TaxTMI 
TaxTMI 
2025 (3) TMI 1098
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.... Shri R. Balachandar, Advocate (Sl. No. xiii) None for Sl. Nos. xiv & xv Present For the Respindent : Shri Sanjay Kakkar and Shri Anoop Singh, Authorised Representatives ORDER PER AJAYAN T.V.: The issues involved in these following appeals being same and connected, and arising out of the same Order in Original No. 13/2014-Cex dated 29.12.2014, these appeals were heard together and are disposed of by this common order. Sl. No. Appeal No. Name of the Appellant Duty Demanded (in Rs. ) Penalty (in Rs. ) 1 E/40947/2015 Geetham Steels Pvt Ltd 1,70,97,731/- 1,70,97,731/- 2 E/40950/2015 C. Natarajan 25,00,000/- 3 E/40948/2015 Rani Deivanai 5,00,000/- 4 E/40949/2015 N. Kirubakaran 5,00,000/- 5 E/40625/2015 Sri Kamalaganapathy Steel Rolling Mills Ltd., 4,60,967/- 4,70,967/- 6 E/40372/2015 Ran India Steels Pvt Ltd 4,24,000/- 7 E/40657/2015 Dindigul Steel Rolling Mills Pvt Ltd 97,000/- 8 E/40566/2015 Attur Steels Pvt Ltd 4,22,000/- 9 E/40611/2015 NGA Steels Pvt Ltd 85,000/-....
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..... Shri. C. Natarajan, the MD of GSPL d. Shri. A. Selvaraj, Proprietor of Shri Senthil Steels, Namakkal e. Shri. K. Murugesan Murugan, Proprietor of M/s Bakya Lakshmi Metal Mart, (BLM for short) Namakkal 4. A further statement was also recorded from Shri. P. Kumar on 08.10.2010. Thereafter, on 11.10.2010, the 2 pen drives seized from Shri. P. Kumar, were imaged in the presence of Shri. Kumar and two independent witnesses, print outs of documents in the said pen drives were taken and yet another statement dated 11.10.2010 of Shri. Kumar was recorded. Again, the CPU seized from the office premise of GSPL on 28.09.2010 was examined on 13.10.2010 in the presence of Shri. C. Natarajan and two independent witnesses and printout of data contained therein were taken. The printouts from the CPU of GSPL Office were put into two files which were also seized under the Mahazar dated 13.10.2010 and a statement of Shri. Natarajan, MD of GSPL was recorded on 13.10.2010. 5. A month later, on 25.11.2010, the hard disk seized from the premises of GSPL was examined in the presence of Shri Natarajan, MD of GSPL and two independent witnesses under Mahazar and a statement was also ....
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....lem (VCC) who had supplied Scrap to GSPL. c Statement dated 15.01.2013 of Shri. V. Shivalingam, Proprietor, M/s Vasantham Steels, Erode, (VS) who had sent scrap to GSPL 10. Subsequently on 22.10.2013, the two pen drives seized from the residence of Shri P. Kumar under Mahazar dated 28.09.2010, the CPU and Hard disk seized from the Office premises of GSPL under Mahazar dated 28.09.2010 and the CPU seized from the residential premises of Shri Natarajan, MD, GSPL, under Mahazar dated 28.09.2010 were subjected to 'imaging' by an independent Cyber Forensic Analyst, Shri. M Maharajan of M/s Ascent Technologies, Chennai, under Mahazar proceedings in the presence of Shri. Natarajan and in the presence of two independent witnesses, in the DGCEL, Office at Coimbatore, subsequent to which proceedings a statement was recorded from Shri. C. Natarajan, M.D, GSPL on 22.10.2013. 11. Thereafter, under Mahazar proceedings, on 25.10.2013, in the presence of independent witnesses and Shri. P. Kumar, former Accountant of GSPL computer print outs were taken from the working copy of the pen drive with inscription 'Transcend", seized from the residence of Shri P. Kumar, and subs....
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....shara Industries, M/s. Salem Automach and M/s. Salem Alloys as well as the managing partner of M/s. Salem Alloys, have by their various acts of omissions and commissions rendered themselves liable for penalties under the provisions of Central Excise Act and Rules. 13. A show cause notice dated 28-10-2013 was issued to the main appellant GSPL as also to other appellants. The show cause notice directed the main appellant to show cause as to why Central Excise duty amounting to Rs. 1,19,66,174/- on the clearance of MS ingots to various parties without accounting and without payment of duty during the period February 2010 to February 2012 and ineligible credit of Rs. 51,31,557/- availed during February 2010 to May 2010 should not be demanded by invoking extended period, interest be not demanded and penalty not imposed on them under the provisions of Section 11AC of the Central Excise Act, 1944 (CEA in short) read with Rule 25 of Central Excise Rules, 2002 ( CER in short).Show cause notice was also issued to SKSRM as to why Central Excise duty amounting to Rs. 4,60,967/- on the clearance of TMT rods without payment of duty made out of MS ingots procured from GSPL without payment of d....
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.... The drivers have deposed that they have not transported MS Scrap. The demand based on such deposition alone without corroborative and tangible evidences is not sustainable when payments were made to the suppliers. Reliance is placed on the decision rendered in the case of Motabhai Iron and Steel Industries vs. CCE-2014 (302) ELT 69 (Tri.Ahmd) and in the case of RS Industries vs. CCE-2003 (153) ELT 114 (Tri.Del). b) On 28.9.2010, two pen drives were seized from the residence of Shri P. Kumar, who was former employee of the Company. Officers took those pen drives to a nearby by browsing centre viz. Archana Software Tech and took print outs as recorded in the Mahazar dated 28.9.2010. Again on 11.10.2010, print outs were taken from those two pen drives in the Office of Director General of Central Excise Intelligence, Regional Unit, Coimbatore as recorded in Mahazar dated 11.10.2010. Again on 22.10.2013, these pen drives were further subjected to the process of imaging through an external agency viz., M/s Ascent Technologies in the Office of the Director General of Central Excise Intelligence, Regional Unit, Coimbatore as recorded in Mahazar dated 22.10.2013. On 25.10.2023, co....
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....ined to the investigating officers that a quantum of 959.010 MTs of RG-1 Stock was remelted due to quality problems as per Notification No.67/95-CE and the transactions were also duly reflected in the ER-1 Return. The closing balance of MS Ingots as on 28.9.2010 was re-melted. Such quantum was shifted from the RG-1 Stuck to raw material stock (defective ingots on 28.9.2010. The stock transfer was also shown in the ER-1 return for the month of Sep, 2010. Necessary entries were also made in the RG-1 stock and raw material stock register. Such defective ingots were remelted and fresh ingots were produced. Necessary entries were made in the RG-1 stock. register and raw material stock register. All the defective ingots were remelted and converted into fresh ingots during Oct, 2010 and Nov, 2010. All the fresh ingots were cleared on payment of duty subsequently. These transactions were also verified by the Officers of Salem Commissionerate and submitted reports to the investigation authorities. Such reports are also relied in the SCN [A-35 and A-36]. ER-1 and ER-6 returns for Sep, 2010 to Nov, 2010 would establish that all the defective ingots were remelted and subsequently cleared on pa....
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....that note books maintained by labourers are not a dependable record In the case of M/s. Ashwin Vanaspathi Industries Vs. CC reported in 1992 (59) ELT 175-Tri, it is held that the liability cannot be proved on the basis of private registers. i) In the case of M/s. Gurpreet Rubber Industries vs. CCE-1996 (82) ELT 347-Tri, it is held that note books maintained by casual labourers are not a dependable record to establish the liability. j) The decisions rendered in the following case laws are relied on to contend that private registers, mere slips, notebook maintained by workers etc. are not sufficient evidence to prove clandestine removal unless supported by corroborative evidence and that admissibility of the printed material under Section 36B is made subject to fulfilment of certain conditions: a. M/s. Kirtibhai Manganbhai Patel vs. CCE-2003 (159) ELT 1162-Tri. b. MTK Gurusamy vs. CCE-2001 (130) ELT 344-Tri. c. Essvee Polymers vs. CCE-2004 (165) ELT 291-Tri. d. TGL. Poshak Corporation vs. CCE-2002 (140) ELT 187-Tri. e. Premium Packaging Private Ltd. vs. CCE-2005 (184) ELT 165 (Tri) k) As far as directors are conc....
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....is of two weighment slips recovered from the appellants' premises on 7.3.2012, which do not indicate the material weighed. A slip recovered from the appellants' premises on 7.3.2012 was also an unauthenticated slip, which is not lucid. Further, no other corroborative and tangible evidences are adduced to prove the receipt of unaccounted MS Ingots and the unaccounted clearance of TMT bars. c) That he reiterates the reliance on the decisions cited earlier to contend that private registers, mere slips, notebook maintained by workers etc. are not sufficient evidence to establish liability and that reliance cannot be placed on deposition of various persons without any independent corroborative evidences substantiating the same. d) That even otherwise they had paid Rs. 4,60,967/- on 16-03-2012 and the allegation is that such raw material could have been received in March 2012 out of which finished products TMT rods could have been cleared in March 2012 and in view of the payment in March 2012 interest liability would not arise. 19. Submissions on behalf of the other appellants on whom penalties under Rule 26 was imposed was made by the other learned Advocates and apa....
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....ed quantity by the appellants, no evidence is available for the payment for the alleged purchase of raw materials, no evidence available for payment of freight charges h) The printouts recovered from the pen drive of Shri. Kumar is not admissible as an evidence in terms of Section 36B of the Central Excise Act, 1944, and relied on case laws in Jindal Nickel & Alloys v CCE,,2012 (279) ELT 134 (Tri-Del), Sakeen Alloys Pvt Ltd v CCE, 2013(296) ELT 392 (Tri-Ahmd), S.N.Agrotech v CC, 2018 (361) ELT 761 (Tri-Del), Rhino Rubber Pvt Ltd v CCE, 1996 (85) ELT 260 (T), CCE v Rajaguru Spinning Mills (P) Ltd, 2009 (243) ELT 280 (Tri-Chennai), R.M.Brothers v CCE, 2015 (328)ELT 124 (Tri-Del) and Jai Mata Industries Ltd v CCE, 2013 (293) ELT 539 (Tri-Del). i) there is no corroborative evidence available to substantiate the correctness of the entries made in the various documents, private diaries, note books, computer sheets etc. and relied on case laws cited in their synopsis, in Kashmir Vanaspati (P) v CCE, 1989 (39) ELT 655 (T), Gurpeet Rubber Industries v CCE, 1996 (82) ELT 347 (T), United Metal & Steels (P) Ltd v CCE & Cus, 2003 (161) ELT 585 (Tri-Kolkata), Kamar Ali & Sons v....
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....r a lapse of 3 years and one month. The inordinate delay in the issue of SCN is not explained in the SCN and the latches being unexplained in the SCN is fatal to the invocation of extended period and the notice is barred by limitation. 22. Shri. M. Kannan, Ld. Advocate who appeared for the appellants, M/s. Salem Alloys, Shri S. Sidesh Kumar, MD of Salem Alloys and Salem Automech, Salem would further submit that there was no cash transactions with M/s. Geetham Steels Pvt Ltd; that they are in no way connected with M/s. ABC India Ltd and no prudent person would pay an amount of Rs. 1,11,21,421/- by RTGS and receive back the said amount in cash for availing cenvat credit of Rs11,72,909/-. That even otherwise the amount shown as encashed by Mr. S. Sidesh Kumar in his account and the amount shown as received from M/s. Salem Alloys as per Bank account do not tally with the amount show as received from M/s. Salem Alloys (receipt of cash under the name of ABC India Ltd) as shown in the computer printout from pen drive and there is no evidence on record to show that the appellant have issued cenvat invoices without actual supply of goods and received consideration for such invoices. 2....
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....ished goods from RG 1 to raw material register and none of the ingots were declared as rejects when ER 1 was filed for August or Sept 2010. That the reliance placed on the decisions in CCE Raipur v Shree Nakoda Ispat, 2015 (1) TMI 267-CESTAT, New Delhi, Shingar Lamps Pvt Ltd v CCE, 2002 (2) TMI 278- CEGAT, New Delhi, CCE, Raipur v Sidhi Vinayak Sponge Iron (P) Ltd, 2015 (1) TMI 264- CESTAT, New Delhi, Bhartiya Tar Udyog v CCE, Delhi-II, 2015 (1) TMI 170- CESTAT, New Delhi, Commr of C. Ex, Kanpur v Trela Footwear Exports Pvt Ltd, 2015 (1) TMI 213- CESTAT, New Delhi were distinguishable from the facts of the instant case. c) For the clandestine removal/sale of 2193.52 MTs of MS Ingots during the period Feb 2010 to June 2010 is evidenced from the data from the pen drive. Kumar has admitted to his role and he is the person responsible for feeding data and data under the name ABC India Pvt Ltd reflects the actual transactions of GSPL, that the amount received in cash relating to the proceeds of sale of goods removed in clandestine manner has been brought into official bank account of GSL through private bank accounts of person related to MD. d) For the unaccounted proc....
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....shnu Chemicals Ltd, M.V. Ramana Murthy, Central Excise Incharge and CH. Krishna Murthy, Managing Director Versus Commissioner of Central Excise, Customs & Service Tax, Hyderabad - I, 2019 (7) TMI 952 - CESTAT HYDERABAD h) That Shri. Natarajan was non cooperative and did not respond to six summons and all his statements have to be considered to conclude on his bonafides and he had not mentioned about stock available in the factory when specifically asked under statement and no evidence was placed by appellant on the day of search or immediately thereafter that defective ingots were duly accounted and used captively for remelting. i) That there is no correlation of purchases and sales chronologically of the computerised stock or sale ledgers/registers with the data extracted from pen drives or with RG-1 or ER-1 returns j) That in case of the type at hand is a civil case and preponderance of probabilities is the level of evidence required and not proof beyond reasonable doubt. Reliance is placed on the decisions in Collector of Customs Vs. D. Bhoormull, 1983 (13) E.L.T. 1546 (SC), Gulabchand Silk Mills Pvt. Ltd. v. CCE, 2005 (184) E.L.T. 263,Umiya Chem v. CC....
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....010 to February 2012 and the consequent demand of duty is lawful; whether the demand of cenvat credit availed for the period February 2010 to May 2010 by the main appellant terming it ineligible, is licit; whether the demand made on M/s. SKSRM for clearances of TMT Rods alleged to have been cleared without payment of duty and allegedly made out of MS ingots procured from the main appellant without payment of duty, as confirmed in the impugned Order in Original, is tenable and whether penalties imposed on the appellants are legal. 30. Having heard both sides at length and after perusing the records we find that the demand of Rs. 58,90,251/- confirmed on GSPL on finding of clandestine removal of MS Ingots from February 2010 to June 2010 and the demand of Rs. 51,31,557/- of ineligible cenvat credit taken without receipt of inputs for the period from February 2010 to June 2010, confirmed on GSPL, are principally based on the data recovered from the pen drives seized from the premises of Shri. N Kumar, the ex-employee of GSPL and the data in the CPU seized from the office premises of GSPL and the appellants have raised a plea of non-compliance with the requirements of Section 9D(2), ....
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.... bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required: Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to requisitions of attendance under this section. (3) every such inquiry as aforesaid shall be deemed to be a "judicial proceeding" within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860 (45 of 1860)." "9D. Relevancy of statements under certain circumstances.- (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the C....
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....pable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) When the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) the provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court." 34. As can be seen from the aforestated provisions, both S.14 and S.9D of the CE Act are pari-materia with S.108 and S.138B of the Customs Act respectively and therefore judicial pronouncements in respect of these provisions of Customs Act, 1962 would also hold good for the pari-materia provisions of Central Excise Act, 1944. 35. Nearly three decades ago, a three judge bench of the Honourable Supreme Court, in K. I. Pavunny v Asst.Collr.(H.Q).,C.Ex.Collectorate, Cochin, 1997....
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....aking further steps for confiscation of contraband and imposition of penalty. (6) The selfsame evidence is admissible in evidence on the complaint laid by the Customs Officer for prosecution under Section 135 or other relevant statutes." (emphasis supplied) 36. Thereafter, the import of a retracted confession was elaborated as under: "25. It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out whether there are any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained in the confessional statement. The Court is required to examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise. If the Court is satisfied from the evidence that it was voluntary, then it is required to examine w....
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....powered to send persons so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance, to the officer-in-charge of the nearest police station. These Sections clearly show that the powers of arrest and search conferred on Central Excise Officers are really in support of their main function of levy and collection of duty on excisable goods." (at page 702) (emphasis supplied)" xxxxx "109. Having regard to the statutory scheme contained in the Central Excise Act, more particularly sections 21(1) and proviso (a) to section 21(2), the Court held that a Central Excise officer had no power to submit a charge-sheet under section 173(2) of the Cr.PC, as such officer is only empowered to send persons who are arrested to a Magistrate under these provisions. 110. The Court distinguished Raja Ram Jaiswal (supra), and held that this case being under the Central Excise Act, which is a revenue statute like the Land Customs Act, 1924 and the Sea Customs Act, 1878, would be more in accord with the case of Barkat Ram (supra) - see page 704. 111. The next judgment in chronological order is Romesh Chandra Mehta (s....
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....Sea Customs Act, powers of investigation which a police officer may in investigating the commission of an offence. He is invested with the power to enquire into infringements of the Act primarily for the purpose of adjudicating forfeiture and penalty. He has no power to investigate an offence triable by a Magistrate, nor has he the power to submit a report under Section 173 of the Code of Criminal Procedure. He can only make a complaint in writing before a competent Magistrate. (at pages 466-467) (emphasis supplied)" 112. Barkat Ram (supra), Raja Ram Jaiswal (supra) and Badku Joti Savant (supra) were all referred to. The Court then laid down, what according to it was the true test for determining whether an officer of customs is to be deemed to be a police officer, as follows: "But the test for determining whether an officer of customs is to be deemed a police officer is whether he is invested with all the powers of a police officer qua investigation of an offence, including the power to submit a report under Section 173 of the Code of Criminal Procedure. It is not claimed that a Customs Officer exercising power to make an enquiry may submit a report unde....
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.... S. 2(e) "evidence" means and includes- (i) all statements including statements given electronically which the Court permits or requires to be made before it by witnesses in relation to matters of fact under inquiry and such statements are called oral evidence; (ii) all documents including electronic or digital records produced for the inspection of the Court and such documents are called documentary evidence" 41. Thus, Fact" encompasses any thing (in the material sense), state or relation, of things perceptible to the senses, including states of mind, whereas "evidence" can ONLY be oral or documentary. Fact refers to the thing to be proved (quid probandum) and evidence means the means of proof or manner of proof (modus probandi). Thus, conceptually Fact and Evidence are distinct and separate. 42. Fact can either be a fact-in-issue, which means and includes any fact from which, either by itself or in connection with other facts, the existence, non-existence, nature or extent of any right, liability or disability, asserted or denied in any suit or proceeding, necessarily follows. [2(g) of the BSA] or a relevant fact [2(k) of the BSA]- A fact is said ....
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....ainst admissibility of hearsay evidence. Indeed, it is substantive evidence and like any other substantive evidence requires no corroboration for forming basis of conviction of an accused. But then the question as to how much weight can be attached to a dying declaration is a question of fact and has to be determined on the facts of each case." 45. It is pertinent to note that Section 5 to 16 of the Indian Evidence Act, 1872 (3 to 14 of BSA, 2023) pertains to relevance of facts and sections 16 to 31 of Indian Evidence Act, 1872 (14 to 25 of BSA, 2023) deals with admissions and confessions and when they are relevant or when they are irrelevant. 46. At this juncture, it will also be appropriate to notice S.141 BSA (former S.136 of Indian Evidence Act). S.141 says: "141. (1) When either party proposes to give evidence of any fact, the Judge may ask the party proposing to give the evidence in what manner the alleged fact, if proved, would be relevant; and the Judge shall admit the evidence if he thinks that the fact, if proved, would be relevant, and not otherwise. (2) If the fact proposed to be proved is one of which evidence is admissible only upon proof of so....
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....contradict him under Section 145, ibid. In fact, one cannot even use the statement recorded by a Magistrate under Section 164 Cr.P.C. of a witness as a substantive piece of evidence. A statement given by a witness to the police under Section 161(3) Cr.P.C. cannot even be used to corroborate his testimony in the Court, but, can be used only to contradict him. The law being thus, certain Revenue statutes like the CESA, etc. provide for a special rule of evidence for treating a statement of a person as a substantive piece of evidence. The Parliament, in its wisdom, reposed faith in the investigation of Revenue offences by Revenue officers and also was aware of the difficulties that would be faced by them while prosecuting a Revenue offender in a Court of law. 9. Section 9D along with its analogous provisions, was inserted into being added to the CESA was vide clause 19 of the Customs, Gold (Control) and Central Excises and Salt (Amendment) Act, 1973 (Act 36 of 1973). This amendment was a consequence of the 47th report of the Law Commission of India on "Trial and Punishment of Social and Economic Offences" submitted to the Government of India in February, 1972. For the purpose....
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.... Though such a discretion is not very frequently met with in Indian statute law, in this case, it is necessary for obvious reasons. Twenty years ago, Stone stressed the importance of excluding similar conduct evidence (even though it is relevant otherwise than via disposition), where its effect was too prejudicial, in these words-- "where the peg is so small and the linen so bulky and dirty that a jury will never see the peg, but merely yield to indignation at the dirt." Somewhat similar considerations make it desirable that the Court should have this power, since the provision which we are recommending is itself new." It is, therefore, obvious that the use of a statement made before a Central Excise officer of a gazetted rank under the CESA cannot be pressed in aid, if the conditions stated therein are not satisfied. 10 In this backdrop, if we analyse Section 9D of the CESA, extracted above, it can be inferred that a statement of a person recorded by any Central Excise officer of a gazetted rank can be treated as a substantive piece of evidence, without he being examined in the Court, provided the Department is able to establish the existenc....
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....he Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice, then the statement made to a Gazetted Central Excise Officer is taken as relevant and admitted in evidence. This would take care of a scenario, of the deponent turning hostile, in which case, the Court can rely on the previous statement given before the Gazetted Central Excise Officer in the interests of justice. Whenever the witness who gave the statement deposes and stands by his earlier statement given before the Gazetted Officer, and if such deposition is to the detriment of the opposite side, then the witness is to be offered for cross-examination as otherwise it will be prejudicial to the interests of the other side. If the witness stands by his statement and if the cross-examination doesn't dislodge his deposition in Court, save for some minor or inconsequential inconsistencies, then the Court can disregard such variations and, in the facts and circumstances admit the statement in evidence in the interests of justice as provided in S.9D(1)(b). Thus, S.9D(1)(b) would also apply to a situation as aforementioned, where the witnes....
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....the phrase "so far as may be", in this section can only mean that the adjudicating authority has been legislatively mandated to apply the provisions of S.9D (1), depending on the facts and circumstances of the case, to the extent possible. In other words, the words "so far as may be" cannot be taken as a leeway to refrain from the application of S.9D(1), to the exclusion of the consideration of the word "shall", which would be contrary to the stated intent of the section. 56. Now what would this entail for the adjudicating proceeding before the adjudicating authority? It is pertinent to note that under Section 14 of the CEA/Section 108 of the Customs Act, all persons so summoned before the Gazetted Officer of the Department shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required. Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the erstwhile Indian Penal Code, 1860 (45 of 1860). Thus, the person summoned is giving the aforesaid statement at the risk of being proceeded against for perjury. T....
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.... deponent- which is the method or manner of proving the recording of the statement, which statement under section 14 is already considered relevant for the purpose of proving the truth of the fact it contains- that is to say, the said deposition of the Gazetted Officer stating that the deponent had indeed given the statement before him, would be the manner of admitting or mode of proof of the admissible substantive evidence. 58. Again, 9D(1)(b) provides for the deponent's statement given before the Gazetted Officer to be admitted as substantive evidence, when the person who made the statement is examined as a witness in the case before the adjudicating authority and the adjudicating authority is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. This sub section (b) of Section 9D(1) takes care of a situation where the witness who is deposing before the adjudicating authority turns hostile and on an evaluation of the circumstances of the case the adjudicating authority decides to discard the version given by the witness before it and instead place reliance on the earlier statement given before....
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....and to decide whether or not to place reliance on the statement as per the mandate of Section 9(1)(b) in the circumstances of the case, as has been elaborated supra. This interpretation is also in consonance with the decision of the Honourable Apex Court in K I Pavunny's case as stated supra, wherein the Apex Court emphasised that in the case of a retracted confession the court should examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise and if the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. Such an interpretation is also in line with the decision of the jurisdictional Madras High Court cited supra and given the pari materia provisions of the Customs Act, 1962, we are of the view that the said interpretation would hold good under the pari materia provisions of Customs Act as well. 61. However, we are unable to subscribe to the view that cross-examination of the witness is a necessary pre-requisite in all circumstances. Wherever, the scenario under Section 9D(1)(a) arises, it goes without saying that there would not arise a ques....
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.... the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Sub-section (1) therefore clearly implies that it is only in the proceedings before the Court and in the context of any prosecution for an offence under the Customs Act, the statement of a person as recorded by the Customs Officer would be held to be relevant. 18. Insofar as the second limb of Section 138B as provided for in subsection (2) of the said provision is concerned, it clearly implies that the provisions of sub-section (1) shall apply in relation to any proceedings under the Customs Act (other than a proceeding before a Court), in a manner they apply in relation to a proceeding before a Court. In other words, the relevancy of a statement which sub-section (1) of Section 138B speaks about, would be held to be admissible and relevant even in relation to any proceeding under the Customs Act, in a manner it is so applicable before a Court as provided for under subsection (1). 19. On such meaning which can be attributed to Section 138B, the contention of the petitioner is required ....
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....ade before any Customs Officer, during the course of any inquiry which are subject matter of consideration in adjudication of the show cause. In our opinion, such contention as urged on behalf of the petitioner, if accepted, would militate against the provisions of clause (a) of sub-section (1) of Section 138B which also includes complete discretion which is made available to the adjudicating officer, to hold statements as recorded relevant even in given situation. When the provision itself manifest such discretion to the adjudicating officer, then any demand for cross examination would be required to be tested, in the facts and circumstances of the case, including by applying the test of prejudice which may be required to be discharged. For such reasons, we reject the contention of the petitioner that any absolute right was created by virtue of Section 138B on the petitioner to demand cross examination of the three witnesses in the facts of the present case." (emphasis supplied) 63. It would also be apposite to refer to the decision of the High Court of Delhi in J & K Cigarettes v. CCE, 2009 (242) ELT 189 (Del), wherein while repelling the challenge to the consti....
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....vant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for forming the opinion. Only then, it would be possible for the affected party to challenge such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted. 30. Therefore, it cannot be said that the provision gives uncanalised or uncontrolled power upon the quasi judicial authority. Granting of opportunity and passing reasoned order are....
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.... 2 SCC 279. In that case, the Supreme Court categorically observed that wherever vide power is conferred by statutes on public functionaries, the same is subject to inherent limitation that it must be exercised in just, fair and reasonable manner, bona fide and in good faith; otherwise, it would be arbitrary. In such cases, test of reasonableness is more strict. Following observations therefrom are worth quoting :- "15. Every wide power, the exercise of which has far reaching repercussion, has inherent limitation on it. It should be exercised to effectuate the purpose of the Act. In legislations enacted for general benefit and common good the responsibility is far graver. It demands purposeful approach. The exercise of discretion should be objective. Test of reasonableness is more strict. The public functionaries should be duty conscious rather than power charged. Its actions and decisions which touch the common man have to be tested on the touchstone of fairness and justice. That which is not fair and just is unreasonable. And what is unreasonable is arbitrary. An arbitrary action is ultra vires. It does not become bona fide and in good faith merely because no personal ga....
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....far 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). 12. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 13. Once the ambit of Section 9D(1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub-section, which are contained in clauses (a) and (b) thereof. 14. Clause (a) of Section 9D(1) refers to the following circumstances : (i) when the person who made the statement is dead, (ii) when the person who made the statement cannot be found, (iii) when the person who made the statement is incapable of giving evidence, (iv) when the person who made the statement is kept out of the way by the adverse party, and ....
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....ed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 18. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. (emphasis supplied) 19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescri....
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.... Act, 1872 envisages and stipulates that, a statement made by a witness is relevant and is admissible in evidence only when such witness is offered for cross-examination in the proceeding. 13. A party to the proceeding, introducing evidence through a natural person in the proceeding, is obliged to offer such witness for cross-examination to the opposite party. It is for the opposite party to either cross-examine such witness or to decline the same. However, till such time, the witness is offered for cross-examination to the opposite party, the statement given by such witness, in the proceeding does not become admissible as evidence in the proceeding. Such statement cannot be treated as evidence. Section 138B of the Act of 1962 carves out few exceptions from such cardinal principle in a proceeding. Section 138B(1) of the Act of 1962 stipulates that, a statement made and signed by a person before any gazetted officer of the customs during the course of any enquiry or proceeding under the Act of 1962 shall be relevant, for the purpose proving, in any prosecution of an offence under the Act of 1962, the truth of the facts which it contains when, the person who made the stateme....
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.... provisions of Section 138B(1)(a) read with 138B(2) of the Act of 1962. For example, but for the provisions of Section 138B(1)(a) and 138B(2) of the Act of 1962, the statement made by a person under Section 108 of the Act of 1962 would have become irrelevant, had he died before his cross-examination by the notice" 66. In sum, the following emanate from the aforesaid discussions and judgements : A. The statement given under Section 14 of the Central Excise Act, 1944 (or under Section 108 of the Customs Act, 1962) in response to a summons by a gazetted customs/excise officer, is not hit by Section 25 of the Indian Evidence Act, 1872, because a customs/excise officer is not a "police officer". B. At this stage, it is merely a recorded statement-not yet admissible or relevant. It becomes relevant under the circumstances stated in S. 9D of the CE Act 1944/S.138B of the Customs Act. C. The fact that a statement is made and recorded, and is said to be relevant as per IEA/BSA, does not mean it is proved. D. For the S.14/S.108 statement to be admissible under general circumstances there must be an examination in chief and a subsequent cross examination....
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....icer in its entirety. It is only when such contradictions/inconsistencies cast a serious doubt about the truthfulness or creditworthiness of the witness so as to render the evidence unacceptable, that the adjudicating authority may not be in a position to place reliance on such evidence. Serious contradictions and inconsistencies which materially affect the case of the Department have to be understood in clear contradistinction to mere minor discrepancies in the statement of the witness. G. Cross-examination is thus not an absolute right and if the conditions of sub-sections (a) or (b) of S.9D(1)/S 138B(1) exist, then the statement becomes relevant and can be made admissible without cross examination in the circumstances more elaborately elucidated supra. H. As laid down by the Hon'ble High Court in J & K Cigarettes v. CCE, 2009 (242) ELT 189 (Del), while invoking Section 9D of the Act, the concerned adjudicating authority is to form an opinion on the basis of material on record that a particular ground, as stipulated in the said Section, exists and is established; such an opinion has to be supported with reasons; and before arriving at this opinion, the authority....
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....r such examination in chief, that the adjudicating authority can arrive at a decision whether or not to declare the witness appearing before it as a hostile witness or not and then to decide in the facts and circumstances whether to rely on the earlier statement or not, as more elaborately elucidated supra. It is also the mandate of law to answer the test of fairness and reasonableness and to avoid any semblance of arbitrariness, that while invoking Section 9D of the Act, the concerned adjudicating authority is to form an opinion on the basis of material on record that a particular ground, as stipulated in the said Section, exists and is established; such an opinion has to be supported with reasons; and before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion. 70. Thus, we hold that since the adjudicating authority has not followed the mandate of Section 9D (2) in the instant case and had not given an opportunity to the affected party to make submissions post intimation of his intent to rely on such materials duly stating the ....
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....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, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities; (c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and (d) the information contained in the electronic record reproduces or is derived from such information fed into 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....
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.... a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment. Explanation. -- For the purposes of this section any reference to information being derived from other information shall be a reference to its being derived there from by calculation, comparison or any other process." 36. Mr. Shri Singh learned counsel for the appellant fairly submits that when the CCTV footage was introduced as evidence through PW-1 on 28.08.2014, the judgment of this Court in State (N.C.T. of Delhi) v. Navjot Sandhu @ Afsan Guru, (2005) 11 SCC 600 was holding the field. In Navjot Sandhu (supra), this Court held as follows: "150. According to Section 63, secondary evidence means and includes, among other things, "copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies". Section 65 enables secondary evidence of the contents of a document to be adduced if the original is of such a nature as not to be easily movable. It is not in dispute that the information contained in the call records is stored in huge servers which cannot ....
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....document, without which, the secondary evidence pertaining to that electronic record, is inadmissible." 38. According to the learned counsel, since the exhibits were marked before 18.09.2014, the appellant did not have the benefit of the decision of the Anvar P.V. (supra) when the footages were marked. 39. In Shafi Mohammad v. The State of Himachal Pradesh (2018) 2 SCC 801 (delivered on 30.01.2018), a two Judge Bench of this Court after noticing Anvar P.V. (supra) held that a party who is not in possession of device from which the document is produced cannot be required to produce the certificate under Section 65-B(4) of the Indian Evidence Act. It also held that applicability of requirement of certificate being procedural can be relaxed by the Court wherever interest of justice so justifies. 40. In Sonu @ Amar vs. State of Haryana (2017) 8 SCC 570, (delivered on 18.07.2017) the following paragraphs being crucial are extracted hereinbelow: "30. In R.V.E. Venkatachala Gounder [R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple, (2003) 8 SCC 752], this Court held as follows: (SCC p. 764, para 20) "20. ... Ordinarily, an o....
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....parties. Out of the two types of objections, referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in superior court." 31. It would be relevant to refer to another case decided by this Court in P.C. Purushothama Reddiar v. S. Perumal [P.C. Purushothama Reddiar v. S. Perumal, (1972) 1 SCC 9] . The earlier cases referred to are civil cases while this case pertains to police reports being admitted in evidence without objection during the trial. This Court did not permit such an objection to be taken at the appellate stage by holding that: (SCC p. 15, para 19) "19. Before leaving this case it is necessary to refer to one of the contentions taken by Mr Ramamurthi, learned counsel for the respondent. He contended that the police reports referred to earlier are inadmissible in evidence as the Head Constables who covered those meetings have not been examined in the case. Those reports were marked w....
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....er, the Honourable Supreme Court, went on to hold as below: 47. A two-Judge Bench in a referral order reported in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & Ors., (2020) 3 SCC 216 referred the following question to a larger bench: "3. We are of the considered opinion that in view of Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108], the pronouncement of this Court in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC (Civ) 346 : (2018) 1 SCC (Cri) 860] needs reconsideration. With the passage of time, reliance on electronic records during investigation is bound to increase. The law therefore needs to be laid down in this regard with certainty. We, therefore, consider it appropriate to refer this matter to a larger Bench. Needless to say that there is an element of urgency in the matter." 48. The reference came to be answered in the judgment reported in (2020) 7 SCC 1 by a three-Judge bench in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal & Ors. The relevant portions of which are as under:- "45. Thus, it is clear....
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....any the electronic record when the same is produced in evidence. We may only add that this is so in cases where such certificate could be procured by the person seeking to rely upon an electronic record. However, in cases where either a defective certificate is given, or in cases where such certificate has been demanded and is not given by the person concerned, the Judge conducting the trial must summon the person/persons referred to in Section 65-B(4) of the Evidence Act, and require that such certificate be given by such person/persons. This, the trial Judge ought to do when the electronic record is produced in evidence before him without the requisite certificate in the circumstances aforementioned. This is, of course, subject to discretion being exercised in civil cases in accordance with law, and in accordance with the requirements of justice on the facts of each case. When it comes to criminal trials, it is important to keep in mind the general principle that the accused must be supplied all documents that the prosecution seeks to rely upon before commencement of the trial, under the relevant sections of the Cr.PC. 56. Therefore, in terms of general procedure, the pr....
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....o Bruno v. State of U.P., (2015) 7 SCC 178 : (2015) 3 SCC (Cri) 54], being per incuriam, does not lay down the law correctly. Also, the judgment in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC 807 : (2018) 2 SCC (Civ) 346 : (2018) 2 SCC (Civ) 351 : (2018) 1 SCC (Cri) 860 : (2018) 1 SCC (Cri) 865] and the judgment dated 3-4-2018 reported as Shafhi Mohd. v. State of H.P. [Shafhi Mohd. v. State of H.P., (2018) 5 SCC 311 : (2018) 2 SCC (Cri) 704], do not lay down the law correctly and are therefore overruled. 73.2. The clarification referred to above is that the required certificate under Section 65-B(4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, computer tablet or even a mobile phone, by stepping into the witness box and proving that the device concerned, on which the original information is first stored, is owned and/or operated by him. In cases where the "computer" happens to be a part of a "computer system" or "computer network" and it becomes impossible to physically bring such system or network to the court, then the only means of providing information contained in ....
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....5. To examine the issues that have been raised, it would be necessary to first examine section 36B of the Central Excise Act. It is reproduced: "Section 36B- Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence. (1) Notwithstanding anything contained in any other law for the time being in force,- (a) a microfilm of a document or the reproduction of the image or images embodied in such microfilm (whether enlarged or not); or (b) a facsimile copy of a documents; 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"). (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 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 pe....
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....ent 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 be 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 be supplied to a computer if it is supplied thereto in any appropriate form and whether it is so 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 shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment. Explanation - For the purposes of this section,- ....
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....the provisions of section 36B of the Central Excise Act, it would be relevant to refer to the observations made by the Supreme Court in Anvar P. V. The Supreme Court, held that evidence relating to electronic record shall not be admitted in evidence unless the requirement of section 65B of the Evidence Act is fulfilled." The Tribunal thereafter goes on to reproduce relevant paragraphs of Anvar P.V and Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & Others, noticing that the latter judgement was with a mild modification that if the original device is not produced, then electronic record can be produced in accordance with section 65B(1) of the Evidence Act together with the requisite certificate under section 65B (4) and then in para 22 held as under: 22. It transpires from the aforesaid two judgments of the Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar that: (i) Any documentary evidence by way of an electronic record under the Evidence Act can be proved only in accordance with the procedure prescribed under section 65B of the Evidence Act. The purpose of this provision is to sanctify secondary evidence in electronic form generated by a....
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....on similar lines relied upon by the appellants. Therefore, by following the aforementioned binding judgements of the Honourable Apex Court as well as in conformity with the views expressed by coordinate benches of this Tribunal earlier, we hold that the Adjudicating Authority has grossly erred in placing reliance on the printouts obtained from the pen drives, computer and hard disks as has been done in this matter to confirm the demands. The impugned order of the Adjudicating Authority cannot be sustained and is liable to be set aside on this count also. 76. We further notice that in this case the appellants have raised the plea of non-compliance with the requirements of Section 36B before the adjudicating authority itself and thus this is a case where an objection relating to the mode or method of proof with respect to the electronic records was taken at the first instance itself before the adjudicating authority. It was definitely open to the adjudicating authority to have got the defect remedied instead of contending that Section 36B has been substantially complied with. 77. Had it been a matter where the adjudicating authority had omitted only to comply with the mandate o....
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....Vasudevan, who too was one of the Directors during the relevant period and the one who was in charge till May 10 according to Shri. C Natarajan. Nothing is forthcoming as why no enquiries were made with Mr.S Vasudevan. c) Shri. C Natarajan, MD of GSPL in his first statement on 28.09.2010 on being asked about the shortage of finished goods stock, has stated that quality of stock which they had thought was okay was checked by technical person who rejected it and that the stock was again remelted during which operation the furnace got punctured, the melting was failure and the melted ingots are kept separately as scrap. He had also given the name of the well experienced technical person as Mr. Venkatesh of Sankari who has done the quality check, and also provided Mr Venkatesh's phone number. Such being the statement, this ought to have been controverted by making necessary investigations with Mr Venkatesh and also by stating whether the statement of Mr. C Natarajan when queried about the shortage in closing stock of ingots, that it was again remelted due to rejection of their quality by technical person and was kept separately as scrap and thus there was no shortage, was furt....
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....end" and the other with Inscription "SanDisk" inside a cloth cover and sealed the cover with a paper seal." However, para 7.8 of the SCN states that from the forensic report pertaining to the pen drive with inscription 'SanDisk' generated during mahazar proceedings on 22.10.2013, it appears that the tally data files in the said pen drive were in Tally 9.214 version whereas the data in the computer printout taken on 11.10.2010 indicated that it has been taken from 'Tally' version and hence it appears that the computer printouts taken on 11.10.2010 were actually from the pen drive with inscription 'Transcend' !!!. Such contradictions between the mahazar dated 11.10.2010 and that of 22.10.2013, has resulted in a fact situation that what was actually recorded on 11.10.2010 under mahazar proceedings and statement of shri. P. Kumar as details from the printouts taken from the pen drive 'SanDisk', was incorrect and such details pertained to printouts actually from the pendrive "Transcend". Even if we are to treat this as a mistake, such mistakes in contemporaneous recording of facts of investigations when they are conducted, hardly inspires confidence in the data retrieval proces....
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....op of one of the Computers in the Office, for departmental use. The CPUs and Hard Disk were again sealed with paper seal bearing our signature as well as the signature of Shri. Natarajan. The Pen drives were put in an envelope and sealed with paper seal bearing our signature as well as the signature of Shri. Natarajan. We the witnesses and Shri. Maharajan have been present throughout the above proceedings." What is of crucial importance is the explanation of Shri. Maharajan when asked how the date of last written was before the date of creation in the case of the file with name Proforma.xls in KUMAR PEN DRIVE SAN DISK. He has replied that the date of creation of the file indicated the date and time of bringing the file into the pen drive, which means that the file would have been created at some other digital location prior to the date of last written time stamp. Now, if we give effect to this explanation with respect to what has been recorded in the mahazar as regards the report regarding 'KUMAR TRANSCEND PD', as reproduced above, it can be seen that in the report regarding 'KUMAR TRANSCEND PD', the file name _esko, file created on 28th September 2010 at 12.21.41....
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.... Kumar's residence at 12.15 pm and before reaching the browsing centre Archanaa Software Tech, or at the browsing centre Archanaa Software Tech. Even more surprisingly, according to the explanation of Shri. Maharajan, the said file is shown last accessed on 08.10.2010, whereas as per the recitals of the mahazar, after the completion of proceedings at Archanaa Software Tech on 28-09-2010, the officers had placed the two pen drives in a brown cover and sealed them with a paper seal and seized them and thereafter as per the recitals of the mahazar in the DGCEI Coimbatore Regional Office on 11.10.2010, it is again recorded that the seals are intact, when these pen drives were taken out for the imaging process that was to be performed by the aforementioned Cyber Forensic Analyst. The aforesaid analysis of the appeal records, inevitably leads only to the conclusion that the custody of the said pen drives during the intervening period from 28-09-2010 to 11-10-2010 was compromised and this breach of custody has resulted in the pen drive with inscription "Transcend" being accessed on 08.10.2010, at which point in time it was supposedly under seizure, sealed and in secure custody. This, to o....
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.... and removal of finished goods. h) It is also puzzling as to why the investigating officers who had conducted search of the premises of GSPL on 28-09-2010 to unearth evidences of clandestine production and removal of MS ingots, thereafter did not conduct any follow up searches or investigation immediately with the consignors to whom the MS ingots have allegedly been clandestinely cleared or from whom raw materials would have to be procured; the conventional wisdom in such matters, idiomatically expressed being, to strike the iron when it was hot. It is seen that the pen drives of seized from Shri. P. Kumar was verified at the first instance on 28-092010 itself and printouts of the details of purchase and sale data entered in these pen drives of companies M/s. ABC India, which is stated to represent the transactions not reflected in the GSPL accounts, were taken on the same day. On 28-09-2010 itself, Shri. C. Natarajan, MD of GSPL too had given names of the customers of the company. Again, on 11-10-2010 printouts of purchase of M.S. Scrap, Sales of ingots and cash transactions of M/s. ABC India was taken and Shri. P. Kumar in his statement dated 11-10-2010 had provided from....
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....ions demand proof of a high order of credibility." Thus, while the general standards of proof for civil cases are the preponderance of probability and the standards for criminal cases are beyond reasonable doubt, these standards have also been eschewed in favour of "clear and convincing evidence" when the allegations are of more serious nature and also attract heavy financial consequences. At the cost of repetition, we reiterate that the three steps in sequence involved in applying the principles of evidence law, as we had elucidated supra, would be to at first find out whether the fact, the evidence in respect of which it is sought to be adduced to prove it, is relevant, and the next step would be to see whether the evidence that is being sought to be adduced to prove such a relevant fact is admissible and lastly whether the fact or facts so proved are sufficient to determine the issue. Sufficiency is completely determined only by adjudicating authority and is thus the adjudicating authority's evaluation of the extent of the bearing the proven facts have in the matter as per the standards of evidence called for in the adjudication process, which in matters of clandestine removal w....
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....respondent during the said period, the same cannot become conclusive proof of production and clandestine sale to different parties. Due to lack of positive evidence, benefit of doubt will always go in favour of the assessee. 10. Accordingly, we answer the reference against the Revenue and in favour of the assessee and it is held that the receipt of one of the raw materials, does not conclusively prove clandestine manufacture and surreptitious removal of finished final product. Further, since the charge is regarding clandestine manufacturer and removal of finished product for evading excise duty, the same cannot be held to be proved on the basis of principle of preponderance of probabilities and the Revenue has to prove the same beyond doubt. The reference is answered accordingly. 83. In Arya Fibres Pvt Ltd v. CCE, Ahmedabad II, 2014 (311) ELT 529 (Tri-Ahmd), a coordinate bench of this Tribunal after considering various Tribunal decisions formulated certain parameters to be established by Revenue in matters where clandestine removal are being alleged. The relevant paragraphs are as below: 40. After having very carefully considered the law laid down by this Tribu....
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....he evidence relied upon qua each of the demands confirmed in the impugned order and examine whether the evidence relied upon meet the standard of "clear and convincing evidence", to establish the case of clandestine removal and to establish the availment of cenvat credit without actual receipt of inputs. 85. The entire demand of Rs. 1,70,97,731/- made on GSPL comprises of demand of (i) Rs. 58,90,2251/- on clandestine removal made between February 2010 and June 2010 of 2194 MTs as per Computer Printouts pertaining to M/s. ABC ( ABC Data in short);(ii) Rs. 32,50,479/- demanded based on the production reports for August, 2010 and Sep, 2010 recovered from the factory on 28.9.2010 on the allegation of clandestine removal of 1358.57 MTs; (iii) Rs. 25,58,588/- demanded on the alleged shortage of 1001.8 MTs MS ingots on 28.9.2010; (iv) Rs. 2,66,856/- demanded by alleging that MS ingots of.76.02 MTs were removed in Feb, 2012 as per Annexure-D2 of the SCN (v) Rs. 51,31,557/- demanded on the grounds that it is ineligible cenvat credit on the MS scrap, which was not received, but credit was taken during Feb, 2010 to May, 2010 as per data in GSPL computer. (i) The demand of Rs. 58,9....
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....nd clearance is further corroborated by the unaccounted procurement of raw materials and tabulates the quantity of scrap purchased from Feb 2010 to May 2010 as per GSPL Computer data, as per ER 6 filed by GSPL and as per data in computer printout from pen drive and concludes that GSPL had sufficient unaccounted quantity of inputs during the month of February 2010 to May 2010 to enable production and clearances during the same period as found in the data in the pen drive. The adjudicating authority also refers to the statement of three scrap dealers who have admitted that they have cleared scrap to GSPL without bills and without accounting the same and this corroborates the authenticity of the entries recorded in the computer data available in the pen drive with inscription "Transcend". We are unable to uphold the aforementioned findings of the Adjudicating authority for the following reasons: (A) Based on our observations supra as to the mistakes and breaches, in our view, the credibility of the entire investigative procedure in so far as data retrieval from the pen drives, CPU and hard disk in this case has been irrevocably tarnished and no credence in any manner can be a....
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....ge '9'of his statement then comes to the fore. He states "it was based on similar slips of scrap receipt and dispatch of ingots that I used to make entries in the pen drive in the name of ABC India ltd as per the directions of the above MD i.e. Shri. C Natarajan." Thus, it appears that there has been no recovery of any slip pertaining to scrap receipt and dispatch of ingots which had been written by Shri. C Natarajan and pertains to the data entered in ABC India Ltd, ABC India being the company where the clandestine clearances details were included. In his statement of 08.10.2010 Shri. P Kumar then only identifies slips handed over by Shri. Natarajan to be entered in the cash ledger under the name of ABC India, but they pertain only to payments made to Shri Venkatesh, Shri Madhan, Shri Raja, Shri Chitambaram, Shri Manivel who were employees and Shri Ranjit and Shri litu who were contractors. Thus, there appears to be no evidence of any slips pertaining to cash paid for receipt of unaccounted raw materials or slips accounting receipt of cash otherwise than banking channels as sales proceeds of clandestinely cleared goods. (D) The cash flow into GSPL relied upon by the Adjud....
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....hmetical calculation substantiating the quantum of alleged production of 2194 MTs clandestinely removed during the said period, from the said quantum of raw material. (ii) The demand of Rs. 32,50,479/- on the allegation of clandestine removal of 1358.57 MTs during August 2010 and September 2010 (Annexure D1 of SCN) is based on the production reports for August, 2010 and Sep, 2010 prepared by Mr. Pinto the Lab Chemist, recovered from the factory on 28.9.2010 and his statement of the same date, unaccounted scrap purchases of 801 tons during July to September 2010 (Annexure B of SCN), determined on the basis of slips recovered from GSPL and Senthil Steels as well as deposition of scrap dealers. The discussions in this regard by the Adjudicating Authority is in paras 32 and 35.5 to 35.8 of the OIO. The Adjudicating Authority has found that pinto has stated that he prepared the daily production report and this is admitted by Shri. Natarajan, that 46 numbers of such production reports were seized from the office premises and he premised his finding of suppression of production on the conclusion that the figures shown in the seized daily production numbers do not tally with the p....
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....d date, however, it is at variance with that indicated as recorded in the production report for the said date seized from the factory and is indicated as 70.036 T in the tabulation in paragraph 8.1.3 of the SCN. Therefore, if what was available as reports for the period pertaining to the same dates as filed in pages 1 to 46 of the made-up file and seized from office of GSPL are the daily production reports, then what was seized from Mr. Pinto are not the daily production reports as recorded in his statement, but only drafts of the same as it clearly did not contain the length and Ton/weight of the ingots as evidenced from the daily production reports of 27-082010 and 28-08-2010 seized from Pinto. Even if Mr. Natarajan's disowning of the slips seized from the factory is discounted, still his explanations in his statement that he was new to the industry having started the manufacture of M.S. Ingots in February 2010 and that they have not arrived the good quality in all heats and that from the daily production, only good quality is entered in stock as if there is piping/raising and cup formation in the ingots they will be remelted, remain uncontroverted, especially when neither the te....
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....about the stock lying in the factory has proceeded on presumptive calculations to conclude that the appellant has not explained the shortage and their plea of captive consumption is an attempt to cover up the shortage and is not a genuine case of transfer of defective MS ingots for captive use. This finding of the Adjudicating Authority is erroneous for the following reasons: A) The very premise of the Adjudicating Authority that Mr.Natarajan has not mentioned about the stock lying in the factory is incorrect and contrary to the statement given by Mr.Natarajan on 28-09-2010. It is seen from the statement dated 28-09-2010 of Mr.Natarajan that on being asked about the shortage of finished goods stock, he has stated that quality of stock which they had thought was okay was checked by technical person who rejected it and that the stock was again remelted during which operation the furnace got punctured, the melting was failure and the melted ingots are kept separately as scrap. He had also given the name of the well experienced technical person as Mr. Venkatesh of Sankari who has done the quality check, and also provided Mr Venkatesh's phone number. This say of Mr. Natarajan o....
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....hat they have subsequently removed the said goods so manufactured on payment of duty, has not been rebutted. (iv) The demand of Rs. 2,66,856/- is on the allegation that MS ingots of76.02 MTs were removed in Feb, 2012 as per Annexure-D2 of the SCN determined on the basis of slips recovered from M/s. SKSRM and M/s. Balaji Steel Industry, who had accepted and paid duty on the TMT Rods manufactured from such MS Ingots and cleared by them. The Adjudicating Authority's finding in this regard is in para 35.1 to 35.5 of the OIO, wherein with respect to transactions with M/s. Balaji Steel Industry reliance is placed on the notepad seized from the premises of M/s. BSI and the statement of Shri. S Gnanasekharan, Factory in charge of M/s. BSI. The notebook has four entries with the name Geetham under the heading purchase, of which two entries with the name Geetham on 15.02.2012 and 19.02.2012 has no invoice numbers mentioned, while the other two entries has invoice numbers 36 and 37 which tally with invoices of GSPL and therefore the entries against the name without any invoice mentioned indicates receipt of ingots by M/s BSI without bills. That Shri. Gnanashekharan admitted to such r....
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....tation has been gathered. Given the quantum of duty liability paid by the buyers who have initially accepted the allegation, in the absence of any other corroborative evidence of production, transportation etc., coupled with the deponents resiling from their stated position in their written submissions in response to the SCN as well as the exculpatory statement of Mr. Natarajan, in the absence of the deponents of the admission statements being subjected to the test of cross examination, such statements and couple of entries in a private notebook and weighment slips sans indication of material weighed, cannot be the basis for visiting GSPL with a duty liability in this regard. It is also pertinent that in the statement of Mr. Natarajan dated 21.06.2012, he is shown ten vehicle numbers at page no.2 of computer printouts from computers from M/s. SKSRM and enquired whether he has engaged the said vehicles. Yet no enquiry is seen made with the drivers of the said ten vehicles whose registration numbers have been confronted with Mr. Natarajan. (v) The demand of Rs. 51,31,557/- (Annexure D3 (a) and D3(b) of the SCN) is made on the grounds that it is ineligible cenvat credit taken....
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....anation is not convincing and the modus operandi as charged by the Department remains unchallenged by the parties and the total amount of ineligible cenvat credit so taken is Rs. 11,72,909/. Likewise in respect of the other cenvat invoices shown in the raw material register/statutory register of GSPL upon verification with the lorry owners it is revealed from their statements that they have not transported scrap to GSPL and therefore the invoices issued bearing the vehicle numbers of the vehicles in respect of which statements were taken from the vehicle owners, were not genuine invoices and no goods were actually received by GSPL under the said invoices. We are unable to subscribe to the Adjudicating Authority's findings for the following reasons: (A) The reliance on electronic evidence with respect to M/s. ABC Data is untenable due to the detailed discussions elucidated supra. (B) Apart from the fact that Mr. Sidesh Kumar has accepted payment in respect of four dates to Mr. Natarajan only amounting to Rs. 59.50 lakhs, whereas GSPL has received payments from M/s. Salem Alloys on seven days for a total amount of Rs. 1,11,21,421/-, even a cursory glance at the tabl....
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....eturned to GSPL who is alleged to have paid such amount without receiving goods in order to secure the benefit of cenvat credit of Rs. 39,58,648/-. (D) Yet another factor that bears consideration is that the contentions of the Department doesn't appear to add up when tested against the figures cited by the Department in the SCN itself. As per the SCN, the quantum of inputs covered under these invoices which have been stated to have been issued without actual supply of inputs, is amounting to 3050.237 MTs (as per Annexure D3(a) and D3(b) of the SCN) during February 2010 to May 2010. It is also stated that this quantity has been accounted by M/s. GSPL in its raw material register and statutory records, albeit without actual receipt of the inputs. Now, it is seen that for the period February 2010 to May 2010, para 34.7 of the SCN states that quantity of scrap accounted as purchased as per GSPL computer Data is 3911.192. If the said amount of scrap of 3050.237 MTs stated to have been not received but only invoices issued, is deducted from the quantity of scrap accounted as purchased, it would then reflect the scrap actually purchased and available during Feb 2010 to May 2010 a....
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....in are different from the facts and circumstances of this case. We hold that the reliance placed on paragraph 150 of the decision in Navjot Sandhu case to contend that, dehors the requirement of the certificate mandated under Section 65B(4), the conditions specified in Section 65B(2) appears to have been fulfilled, is unacceptable and not appreciated, given that Navjot Sandhu decision stood overruled in the decision of P.V. Anvar. We have no quarrel with the proposition of the Authorised representative in his contention that as per Section 61 of the erstwhile Evidence Act, 1872 it is necessary that the contents of a document has to be proved either by primary or secondary evidence and that the evidence of the contents contained in a document is hearsay evidence unless the writer thereof is examined before the court and further that as per section 67 of the erstwhile Evidence Act, 1872, the signature or handwriting of the person alleged to have signed the whole or part of the documents has to be proved. These contentions are precisely in tandem with our findings supra on the manner in which the adjudicating authority has to evaluate the statement under Section 14 for its relevance a....
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....oof required to rebut a presumption raised under the statute at hand is in our view applicable for two distinct reasons. The first and foremost is that the presumption is raised in relation to a fiscal statute. While the amount payable is not a tax it is nevertheless a statutory levy which is attracted the moment the transaction of sale takes place within the market area. Goods, admittedly produced within the market area and not consumed within such area are presumed to be leaving pursuant to a transaction of sale unless the contrary is proved. That the goods are produced within the market area is not in dispute in the instant case. That they left the market area is also admitted. In the ordinary course, therefore, the presumption would be that the goods left pursuant to a sale unless the Appellants are in a position to prove the contrary. (emphasis supplied) 87. In these fact circumstances and in the light of our discussions above, we are constrained to draw an adverse inference against the investigation in all the aforesaid appeals as the best possible evidence that was contemporaneously easily available and accessible that would have lead the investigators to conclus....