data storage device as well as the time of obtaining printouts therefrom, a certificate should have been obtained as per the provision of Section36B of the Act. No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellants was obtained by the department, the credibility of the computer printout gets vitiated." (emphasis supplied) 26. The aforesaid decisions of the Tribunal, which are in the context of the provisions of section 36B of the Central E....
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....e key and license key". (x) On being asked how these keys can be taken, Vaibhav Goel stated that he would have to talk to an expert and on direction of Vaibhav Goel, Mohit Vaish spoke to one Dua, who on mobile informed after some time that site key is 'EIGIDADEJTBO' and license key is 'HJHTVOGSVQ'. (xi) Mohit Vaish configured the printer and started taking printouts of sale, purchase and cash data, which is stated to contain both accounted and unaccounted transaction; (xii) Some printouts from one of the pen drive Toshiba 4GB that was recovered were also taken after connecting the same with the CPU; (xiii) Since the whole process of taking of printouts of the data in the CPU and the pen-drive was taking time and printing stated mal-functioning, the officers discontinued the process of taking printout and seized the three Hard disks and seven pen drives properly. Details of the seized hard discs and pen drives were mentioned in Annexure-A to the Panchanama; (xiv) Subsequently, on 15.07.2013 another Panchnama was drawn. The Panchnama records that the hard drive mentioned at serial no. 1 was attached with the CPU and printer....