TaxTMI 
TaxTMI 
2025 (3) TMI 1098
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....) 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/- 10 E/40721/2015 Salem Alloys 1,20,000/- 11 E/40722/2015 S. Sidesh Kumar 1,20,000/- 12 E/41848/2015 Salem Automech 50,000/- ....
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....ed 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 recorded from Shri. Natarajan. 6. Subsequent to the search conducted on 28.09.2010, GSPL gave a letter to the Salem Commissionerate on 29.12.2010 stating that the 959.01 MT of MS ingots as per their production register on 01.09.2010 had been found defective and h....
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....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 subsequent to the mahazar proceedings, a statement was recorded from Shri. P Kumar on 25.10.2013. 12. On scrutiny of such documents and other information, the lower authority came to a conclusion that GSPL cleared clandestinely a total quantity of 13587 MTs of MS Ingots, during the months of August ....
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....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 duty should not be demanded under Section 11A(1) and the said amount paid should not be appropriated against the said demand, interest should not be demanded and penalty not imposed on them under the provisions of Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, ....
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....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, computer printouts were taken from these two pen drives in the Office of the Director General of Central Excise Intelligence, Regional Unit, as recorded in Mahazar dated 25.10.2023. Thus, it is proved beyond doubt that electronic evidences were handled in a casual manner through unauthorized agencies without satisfying the conditions s....
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....ective 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 payment of duty. No adverse report was submitted by the Officers. No other corroborative evidences evidencing suppression of purchases, suppression of production, excess consumption of electricity than what is required, production capacity, transportation of clandestine purchases and sales, cash flow back and evidences/depositions from the alleged s....
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....rers 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 concerned, Shri. C. Natarajan has not given a confessional statement, Smt. N Rani Deivanai and Sri. N. Kirubakaran have not been interrogated and there is no proposal for confiscation of goods and under such circumstances penalty cannot be imposed on the Directors. Reliance is placed on decision in M/s. Yamuna Machine Works (P) Ltd v CCE, 2013 (298) ELT 86 (Tri-Ahmd). l) Shri P.Kumar's statements were countered by C.Natarjan du....
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....ntend 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 apart from echoing the submissions made by the learned counsel for GSPL regarding the unreliability of the data recovered from the pen drives seized from Shri. Kumar, utilising unauthorised persons and that the computer printout relied upon in the proceedings to establish clandestine clearance of ingots by GSPL do not satisfy the requirements of Section 36B of the CEA as put forth by GSPL and further that the computer printouts do not satisfy any of the stipulations contained in ....
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....vt 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 CCE, 2006 (200) ELT 104 (Tri-Kolkata), CCE v Sumetco Alloys Pvt Ltd, 2008 (230) ELT 81 (Tri-Del), CCE v Sangamitra Cotton Mills (P)Ltd, 2004 (165) ELT 472 (Tri-Chennai) and Mahesh Silk Mills v CCE, 2014 (304) ELT 703 (Tri-Ahmd) upheld by the Hon'ble High Court of Gujarat in Commissioner v Mahesh Silk Mills, 2015 (319) ELT A 52 (Guj) to drive home the point that entries in the private registers, note books etc. without any corroboration are not dependable records to establish clandestine removal. j) that it is settled law that demand ca....
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....erson 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. 23. For the sake of completion, the written submissions of M/s. Akshara Industries P Ltd is taken note of at this juncture, whereby it has been contended inter-alia that the appellant is a manufacturer and not a dealer and has never supplied scrap to anyone, let alone GSPL; that the OIO despite recording that various transactions attributed to Akshara Industries are not reflected in the computer printouts and even when the statements of the transporters did not reflect the appellant's consignments have chosen to impose penalty even when there is no corro....
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....istinguishable 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 procurement of raw material and availment of CENVAT credit without actual receipt of any goods in factory, data from the pen drives, recovered CPU from GSPL and statements of Mr. Kumar evidence the same, all owners of vehicles mentioned in the purchase invoices admit that their vehicle was not used for transportation scrap to GSPL e) That as regards requirement under Section 36B, almost all proceedings including preliminary examination, imaging, taking prints were carried out under panchnama proceedings and author has confirmed the authenticity of data and fact that he was responsible p....
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....d 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. CCE, 2009 (239) E.L.T. 429, Ureka Polymers v. CCE, 2001 (127) E.L.T. 618, CCE Vs. International Cylinders Pvt. Ltd, (2010) 255 ELT 68 (HP),CCE Vs. International Cylinders Pvt. Ltd,(2010) 255 ELT 68 (HP), Indian Cork Mills Ltd. and Others Versus Collector of Central Excise, Bombay [1984 SCC Online CEGAT 165 : (1984) 17 ELT 513 (Tri-Mum), Sri Ram Machinery Corporation Ltd & Anr v CCE, 2017 (348) ELT 540 (Tri-Chennai) and Metal Alloys Industries v CCE, CGST, 2023 SCC Online CESTAT 235. k) That as per Section 61 of the Evidence Act, it is necessary that the contents of a document be proved either by primary or secondary evidence.....
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....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), as deponents were not examined, and non compliance of Section 36B of the CEA read with Section 79A of the IT Act. Similarly with respect to the demand of Rs. 32,50,479/- confirmed on GSPL on the finding of clandestine removal of MS Ingots during August 2010 and September 2010 as well as the demand of Rs. 2,66,856/- confirmed on GSPL for clandestine removal of MS Ingots during February 2012 to BSI and KSRM, the appellants have raised a plea of noncompliance with the requirements of Section 9D (2) as deponents were not examined. These pleas give rise to the following questions of law, the answers to which will have a bearing on the tenability of these demand....
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....r 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 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." 33. It would also be appropriate at this juncture to notice the similar provisions of Customs Act, 1962, which are reproduced below: "108. Power to summon persons to give evidence and produce documents. - (1) Any Gazetted Officer of customs ....
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....f 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 (90) ELT 241 (S.C), had an occasion to consider whether the confessional statement of the appellant therein, given to the Customs officers under Section 108 of the Customs Act, 1962 (for short, the `Act'), though retracted at a later stage, is admissible in evidence and could form basis for conviction and whether retracted confessional statement requires corroboration on material particulars from independent evidence. The Honourable Supreme Court held that: "17. It would thus be clear that the object of the Act empowering Customs Officers to record the evidence under Section 108 is to collect information of the contravention of the provisions of the Act or concealment of the contraband or avoidance of the duty of excise so as to enable them to collect the evidence of the proof of contravention of the provisions of the Act so as to....
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....n 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 whether the statement is true. If the Court on examination of the evidence finds that the retracted confession is true, that part of the inculpatory portion could be relied upon to base conviction. However, the prudence and practice require that Court would seek assurance getting corroboration from other evidence adduced by the prosecution." (emphasis supplied) 37. How such corroboration can be sought is seen indicated in the next paragraph, wherein it was stated as under: "26. ........ Generally, the evidence in support of the violation of the provisions of the Act consists in the statement given or recorded under Section 108, the recovery panchnama (mediator's report) and the oral evidence of the witnesses in proof of recovery and in connection therewith. This Court, therefore, in evaluating the evidence for proof of the offences committed under the Act has ....
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....e 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 (supra). Here again, a Constitution Bench was concerned with the same question under section 25 of the Evidence Act when read with enquiries made under section 171-A of the Sea Customs Act, 1878. The Court had no difficulty in finding that such customs officer could not be said to be a police officer for the purpose of section 25 of the Evidence Act, holding: "Under the Sea Customs Act, a Customs Officer is authorised to collect customs duty to prevent smuggling and for that purpose he is invested with the power to search any person on reasonable suspicion (Section 169); to screen or X-ray the body of a person for detecting secreted goods (Section 170-A); to arrest a person against whom a reasonable suspicion exists that he has been guilty of an offence under the Act (Section 173); to obtain a search warrant from a Magistrate to search any place within the local limits of the jurisdiction of such Magistrate (Section 172); to collect informat....
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....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 under Section 173 of the Code of Criminal Procedure." (at page 469) xxxxx "126. The golden thread running through all these decisions - some of these being decisions of five-Judge Benches which are binding upon us - beginning with Barkat Ram (supra), is that where limited powers of investigation are given to officers primarily or predominantly for some purpose other than the prevention and detection of crime, such persons cannot be said to be police officers under section 25 of the Evidence Act. ...." (emphasis supplied) 39. Thus, what can be gleaned from the above decisions of the Apex Court is that a statement made under S.108/S.14, while admissible, does not automatically translate into their being relevant to the proceedings unless they satisfy the statutory stipulations laid down to consider them relevant. This is because there is a difference between relevancy and admissibility according to the general principles of evidence law. Otherwise, this wou....
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....sability, 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 to be relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Adhiniyam relating to the relevancy of facts. 43. Evidence, on the other hand, can only be admissible or inadmissible and this evidence can be used only to prove or disprove relevant facts. 44. The Supreme Court in Ram Bihari Yadav vs. State of Bihar 1998 INSC 191 (2J) itself has observed that more often than not, the expressions 'relevancy and admissibility' are used as synonyms but their legal implications are distinct and different from for more often than not facts which are relevant are not admissible; so also facts which are admissible may not be relevant, for example questions permitted to put in cross examination to test the veracity or impeach the credit of witnesses, though not relevant are admissible. The probative value of the evidence is the weight to be given to it which has to be judged having regards to the fact and circumstances of each case. The relevant para is as under: "The law relating t....
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....and not otherwise. (2) If the fact proposed to be proved is one of which evidence is admissible only upon proof of some other fact, such last mentioned fact must be proved before evidence is given of the fact first mentioned, unless the party undertakes to give proof of such fact, and the Court is satisfied with such undertaking. (3) If the relevancy of one alleged fact depends upon another alleged fact being first proved, the Judge may, in his discretion, either permit evidence of the first fact to be given before the second fact is proved, or require evidence to be given of the second fact before evidence is given of the first fact" 47. Therefore, the three steps in sequence involved in applying the principles of evidence law under BSA/IEA, 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 the Court/adjudicating authority and is thu....
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....and Economic Offences" submitted to the Government of India in February, 1972. For the purpose of the discussion at hand the observations of the Commission were as follows: "14.1 Statements made in administrative adjudications: Many of the Acts dealing with economic offences empower the enforcement officers to summon and examine witnesses. The statements made by these witnesses before such officers are not, however, admissible in evidence in the subsequent criminal prosecutions. We are of the view that these statements, if recorded by officers of sufficiently high status, to be determined by the Government should be admissible in such prosecutions, since they are very often the earliest officially recorded version of the facts." 14.2 Certain conditions and safeguards will, no doubt, be necessary. Reference in this connection may be made to the Evidence Act, which has a provision relating to the admissibility of a statement made in a previous judicial proceeding. The relevant provision in the Evidence Act, is as follows: "33. Evidence given by a witness in a judicial proceeding, or before any person authorized by law to take it, is relevant for the purpose of proving, in a sub....
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.... the conditions set out in sub-section (a). The conditions set out in sub-section (a) are in pari materia with the ones set out in the first clause of Section 33 of the Evidence Act." (emphasis supplied) 49. S.9D(1) stipulates "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" and thus addresses when such statements before a Gazetted Officer would be relevant for the purpose of proving, "in any prosecution for an offence", the truth of the facts which it contains. As stated supra, the relevancy of a fact is a precondition for admitting evidence to prove such a fact. Thus, the legal relevance of the statement, which is crucial to the proof of facts, as evidence can only be admitted concerning relevant facts or facts in issue, stands established by virtue of the stipulation in 9D(1). As held by the Hon'ble High Court of Madras supra, such a statement is a substantive piece of evidence, without the deponent of the statement being examined in t....
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....d in chief and thereafter offered to the opposite side for cross-examination. 52. S.9D(2) states that 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. 53. Given that the adjudication proceedings under Section 33A of CEA, 1944/Section 122A of Customs Act, 1962, would come within the ambit of the phrase "any proceeding under this Act", stipulated in S.9D (2), the provisions of sub-section (1) shall, so far as may be, apply to such adjudication proceedings, as they apply in relation to a proceeding before a Court. Now, it is to be seen as to what could be the import of the phrase "so far as may be". 54. In Dr. Pratap Singh vs. The Director of Enforcement Fund, Foreign Exchange Regulation Act & Ors. 1985 INSC 106: AIR 1985 SC 989, the Hon'ble Supreme Court has held that the term "so far as may be" has to be construed to mean that those provisions may be followed to the extent possible. The relevant para is reproduced below: "Sec. 37 (2) provides that 'the provisions of the Code relating to searches, shall so far as may ....
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....es into a validation of the truthfulness of the statement, nor does it attract any such presumption that what is deposed in the statement is the truth. A statement may be relevant, but it yet needs to be proved in accordance to the means known to law. The fact that a statement is made and recorded, and is statutorily said to be relevant in the IEA (BSA), does not mean it is proved. In this regard, reference to the decision of the Honourable High Court of Madras in Commissioner of Customs (Imports), Chennai I v. Sainul Abideen Neelam, 2014 (300) ELT 342 (Mad) is apposite where it was held as under: 14. The learned counsel for the Revenue relied on the decision of the Hon'ble Supreme Court in Surjeet Singh Chhabra v. Union of India [1997 (89) E.L.T. 646 (S.C.)] and the decision of this Court in Roshan Beevi and Others v. Joint Secretary, Government of Tamil Nadu - 1984 (15) E.L.T. 289 (Mad.) in support of his contention that statement made before the Customs Officer under Section 108 of the Customs Act, though retracted later is an admissible evidence and binding. Certainly, there is no quarrel about the said proposition. The admissibility of such statement as evidence is always th....
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....ies in a case where the witness deposing stands by his earlier statement and is thereafter offered for cross-examination to the opposite side and in case of minor inconsistencies/no inconsistency, if the adjudicating authority is of the opinion, having regard to the circumstances of the case that the statement should be admitted in evidence in the interests of justice, the adjudicating authority can do so as per this Section 9D(1)(b). 59. However, implicit in this procedure stipulated in 9D(1)(b) is the necessary requirement for the adjudicating authority to depose all the deponents who have given statement under Section 14, save as those that are unavailable in the scenarios given in 9D(1)(a), for the purposes of evaluating whether the statements are voluntary, to attest that he had deposed the contents of the statement and then take a considered decision whether the truth of the facts contained in the statement stand proved or disproved in the facts and circumstances of the case. In other words, it is only after such examination in chief, that the adjudicating authority can arrive at a considered decision, whether to declare the witness appearing before it as a hostile witness a....
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.... Similarly, when the adjudicating authority, on examination of the witness under Section 9D(1)(b) forms an opinion in the facts and circumstances that the witness has resiled from his earlier statement and is to be considered hostile, and that the adjudicating authority deems it necessary to rely on the earlier statement of the witness, then again there does not arise a further necessity to make the witness available for cross-examination to the assessee. However, if the witness is deposing against the assessee, then it would be necessary for the adjudicating authority to offer the said witness to the assessee/assessee's representative for cross examination if the assesse so desires and requests for cross-examination, as otherwise it would be prejudicial to the assessee. Thus, it can be seen that cross-examination of the witness deposing before the adjudicating authority is not an imperative in all circumstances and only when the deposition is to the detriment of the assessee, that the witness is to be offered for cross-examination, if the assessee so desires and requests for cross -examination. 62. Our aforesaid interpretation is also bolstered by the decision of the Honourable H....
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....or any cross examination, as the provision deals with relevancy of statements in the facts and circumstances of the case. As to whether an opportunity of cross examination ought to be given in regard to the statements as recorded by the Customs Officer, would be required to be considered in the course of adjudication of the show cause notice. Considering the implications, the provisions of Section 138B would bring about, we do not find that in the facts and circumstances of the case, it can be argued by the petitioner as an absolute principle of law, that an opportunity of cross examination of three witnesses ought to have been granted to the petitioner. This for more than one reason, that sub-section (2) is required to be read in conjunction with sub-section (1). Sub-section (1) clearly provides for relevancy of statements as made and signed before the Gazetted Officer of the Customs only in relation to any prosecution for an offence under the Customs Act and not otherwise. Although subsection (2) makes a provision that the provisions of sub-section (1) are applicable in relation to any proceeding under the Customs Act, other than a proceeding before a Court, as they apply in rela....
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.... arises at this stage is as to whether the provision in question is arbitrary. Such a provision can still be held to be offending Article 14 of the Constitution and can be termed as arbitrary if it is established that the provision gives uncanalised and uncontrolled power to the quasi judicial authorities. But, we are of the opinion that it is not so. The safeguards are inherent in the provision itself. In the first instance, only those statements of such persons, which are made and signed before the Central Excise Officer of a gazetted rank, are treated as admissible. Thus, protection is taken to treat the statements relevant only if they are made before an officer enjoying a higher rank/status. Secondly, (and that has already been taken note of) such statements are made relevant only under certain specified circumstances, and these are the ones which are beyond anybody's control. Thirdly (and this is most important), the quasi-judicial authority can rely upon the statement of such a person only when the stated ground is proved. For example, in those cases where the person who made the statement is dead, there should be sufficient proof that he is dead. In case, where a person c....
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....conditions should be specifically mentioned in the provision. The very fact that before power under Section 9D(2) of the Act could be exercised, the authority has to satisfy itself about the existence of any of the conditions stipulated therein, which provides clear and sufficient guidance to such quasi judicial authority to exercise its power under the section. We may also state that such arguments have been repelled by the Supreme Court on number of occasions. [See - Harishankar Bagla v. State of Madhya Pradesh, AIR 1954 SC 465; and Bhatnagars & Co. Ltd. v. Union of India, AIR 1957 SC 478]." 31. Interestingly, even in the present case, the attempt of learned senior counsel appearing for the petitioners was to show that the respondent No. 1 ought to have given prior intimation and granted an opportunity to the assessee to make its submissions on invocability of Section 9D itself and thereby enabling the assessee to take appropriate steps, as may be possible, in the circumstances of the case. He submitted that if a particular witness was not allowed to be cross-examined by stating that it was not possible to procure his presence without delay or expense, had the opportunity been ....
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.... it was authorised to be exercised. Dishonesty in discharge of duty vitiates the action without anything more. An action is bad even without proof of motive of dishonesty, if the authority is found to have acted contrary to reason." 32. Thus, we summarize our conclusions as under :- (i) We are of the opinion that the provisions of Section 9D(2) of the Act are not unconstitutional or ultra vires; (ii) while invoking Section 9D of the Act, the concerned 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; (iii) such an opinion has to be supported with reasons; (iv) 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; and (v) it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing statutory appeal, which provides for judicial review. 33. Thus, insofar as the vires of the provision are concerned, we find no merit in these writ petitio....
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.... self evident inference that the decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioners have also invited attention to an unreported short order of the Supreme Court in UOI and Another v. GTC India and Others in SLP (C) No. 2183/1994, dated 3-1-1995 wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. 16. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted i....
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....aightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. (emphasis supplied) 20. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination 21. It is only, therefore, - (i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recor....
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.... 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. 14. Cross-examination is the norm for making the statement made by a witness relevant for evaluation in the proceedings. Section 138B of the Act of 1962 carves out few exceptions and limits it to a proceeding under the Act of 1962 and a proceeding for prosecution launched before any Court of law in respect of offences under the Act of 1962. Section 138B(2) stipulates that, the provisions of sub-section (1) shall so far as may be applies in relation to any proceeding under the Act of 1962, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. In other words, the exceptions carved out under Section 138B(1) of the Act of 1962 from the general law of evidence, apply to a proceeding of adjudication under the Act of 1962, as it would apply in a proceeding before a Court for the prosecution of any offence under the Act of 1962. 15. When an adjudicating authority is faced with a proceedings in which, the prosecution introduces evidence of witnesses, then the prosecution is....
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....of the evidence finds that it is true, it can be relied upon in determination of the issue in dispute in the circumstances of the case. E. However, if the condition of sub-section (a) of S.9D(1)/S.138B(1) do not exist, then it is incumbent upon the adjudicating authority to invariably examine in chief the deponent of the statement given under Section 14/Section 108 in order to determine whether or not sub-section (b) of S.9D(1)/S.138B(1) would be attracted. That is to say, implicit in this procedure is the necessary requirement for the Court to depose all the deponents who have given statement under Section 14/Section 108, save as those that are unavailable in the scenarios given in 9D(1)(a), for the purposes of evaluating whether the statements are voluntary, whether they depose to having made the recitals in the statement recorded under Section 14/Section 108 and then take a considered decision whether the truth of the facts contained in the statement stand proved or disproved in the facts and circumstances of the case. In other words, it is only after such examination in chief, that the adjudicating authority can arrive at a decision whether or not to declare the witness appea....
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....tions as to whether compliance of Section 9D by the Adjudicating Authority is mandatory and what is the import of Section 14 statement and whether it is relevant and admissible if not subjected to the rigours of Section 9D (2), we proceed to address the third question as to whether a plea of non-compliance with the mandate of Section 9D (2) can be raised at the Appellate Stage when not raised before the Adjudicating Authority. 68. We are of the view that whether the adjudicating authority ought to have complied with the mandate of 9D(2), being a pure question of law, can be raised at the appellate stage, even if not raised before the adjudicating authority as it goes to the root of the issue whether the statements recorded under Section 14 can be relied upon as a substantive piece of evidence to render findings against the appellant. The decisions of the Honourable Apex Court in M. J Exporters Pvt Ltd v UOI, 2017 (51) STR 228 (SC), and Assistant Collector of C.Ex. v. Ramdev Tobacco Company, 1991 (51) ELT 631 (SC), hold that question of law can be raised in a lis at any point in time. A coordinate bench of this Tribunal in Shonan Siddhart (J.V) v. CCE, Nagpur, 2017(51) STR 64 (TriM....
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....he appellants wholly unsustainable on this ground alone. 71. The only remaining question of law that arises for our consideration is whether the electronic evidence collected during investigation in this case, is admissible given the absence of certificate issued under Section 36B. 72. We observe that a three judge bench of the Honourable Apex Court has rendered a judgement on 28th January 2025 in Criminal Appeal No. 879 of 2019 in the case of Chandrabhan Sudam Sanap v The State of Maharashtra, reported in 2025 INSC 116, wherein the Honourable Apex Court after analysing the relevant judgements pertaining to Section 65-B of the Indian Evidence Act, and the failure to produce the Section 65-B(4) certificate, has held as below: "35. However, what resolves this issue against the prosecution completely is the failure of prosecution to follow the mandate under Section 65-B of the Indian Evidence Act, and the failure to produce the Section 65-B(4) certificate. Section 65-B reads as under:- "Section 65-B - Admissibility of electronic records. (1) Notwithstanding anything contained in this Act, any information contained in an electronic record which is printed on a paper, stored, r....
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....onstituting a single computer; and references in this section to a computer shall be construed accordingly. (4) In any proceedings where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, -- (a) identifying the electronic record containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer; (c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this subsection it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it. (5) For the purposes of this section, (a) information shall be taken to be supp....
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.... under the other provisions of the Evidence Act, namely, Sections 63 and 65. It may be that the certificate containing the details in subsection (4) of Section 65-B is not filed in the instant case, but that does not mean that secondary evidence cannot be given even if the law permits such evidence to be given in the circumstances mentioned in the relevant provisions, namely, Sections 63 and 65." 37. However, on 18.09.2014, in the case of Anvar P.V. v. P.K. Basheer & Ors., (2014) 10 SCC 473, Navjot Sandhu (supra) was overruled. In Anvar P.V. (supra), it was held as under: "22. The evidence relating to electronic record, as noted hereinbefore, being a special provision, the general law on secondary evidence under Section 63 read with Section 65 of the Evidence Act shall yield to the same. Generalia specialibus non derogant, special law will always prevail over the general law. It appears, the court omitted to take note of Sections 59 and 65-A dealing with the admissibility of electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Sections 65-A and 65-B. To that extent, the statement ....
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....y because a document has been marked as "an exhibit", an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken when the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The later proposition is a rule of fair play. *The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the court to apply its....
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....s test to the present case, if an objection was taken to the CDRs being marked without a certificate, the Court could have given the prosecution an opportunity to rectify the deficiency. It is also clear from the above judgments that objections regarding admissibility of documents which are per se inadmissible can be taken even at the appellate stage. Admissibility of a document which is inherently inadmissible is an issue which can be taken up at the appellate stage because it is a fundamental issue. The mode or method of proof is procedural and objections, if not taken at the trial, cannot be permitted at the appellate stage. If the objections to the mode of proof are permitted to be taken at the appellate stage by a party, the other side does not have an opportunity of rectifying the deficiencies. The learned Senior Counsel for the State referred to statements under Section 161 Cr.PC, 1973 as an example of documents falling under the said category of inherently inadmissible evidence. CDRs do not fall in the said category of documents. We are satisfied that an objection that CDRs are unreliable due to violation of the procedure prescribed in Section 65-B(4) cannot be permitted to....
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....n following the law incorrectly laid down 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], must also be, and is hereby, overruled. 47. However, a caveat must be entered here. The facts of the present case show that despite all efforts made by the respondents, both through the High Court and otherwise, to get the requisite certificate under Section 65-B(4) of the Evidence Act from the authorities concerned, yet the authorities concerned wilfully refused, on some pretext or the other, to give such certificate. In a factcircumstance where the requisite certificate has been applied for from the person or the authority concerned, and the person or authority either refuses to give such certificate, or does not reply to such demand, the party asking for such certificate can apply to the court for its production under the provisions aforementioned of the Evidence Act, CPC or Cr.PC. Once such application is made to the court, and the court then orders or directs that the requisite certificate be produced by a person to whom it sends a summons to pr....
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....ficate at a later point in time. If it is the accused who desires to produce the requisite certificate as part of his defence, this again will depend upon the justice of the case - discretion to be exercised by the court in accordance with law. 61. We may reiterate, therefore, that the certificate required under Section 65B(4) is a condition precedent to the admissibility of evidence by way of electronic record, as correctly held in 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], and incorrectly "clarified" 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] . Oral evidence in the place of such certificate cannot possibly suffice as Section 65-B(4) is a mandatory requirement of the law. Indeed, the hallowed principle in Taylor v. Taylor [Taylor v. Taylor, (1875) LR 1 Ch D 426], which has been followed in a number of the judgments of this Court, can also be applied. Section 65-B(4) of the Evidence Act clearly states that secondary evidence is admissible only if....
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....s put the matter beyond controversy. In view of the above, there is no manner of doubt that certificate under Section 65-B(4) is a condition precedent to the admissibility of evidence by way of electronic record and further it is clear that the Court has also held Anvar P.V. (supra) to be the correct position of law. (emphasis supplied) 73. Thus, the aforesaid most recent judgement of the Honourable Supreme Court case, after analysing all the relevant previous judgements, has reiterated beyond the pale of any doubt that certificate under Section 65-B (4) [pari materia with Section 36B(4)], is a condition precedent to the admissibility of evidence by way of electronic record and affirming the law as laid down in Anvar P.V. It is not anybody's case that the judgement in Anvar P.V was not the law of the land at the time of adjudication in the present case. 74. We find that the said issue wouldn't detain us much longer in view of the decision of the Principal Bench of this Tribunal in M/s. Trikoot Iron & Steel Casting Ltd v. Additional Director General (Adjn.), Directorate General of GST Intelligence (Adjudication Cell), reported in 2024 (10) TMI 672-CESTAT NEW DELHI. In this decis....
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.... 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 (c) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combination of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly. (4) In any proceedings under this Act and the rules made thereunder where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, - (a) identifying the document containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a compu....
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....uding 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 where any document is required to be produced as an evidence in proceedings under the Central Excise Act and the Rules framed thereunder. Such certificate should be signed by a person occupying a responsible position in relation to the operation of the device in question or the management of the relevant activities. In such a case it shall be evidence of any matter which is stated therein. It specifically mandates production of a certificate: (i) identifying the document containing the statement and describing the manner in which it was produced; (ii) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer, (iii) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate. 19. The Central Excise Act contains a specific provision that describes the manner in which the admissibility of computer print outs will be accepted as evidence in proceedings init....
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.... section 65B of the Evidence Act has satisfied; and (vi) This would not apply in a case where the appellant adduces primary evidence by making available in evidence the electronic records. The Tribunal thereafter goes on to notice the decisions of the Tribunal in Agarvanshi Aluminum Ltd vs. Commissioner of Customs (I), Nhava Sheva 2014 (299) ELT 83 (Tri.-Mum), Popular Paints and Chemicals vs. Commissioner of Central Excise and Customs, Raipur and Global Extrusion Private Limited and Ors. Vs. Commissioner of Central Excise & ST, Rajkot and then held as under: 26. The aforesaid decisions of the Tribunal, which are in the context of the provisions of section 36B of the Central Excise Act, hold that a printout generated from the personal computer that has been seized cannot be admitted in evidence unless the statutory conditions laid down in section 36B of the Central Excise Act are complied with. The decisions also hold that if the data is not stored in the computer but officers take out a printout from the hard disk drive by connecting it to the computer, then a certificate under section 36B of the Central Excise Act is mandatory. 75. We are consciously avoiding prolixity by r....
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....enefit thereof should then enure to the appellants. 79. Over and above the aforesaid crucial deficiencies in the case of the Department, we also find that the investigations have been tardy and it appears that vital links that could have been brought on record, have not been done, for reasons beyond us. Some of the glaring gaps and lapses that we have noticed in the investigation are enumerated herein below: a) A pend drive of 2GB of make Transcend is stated to have been seized from the office premises of GSPL on 28.09.2010. Strangely there is no mention about any investigation as to the contents of the pen drive and whether it was examined or what it contained. b) Shri. C Natarajan, MD of GSPL in his first statement on 28.09.2010, the date of search, has stated that the former Director Mr. S. Vasudevan who had appointed Mr. P Kumar along with Mr.P.Kumar were the ones who were running the office and due to some mismanagement and disputes, both had left the company and that due to personal dispute, they had made up records to put him in trouble. Mr. P. Kumar in his first statement on 28.09.2010 has also provided the mobile number of Mr. S. Vasudevan. No enquiry seems to have be....
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....ntified by Shri. P. Kumar as the pendrives used by him for storing data relating to Geetham Steels Private limited and was seized by the officers under mahazar. The officers then connected the pen drive with the inscription 'SanDisk' to the office computer. The officers browsed through the contents of the pen drive....... The printouts containing sheets serially numbered from 1 to 371 were then filed in a file titled "Printouts taken from the pendrive ' SanDisk' seized from Shri. P. Kumar's residence."........ The officers then safely disconnected the pen drive with the inscription "SanDisk" from the office computer and then connected the pen drive with the inscription "Transcend" in the office computer. The officers browsed through the contents of the pen drive. The files and the data in the pen drive with the inscription "Transcend" was similar to the files and data in the pendrive with the inscription "Sandisk". Hence no printout were taken from the data and files contained in the pendrive "Transcend". The officers then safely disconnected the pen drive with the inscription "Transcend" from the office computer. The officer then placed the pen drives with the inscription "transce....
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....n 23rd May 2010 at 12.32.00 PM(IS) and the same was last written on 2nd March 2010 at 03.27.36AM and the same file last accessed on 11.10.2010; that in the report regarding 'KUMAR TRANSCEND PD' the file name _esko, file created on 28th September 2010 at 12.21.41 PM(IS) and the file last written on 26th July 2010 at 10.57.28 A.M(IS) and the same file last accessed on 08.10.2010. When Shri. Maharajan was 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, Shri. Maharajan stated 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. Shri. Maharajan also generated reports regarding certain specific files/folders in the image copy of the pen drive with inscription 'SanDisk' as well as some of the deleted files from the Hard Disk seized from the Office of GSPL. We signed on the said reports also on today's date. The working copy of the extracted files in the portable hard disks was pasted on the desktop of one of the Compu....
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....d sale data entered against the companies M/s. ABC India and M/s Geetham Steels Pvt Ltd from the above pen drives and filed them in a Box file containing sheets serially numbered from 1 to 91. It is further recorded that the officers then placed the two pen drives in a brown cover and sealed them with a paper seal and seized them. Thereafter, the imaging of the two pen drives seized from shri. P. Kumar was done on 11.10.2010 under a mahazar in the DGCEI Coimbatore Regional Office. As per the mahazar recorded for the said proceedings on 11.10.2010, which are also reproduced supra, the recitals state that the seals were found intact, prior to the commencement of the imaging proceedings. Therefore, as per the explanation of Shri. M. Maharajan, Cyber Forensic Analyst from M/s. Ascent Technologies, if the file _esko was brought into the pen drive with inscription "Transcend" on 28th September 2010 at 12.21.41 PM (IS) and the file was created at some other digital location prior to the date of last written time stamp, namely, 26th July 2010, it appears to lend itself only to the explanation that it has occurred after the completion of search at Shri. P. Kumar's residence at 12.15 pm and ....
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.... were made, was never explored, despite there being no apparent difficulty for the investigating officers to do so !. In fact, para 8.4.7 of the SCN (and in para 34.5 of the OIO) also lists six companies to whom GSPL has alleged made clandestine clearances and from whom payments were received. No inquiry with respect to such payments allegedly made by them during February 2010 to June 2010 is seen made, again quite a glaring omission. g) Shri. C Natarajan in his statement dated 28-09-2010 has stated that apart from the staff Mr. P. Kumar and Smt. A Kavitha, there was a person Mr. Manivel in charge of all jobs in the Factory. Subsequently, in his statement of 08-10-2010, Shri. P. Kumar has identified Shri Venkatesh as the person working as production in charge of GSPL, Shri. Madhan as incharge of cutting and Shri. Chithambaram as in charge of scrap. He also identified the names of persons who were drivers and contractors. Again, it is not known why no enquiry was made or statements taken of even the persons identified as production in charge, in charge of scrap etc., especially when it is an investigation into clandestine production and removal of finished goods. h) It is also p....
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.... high as that of a criminal trial given that it is a Fiscal statute (and the customs/excise officers being not police officers). However, they have also stated that in such matters involving financial penal consequences, especially penalty under S.11AC, it cannot be imposed on a mere suspicion without adequate proof and positive evidence must be established of the person's intent to commit fraud or wilful suppression or misstatement of facts etc., with intent to evade payment of duty. In Uniworth Textiles v CCE, Nagpur, 2013 (288) ELT 161 (SC), while considering the ingredients required to invoke the extended period of limitation, the Supreme Court observed that it is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. The Apex Court referred to its decision in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 wherein it was held that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." Thus, w....
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....lers/buyers. (vi)To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department."' 82. In Commissioner of Central Excise v. Brim Products, 2011 (271) ELT 184 ( Pat.), the Honourable High Court of Patna has held as under: 9. In our opinion, since the charge was for clandestine manufacture and surreptitious removal of finished final product, the same is required to be proved beyond doubt by the Revenue. One has to keep in mind that, though being the main ingredient, betel-nut is not the only raw material which is used in manufacture of Pan Masala. That apart, since the investigation has been carried only at the transporters end, no presumption could be drawn with regard to manufacture and removal of the final product. Presumptions and assumptions cannot take place of positive legal evidence, which are required for proving the charge. Even if, it is assumed that some raw materials were received at the factory of the respondent during the said period, the same cannot become conclusive proof of production and clandestine sale to diffe....
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....ied on in the factory of production; etc. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What one could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons, may even be responsible officials of the manufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. 84. Having detailed some of the lacunae and shortcomings in the investigation supra as well as the standard of proof required to be adduced by Revenue in clandestine removal matters as aforementioned, we shall now deal with the 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 remo....
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.... value of clearances to the said parties it is seen that these cash receipts were for clandestine clearances. That as regards receipt of the sale proceeds on account of such unaccounted sale of MS ingots, it is seen that from the passbook of Shri Kirubakar, son of Shri Natarajan, MD of GSPL and the passbook of Ms. Rani Deivanai, Wife of Shri. Natarajan it is seen that cash in lakhs has been deposited in the account of Shri. Kirubakar and Ms. Rani Deivanai which is thereafter transferred to the account of Geetham Steels and that a summary of such transactions has been given in Annexure C to the SCN and thus it is seen that GSPL has received amounts in cash on various dates and these amounts have been brought into the official bank account of GSPL through private bank account of individuals related to Shri. C Natarajan and such cash flow corroborates to unaccounted clandestine clearances. The Adjudicating Authority also says that the clandestine manufacture and 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 ....
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....own as found in the computer or hard disk recovered from the premises of GSPL, it is not forthcoming as which computer is the source computer with respect to the entering of ABC data in Mr. Kumar's pen drive. (C) The Adjudicating Authority has relied on the depositions of Shri. P. Kumar stating inter-alia that he made entries in the computer of GSPL as per the particulars given to him by MD of GSPL. Shri. P Kumar in his statement dated 08.10.2010 states that the documents seized under sl.no.10 of the annexure to the mahazar mentioned above (mahazar of 2809-2010) titled made up file, contains various details like production, scrap receipt and classification with the rate and value, payments made to scrap suppliers, dispatch of ingots etc. and that he is verifying the details of the known handwriting and proceeds to state that it is Shri Natarajan's handwriting in the documents of the made up file. However, what is stated at internal page '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.....
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....y 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, it can be seen that the total quantity of scrap purchased from Feb 2010 to May 2010 as per GSPL computer data is 3911.42 MTs (annexure A-15(i) to SCN), as per ER 6 filed by GSPL (annexure A-19(ii) to SCN) is 3942.707 MTs and as per data in computer printout from pen drive is 4273.020. In other words, the excess raw material that was unaccounted in ER 6, even if one were to assume the computer printout data was tenable, is 330.313 MTs which is the quantum of raw material that the Adjudicating Authority has found to be sufficient to manufacture 2194 MTs of clandestinely removed MS Ingots during Feb 2010 to June 2010. Thus, there is no evidence, to support the alleged production of clandestinely removed MS ingots during Feb 2010 to June 2010 and not even a presumptive arithmetical 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 duri....
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.... further that the said data represents the actual purchase of scrap by GSPL. We do not concur with the aforesaid conclusions for the following reasons: A) It is seen recorded in Pinto's statement dated 28-092010 as his explanation of the contents of the five numbers of daily production report seized from him that it contains details like Lot No., carbon %, sulphur %, manganese %, no. of ingots, length and weight in tonnes and that after counting the number of ingots he prepares the daily production report and sends it to Mr.Natarajan MD and that it is the actual production report with respect to the dates mentioned in the report. Yet, from the daily production reports of 27-08-2010 and 28-082010 seized from him, (para 8.1.1 of the SCN), the length and weight column are blank. While the daily production report dated 30.08.2010 in the said para indicates the production in tons totalled as 68.646 T for the said 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 pertain....
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....in his statement dated 11-10-2010 had provided from the printouts, names and locations of 28 suppliers of scrap, an unloading contractor and labour contractor along with most of their mobile numbers. Yet, apart from the statements of the aforementioned 3 scrap dealers, no enquiry was conducted with the remaining suppliers of scrap. (iii) The demand of Rs. 25,58,588/- on the alleged shortage of 1001.8 MTs of MS ingots on 28.9.2010 (Annexure D1 of the SCN) is for the reason that on 28-09-2010 when the officers visited GSPL nil physical stock was found, RG-1 was not updated for September 2010 and upon updating the closing book stock arrived at as 1008.801 MTs was not available. The Adjudicating Authority discusses this aspect in para 33 of the OIO and on an assertion that Mr. Natarajan in his statement dated 28.09.2010 even when asked specifically about the shortage did not mention 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 findi....
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....ately as scrap and thus there was no shortage, was further verified and whether it was found to be incorrect or not, weighs heavily against the Revenue. B) The Adjudicating Authority or the investigating authority has also not stated as to why the report by the Deputy Commissioner of Headquarters Preventive Unit, Salem, vide letter dated 03.01.2011 submitted after causing verification at GSPL and stating that the benefit of notification No.67/95 is available as there appears to be no bar on the appellant for removing the goods manufactured for captive consumption and using the same for the manufacture of final products which are cleared on payment of appropriate duty; is unacceptable, more so when the Departmental officers have said so after physical verification conducted at the appellant's premises on 18.12.2010 and 29.12.2010 and when the appellant's contention that 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. Bal....
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.... not admissible as evidence as they do not satisfy the conditions stipulated under Section 36 B and that the charge is not substantiated. M/s. SKSRM too in the additional submissions raised similar objections. We are not persuaded by the finding for the reason that the demand is premised on inferences without any actual proof. While the lack of corroborative evidence generic to the aforementioned findings of clandestine clearances are further elaborated infra, the complete absence of any evidence of actual transportation of these clandestine clearances to the buyers cannot be overlooked, particularly given the staunch denial of Shri. Natarajan. Even when a specific lorry number KA 51 4824 has been mentioned as the alleged vehicle of transportation of the MS ingots cleared to M/s. SKSRM, no evidence of any statement from the transporter as to the actual transportation 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 ....
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....s absence of actual receipt of scrap. In para 34.11 to 34.13 it is shown that as per M/s. ABC Data certain amounts were paid back to GSPL by Mr. Sidesh Kumar of Salem Alloys and though Mr. Sidesh Kumar has accepted payment in respect of four dates to Mr. Natarajan, since GSPL has received payments from M/s. Salem Alloys on seven days for a total amount of Rs. 1,11,21,421/- and since it is a running account being maintained for this purpose, there is a meagre difference between the cheque issued by GSPL and the cash received by them from Shri. Sidesh Kumar and thus it was seen that the invoices were issued only to enable ineligible cenvat credit by GSPL even without actual receipt of scrap. That though Shri. Sidesh Kumar has denied these transactions during personal hearing and stated that the withdrawals were for personal business considerations the explanation 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....
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....ted that they have accounted the cenvat invoices issued in their returns. These contentions of the aforementioned suppliers are not cogently controverted by the Adjudicating Authority. While there is allegation against Mr. Sidesh Kumar that he was returning the money to GSPL, no evidence of such returning of money to GSPL in respect of the other suppliers have been brought on record. This is relevant since the amount returned to GSPL in so far as Salem Alloys is concerned is stated to be Rs. 1,11,21,421/- to secure a cenvat credit benefit of Rs. 11,72,909/-, which in itself to our mind is an unlikely proposition. Likewise the balance amount of credit sought to be denied is of Rs. 39,58,648/- which would involve a value of Rs. 4.24 crores as per Annexure D3(b) and yet there is no allegation or evidence of the said amount having been returned 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,....
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.... based on decisions of the High Courts and Tribunal as aforementioned. We also now state certain crucial aspects that have not been brought out by the Department to substantiate the allegations of clandestine procurement of raw materials, production of MS ingots without accounting and clandestine clearance of the same as made against the appellants. The Department has not let in any evidence in the form of unaccounted procurement of the other raw materials required for manufacture of MS Ingots, evidence of their procurement, evidence of the quantum of fuel/ electricity, labour etc., used, the examination or test evaluation of the production capability and capacity of the Appellant's factory etc. The case laws relied upon by the learned authorised representatives are distinguishable as the facts and circumstances stated therein 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....
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....lsettled that a decision is an authority for the point it decides. It is equally well-settled that the text of the decision cannot be read as if it were a statute. That apart the expression used by this Court is "evidence fairly and reasonably tending to show", which signifies that it is not just any evidence, howsoever shaky and nebulous that would satisfy the test of preponderance of probability to rebut the statutory presumption but evidence that can by proper and judicial application of mind be said to be fairly and reasonably showing that the real fact is not as presumed. In other words the evidence required to rebut a statutory presumption ought to be clear and convincing, no matter the degree of proof may not be as high as proving the fact to the contrary beyond a reasonable doubt. The heightened standard of proof 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 ar....