TaxTMI 
TaxTMI 
2025 (5) TMI 1282
X X X X Extracts X X X X
X X X X Extracts X X X X
....onths. However the "Production 07-08- KILN-1", "Production 07-08- KILN-2" taken together tallied with the "Production & Dispatch of Sponge Iron" for Sept. 2007, January 2008, February 2008and March 2008. Therefore, Revenue concluded that the Production & Dispatch shown in this Excel sheet are the actual production AND NOT the RG-1 figures. Some more enquiries and investigations were carried out and the Show Cause Notice was issued demanding various sums as per the following Table : Sl. No. Demand Amount Basis of Demand/ Appellant's Remarks 1. Rs.6,37,349/- On the basis of fake invoices issued / signed by Muralidhar Ojha. 2. Rs.2,86,656/- On the basis of fake invoices issued / signed by Muralidhar Ojha Rs.9,24,005/- Admitted and already paid before SCN was issued. 3. Rs.5,76,903/- Based on data contained in the Pen Drive recovered from one M/s. Ghogar Ispat Pvt. Ltd. In Mayurbhanj - No corroboration. 4. Rs.3,87,191/- Assuming the production taken for computing cost of production of Sponge Iron for May, 2008 as the actual production and demanding duty on the differential - No corroboration 5. Rs.60,064/- Based on quality control report of cert....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Such conclusion has been arrived by assuming that Kiln out-put has to be all acceptable finished products, which is never the case on the ground, since on many occasions some production in the Kiln are rejected during quality check and those quantities are not recorded in the RG-1. In so far as PENDRIVE/CIAL/JRU/PRINTOUT/06 is concerned, it contained a folder "Sponge Iron Stock", details of which for the Month May 2008, found to be tallying one-to-one. The other folder therein - Party-wise "Despatch-08-09" which was complete till June 2007, though the entries therein could have been complete till the date of search i.e. 16.07.2008. The SCN states that "The incompleteness of the report suggests that such report is not actual, but a manipulated one. Such report is prepared when all the parameters have cooled/died down and there is no trace left to find out the actual production and dispatch parameters". "Production & Dispatch of Sponge Iron" for March 2008 in the said Pen Drive, (Annexure-8C) tallied with the Production and Dispatch data contained in PENDRIVE/CIAL/JRU/PRINTOUT/02(Annexure-7F. But the figures of 'Daily stock of Sponge Iron' (Annexure 7C) did not tally with the afores....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made with reference to documents seized from GIPL, a third party, and being wholly uncorroborated, is not sustainable in law. 3.6 In respect of the confirmed demand of Sl. No.4 - Rs.3,87,191/- (Page 50 to 57 of the Paper Book), it was observed by the investigators that in the month of May 2008, the Appellant had worked out the 'Cost of Production' by taking Production & Clearance of the said Month as 3,800 MT and 3,581 MT respectively, as against the RG-1 record of Production & Clearance being 3,460 MT and 3,312 MT respectively. Upon being asked, the Dy. General Manager (Prodn.)- P.K.Jena, stated that cost of production so determined 'is provisional figure'. The SCN questioned the cost of production so determined by the Appellant, by unfoundedly presuming that price of Sponge Iron remain static for a fairly longer period of time, why the appellant considered production of 3,800 MT as against the RG-1 figure of 3,460 MT and presumed that the Appellant's RG-1 figure "is not the actual figure". The same unfounded presumption was applied to the Month of August 2007. Thereafter, it is concluded that production figure recorded in Appellant's RG-1does not reflect the actual production, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5. In respect of the duty demand of Rs.9,24,005, which has already been discharged by the appellant mainly in order to put an end to the litigation, though even in those cases the above arguments hold good, no interest is payable since, it is not specified that the shortage pertains to which period. Therefore, no interest is required to be paid. Also considering the fact that the amount has been paid before issue of SCN, no penalty can be imposed. 6. He relies on the following case law, wherein it is held that without bringing in the corroborative evidence, the allegation of clandestine removal, would not survive : (a) Continental Cement Co. Vs. UOI [2014 (309) E.L.T. 411 (All.) (b) Arya Fibres Pvt. Ltd. & Others Vs. CCE Ahmedabad-II [2014 (311) E.L.T. 529 (Tri. - Ahmd.) (c) Sharma Chemicals Vs. CCE, Kolkata-II [2001(130) ELT 271 7. With reference to the penalty imposed on the second appellant, the Ld counsel submits that since the allegation against the appellant number one itself is not sustainable, the question of imposing penalty on the second appellant would not arise. Further, there is nothing to indicate that the second appellant's role has been specifically brought ou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ah filed an appeal before the CESTAT, West Zone, Ahmedabad vide Appeals No. E/12274/2018; E/11436/2018 and E/11433/2018 respectively. The Hon'ble CESTAT vide Final Order No. A/10120-10125/2019, dated 18-1-2019 allowed all the appeals and set aside the impugned order dated 27-2-2018 mainly observing that : (i) the charges of clandestine removal on the basis of pen drive data are not sustainable; (ii) since already held that the pen drive data is not substantial evidence and no evidence of extra receipt has been produced in the form of person from whom such extra consideration was given, how it was given and how it was received by assessee, therefore, the demand on account of undervaluation is not sustainable. (iii) revenue has not proved the allegation with any evidence as it has to be shown by making investigation at the supplier's end, statements of suppliers and other corroborative evidences including receipt from suppliers, thus, the allegation on the ground of availment of CENVAT on the basis of invoice without receipt of goods are not sustainable. 7. With regard to sole evidence which has been relied upon by the Department is only pen driver data and statement of broke....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... - Del.), the tribunal has held that : 6. In this case during the course of investigation, the statement was recorded and the statement given by Shri Baldev Singh, Managing Director admits that there is a shortage of 10 to 15% for manufacturing the final product and it is also admitted by Shri Baldev Singh that they have cleared certain goods without payment of duty, but the said statement was retracted by Shri Baldev Singh who claims to be that same has been recorded under influence and duress, thereafter, another statement was recorded on 3rd May, 2005 which was also retracted on the same day, where also same statement recorded which is a typed one and it is the claim of the Revenue that same has been typed by Shri Dinesh Kumar (who is an employee of the appellant) in the office of the Department. To that effect, Shri Dinesh Kumar filed an affidavit on 1st August, 2006 that the statement has been typed by the officers of the Department themselves not by him and that said affidavit has not been controverted. Further, the cross-examination of Shri Ashwani Kapoor, Inspector on 3rd August, 2006 explaining that wastage on each stage of production have not been considered by the Adj....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... findings of facts arrived at by the Tribunal, after considering the material placed before it, no question of law much less any substantial question of law arises for consideration out of the impugned order and accordingly, the appeals are summarily rejected. No order as to cost. (ii) Ambica Organics Vs Commr of C. ex & Cus, Surat -I, 2016 (334) ELT 97(Ahd) 7. After hearing both the sides and on perusal of the records, I find that the Central Excise officers while visiting the factory of the appellant, recovered a USB drive in the appellant's premises. The USB drive was connected with computer and a printout was taken by the computer expert accompanied with the Central Excise officers. The printout gives the details of the certain sales (date-wise) commencing from 1-4-2005. The delivery challans for various chemicals for the month of December, 2005 and January, 2006 were found and seized during the search. The appellants disowned the contents of the printout and stated that it has manipulated the data base with motive, to take revenge from the partner and the firm for the refusal of the loan of Rs. 1 lakh sought by the Computer Operator. The appellant filed an affidavit disclo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the computer was operational properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and (d) the information contained in the statement reproduced or is derived from information supplied, to the computer in the ordinary course of the said activities." Sub-section (4) of Section 36B requires issue a certificate in this behalf by a person occupying the responsible official position in relation to the operation of the relevant device or the management of the relevant activity (whichever is appropriate) shall be evidence in any matter stated in the certificate and for the purpose of the sub-section, which shall be sufficient for a matter to be stated to the best of the knowledge and the belief of the persons stating it. In the present case, the data was not stored in the computer. It is stated that the computer expert accompanied with the Central Excise officers had taken the printout from the USB drive by connecting to the computer. The officers had not obtained any certificate as required under Section 36B of the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly, carried on over that period by the person having lawful control over the use of the computer; (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was in operation properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and (d) the information contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities." Ld. Sr. Counsel has argued that the above conditions were not fulfilled in respect of the computer printout taken from the personal computer of Shri Sampath Kumar. It appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... statements of the buyers and the computer printout. Commissioner (Appeals) already held that the evidentiary value of the statements is weak. It is also noted that the statements of the 30 persons were mostly similarly pre-drafted. The investigating officers failed to comply with the conditions of Section 36B of the Act in respect of relying upon this computer printout. There is no adequate material available on record to establish the clandestine removal of goods. Therefore, the demand of duty solely on the basis of these materials cannot be sustained. Hence, as the clearance value was within the SSI exemption, the confiscation of the goods cannot be sustained. So, the imposition of penalties are not warranted. 12. In view of the above discussion, the demand of duty along with interest and penalties on the appellants cannot be sustained. Accordingly, the impugned orders are set aside. All the appeals filed by the appellants are allowed." 13. We observe that in the above said case, it has been clearly held that reliance on pendrive without following proper procedure and without corroborating the computer data with other evidence, does not help the Revenue's case. The ratio laid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....repidation on the part of the witness concerned. 16. 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 prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the gazetted Central Excise officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). ........ 18. It is only, therefore, (i) after the person whose statement has already been recorded before a gazetted Central Excise officer is examined as a witnes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade by the Department, 14. even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s. Singhal Cement Agency, M/s. Praveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out. 15. In view of the above, we are of the opinion that when there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible. No purchase of raw material out side the books have been proved. 16 In the light of the above discussions and considering the totality of the case, we are satisfied that no case is made out for extra so called clandestine sale of the Portland Cement to the said parties. We are satisfied that the first appellate authority has rightly deleted the addition and cancel the penalties. Hence we hereby set aside the impugned order passed by the Tribunal and restore ....