TaxTMI 
TaxTMI 
2025 (9) TMI 397
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....ther appellants, acting in the capacity of directors of the appellant-companies during the relevant period (hereinafter referred to as "co-appellants"), have also filed appeals against the penalties imposed on them under Rule 26(1) of the Central Excise Rules, 2002 by the ld. adjudicating authority in the impugned order. 1.1. A common issue being involved in all these appeals, they are taken up for disposal by way of a common order. 1.2. The details of the present appeals are as provided in the tables given below: - Sl. No. Appeal No. Name of the Appellant Amount of central excise duty involved (in Rs.) 1. E/75100/2025 Rashmi Cements Ltd. (RCL), Units-I & II 4,85,80,126/- 2. E/75101/2025 Rashmi Metaliks Ltd. (RML), Unit-II 10,93,71,399/- 3. E/75102/2025 Rashmi Metaliks Ltd. (RML), Unit-I 33,75,07,475/- 4. E/75103/2025 Rashmi Cements Ltd. (RCL), Unit-III 17,73,58,794/- Sl. No. Appeal No. Name of the Appellant Amount of penalty imposed (in Rs.) 1. E/76065/2025 Mr. Sanjay Patwari Rs.8,00,00,000/- 2. E/760....
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.... to the House of Smt. Dipti Singha at 528/1, Jafla Road 6. 33/RML/MESS/13 & 40/RML/MESS/13 Despatch and sale of Wire Rods by RML-1, Period - November 2011 to September 2012 3^rd Party Premise - House adjacent to 'Hardik Bhawan', Kharagpur 7. 01/RML/Office (GDN)/ 13(2/16) Despatch details of TMT during December 2012 to 14.01.2013 3^rd Party Premise - House No. 528/1, Jafla Road, owned by Smt. Dipti Singha 8. 01/RML/Office (GDN)/ 13(3/16) Despatch of Wire Rods during the period December 2012 to January 2013 3^rd Party Premise - House No. 528/1, Jafla Road, owned by Smt. Dipti Singha 9. 01/RML/Office (GDN)/ 13(5/16) Despatch/sale details of TMT Bars & Billets of RML-1 on 7/8 January 2013 3^rd Party Premise House No. 528/1, Jafla Road, owned by Smt. Dipti Singha 10. 08/RML/Office (GDN)/ 13 Production/dispat ch details of Billets by RML-1 during October to December 2012 3^rd Party Premise - House No. 528/1, Jafla Road, owned by Smt. Dipti Singha 11. 07/RML/Godown/ 13 (2,4,5, & 9/9) Desp....
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.... during the period September 2012 to January 2013 - RML-1 3^rd Party Premise House adjacent to 'Hardik Bhawan', Kharagpur 22. 35/RML/MESS/13 Despatch/sale details of Billets during July 2012 to January 2013- RML-1 3^rd Party Premise House adjacent to 'Hardik Bhawan', Kharagpur 23. 36/RML/MESS/13 Despatch details of TMT during the period November 2012 to January 2013- RML-1 3^rd Party Premise House adjacent to 'Hardik Bhawan', Kharagpur 24. 37/RML/MESS/13 (1,2 & 3/3) Despatch/sale details of Sponge Iron of RML-2 & RCL-2 during October 2011 to January 2013 3^rd Party Premise House adjacent to 'Hardik Bhawan', Kharagpur 25. 41/RML/MESS/13 Despatch/sale details of Pig Iron & Billets during April 2011 to March 2012 - RML-1 3^rd Party Premise House adjacent to 'Hardik Bhawan', Kharagpur 26. 01/OFF/KGP/RM/13 Printout from Pen Drive - Despatch/sale details of TMT by RML-1 during the period December 2011 to July 2012, October 2011 to May 2012 and May 2012 to July 2012 respectivel....
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....3, the present Directors are Shri Surendra Jha, Shri Salil Roy, Shri Abhijit Chowdhury, Shri Subhasis Bosu and Kirti Sanghavi. Similarly, while Shri Sanjib Kumar Patwari, Shri Sunil Patwari, Shri Subhendu Biswas and Shri Dipanjan Mohata were the four Directors of RCL as on the day of search, the present Board comprises Shri Subhendu Biswas, Shri Dipanjan Mohata, Shri Subhasis Bosu, Shri Sisir Kumar Bhunia & Kirti Sanghavi. The above facts are not only apparent from the documents obtained by the DGCEI from the 'Registrar of Companies (in short, RoC)', but have been corroborated by several persons associated with either or both of the above companies in their respective statements during the course of investigation. (b) Among the above two companies, RML has their manufacturing facilities at the following locations: (i) M/s. Rashmi Metaliks Ltd., Unit-1 (referred to as 'RML-1'), having Central Excise Registration No. AACCR7183EXM001 at Gokulpur, P.O. Shyamraipur, Kharagpur, Dist. Midnapore (West), West Bengal, PIN -721301, primarily engaged in the manufacture of 'Pig Iron, MS Billets, TMT Bars, MS Wire Rods etc.' falling under Chapter 72 of the Ist Schedule t....
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....ty, rate, amount, vehicle no. etc., indicating that such pages contained information relating to dispatch of manufactured goods. (e) It appeared to the Revenue that RML-1, RML-2, RCL-1 and RCL-2 had removed and manufactured excisable goods from their factory premises but had neither discharged their central excise duty liability against some of such dispatches nor had adhered to related central excise procedures relating to such removals, as apparent from the various statements recorded during the course of investigation. 4. On the basis of such private records recovered from the third-party premises purportedly from possession of employees and ex-employees, including handwritten pages and print outs generated from electronic media, and the statements recorded in the course of investigation, a Show Cause Notice bearing DGCEI F. No.23 / KZU / KOL / Gr.B /13/2016/5319 dated 21.09.2016 was issued against RML-1, RML-2, RCL-1 and RCL-2 along with 14 other co-noticees, on the following allegations: - (i) The noticees namely, RML-1, RML-2, RCL-1 and RCL-2, had deliberately suppressed the material facts relating to clandestine removal of finished excisable goods which ....
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..../- (including cenvat duty, Education Cess and Secondary and Higher Education Cess thereon) under Section 11A(4) of the Central Excise Act, 1944, along with interest under Section 11AA of the Act, and imposition of penalties under Section 11AC(1)(c) of the said Act read with Rule 25 of the said Rules, covering the period from 2011-2012 and 2012-13. The said Notice also proposed personal penalties on the co-appellants, amongst others, under Rule 26 ibid. 4.2. In the first round of proceedings, an Order‐in-Original No. 32/Commissioner/CE/Haldia/Adjn/2017 dated 28.11.2017 was passed by the ld. adjudicating authority, whereby the demands proposed in the impugned Show Cause Notice were confirmed, without supplying the appellant-companies and the co-appellants with the various documents that were relied upon by the Department, in gross violation of principles of natural justice. 4.3. The appellants challenged this non-furnishing of documents before this Tribunal by way of Excise Appeal(s) bearing Nos. 75909 to 75918 of 2018. Thereafter, vide Final Order No. 75015-75024/2021 dated 19.01.2021 the Tribunal allowed the appeals by way of remand to the adjudicating authority f....
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....hat no demand of clandestine manufacture and clearance can be confirmed purely on conjectures, surmises, assumptions and presumptions. Reference in this regard, is invited to the following decisions: • Continental Cement Company v Union of India reported in 2014 (309) E.L.T. 411 (All.) • Arya Fibre Pvt. Ltd. vs Commissioner of C.Ex, Ahmedabad reported in 2014 (311) ELT 529 (TriAhm) • CCE, Kolkata-III v. Sai Sulphonate Pvt. Ltd. reported in 2022 (380) E.L.T. 441 (Cal.) • Ambica Iron & Steels Private Limited vs Commissioner of Central Excise, Customs & Service Tax reported in 2021 (12) TMI 958 - CESTAT Kolkata • Commissioner of C. EX. & S.T., Udaipur v Mittal Pigment Pvt. Ltd. reported in 2018 (16) G.S.T.L. 41 (Raj.) • Bihar Foundary & Castings Ltd. vs. CCE, Ranchi reported in 2019 (8) TMI 527 - CESTAT Kolkata • Commissioner of Central Excise, Bhubaneswar-I v. Minakshi Steels reported in 2005 (190) E.L.T. 395 (Tri. - Kolkata) (iii) The Revenue's entire allegation is based on assumptions and presumptions derived from private records seized from third party premises which had no connection wit....
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....ures or surmises. Therefore, it is submitted that merely on the basis of third-party evidence, that too not corroborated with any other evidence, case of clandestine removal cannot be established. In light of the same, the appellants submit that the Notice is bad in law, arbitrary, based on assumptions and presumptions, issued with a pre-conceived mind, perverse and liable to be set aside. B. Allegation of clandestine removal of goods cannot be established on the basis of private records in the absence of corroborative evidence: (i) Further, it is a well settled principle that allegations of clandestine removal of the goods will not stand established on the basis of private records in the absence of any corroborative concrete evidence. The judicial fora have time and again echoed the said principle. Reliance is placed on the following rulings: • Sharda Re-rollers Pvt Ltd & Ors vs Commissioner of Central Excise, Customs & Service Tax, Odhisha reported in 2025 (5) TMI 1281 - CESTAT Kolkata • Gautam Ferro Alloys v. CCE, Ranchi reported in 2021 (377) E.L.T. 776 affirmed in the Hon'ble Supreme Court reported in 2022 (380) E.L.T. 385 (S.C.) • ....
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....€¢ Vasundhara Metaliks (P) & Ors Limited vs Commissioner of Central Excise, Customs & S. Tax Audit Commissionerate, Bhubaneswar reported in 2025 (4) TMI 955 - CESTAT Kolkata • JJ Extrusion Private Limited vs Commissioner of Central Excise & S. Tax reported in 2025-VIL-320-CESTAT-KOL-CE • Virajaa Steel & Power Limited & Ors. v Commissioner of Central Excise reported in 2024 (7) TMI 1039 • Ambika International Vs. Union of India reported in 2018 (361) E.L.T. 90 (P&H) (iv) In light of the above, it is evident that the mandatory procedure under Section 9D cannot be circumvented by the adjudicating authority if it seeks to rely on statements recorded during investigation. In the absence of cross examination of the person, as required under Section 9D of the Central Excise Act such a statement does not constitute relevant or admissible evidence. (v) In the facts of present case, the appellants, on multiple occasions, prayed for being allowed to cross examine the 20 persons whose statements were recorded during investigation and are relied upon in the present adjudication proceeding. However, the said request of the appellants was not acced....
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....been violated by the Central Excise Officer. b. At the time of seeking cross-examination, the Appellants could not establish that the persons had any bias/malice towards them. c. The right to cross examination is not an absolute right In this regard, it is submitted that the provisions as contained in Section 9D of the Act are mandatory even if the appellants has not been able to substantiate any bias/malice against the persons. Further, not offering the opportunity to cross examine is itself a violation of provisions of Section 9D of the Act. D. Print outs relied upon by the Adjudicating Authority are not admissible as evidence for failure to comply with Section 36B of the Act which is mandatory in nature: (i) The impugned order alleging clandestine removal of goods is primarily based on data and computer printouts retrieved from pen drives and hard disks. A pen drive/hard disk is a floating device and has no evidentiary value on its own and can be admitted as evidence only when it strictly fulfils the conditions specified in Section 36B of the Act. (ii) Section 36B of the Act states that the statement contained in a computer printout shall be d....
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....unless the mandatory procedure prescribed in Section 36B of the Central Excise Act s followed. Reliance in this regard is placed on: • Commissioner of Central Excise & Customs, Bhubaneshwar vs Shivam Steel Corporation reported in 2023 (2) CENTAX 259 (Ori) • Jai Balaji Industries Limited and Ors vs Commissioner of CGST & Central Excise, Bolpur Commissionerate (supra) • Prinik Steels (P) Ltd. & Ors vs Commissioner of Central Excise, Customs & S. Tax, Bhubaneshwar (supra) • Vasundhara Metaliks (P) & Ors Limited vs Commissioner of Central Excise, Customs & S. Tax Audit Commissionerate, Bhubaneswar (supra) • Narsingh Ispat Limited & Ors vs Commissioner, C.G.S.T. and Central Excise, Jamshedpur reported in 2024 (3) TMI 1037 (supra) • Parijat Paper Mills Ltd. & Ors vs Commissioner of Central Excise & CGST, Meerut reported in 2025 (5) TMI 1529 - CESTAT ALLAHABAD • JJ Extrusion Private Limited vs Commissioner of Central Excise & S. Tax (supra) • Popular Paints and Chemicals vs. CCE, Raipur reported in 2018 (8) TMI 473 - CESTAT New Delhi • Premium Packaging Pvt. Ltd. vs. CCE, K....
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.... the legal rights of the Appellant. Importantly, when the duty or tax so deposited is consistently challenged from the inception of proceedings before the adjudicating authority and continued up to the appellate or Tribunal stage, such payment must be regarded as made under protest, even in the absence of an express written protest. Therefore, the amount deposited by the appellants retain the character of a payment made under protest and cannot be treated as a voluntary or conclusive discharge of liability. Reliance in this regard is placed on the following cases: • Commissioner Of C. Ex., Lucknow vs Eveready Industries India Ltd. reported in 2017 (357) E.L.T. 11 (All.) • Surbhi Enterprise vs Commissioner of C. Ex., Ahmedabad reported in 2007 (210) E.L.T. 588 (Tri. - Ahmd.) • Duggar Fibre Pvt. Ltd. vs Commissioner of C. Ex., Cus. & CGST, Delhi reported in 2021 (378) E.L.T. 293 (Tri. - Del.) • G.S. Radiators Ltd. vs Commissioner of Central Excise, Ludhiana reported in 2005 (179) E.L.T. 222 (Tri. - Del.) (ii) In light of the foregoing, it is submitted that the amount deposited during the course of the investigation cannot be deem....
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.... in law. H. Further and in any event, the computation suffers from infirmities: (i) The entire demand has been computed on the basis of comparison between the data as per the statutory records maintained by the appellants vis a vis private records seized from the third-party premises. In this regard, it is submitted that in further and any event, the computation also suffers from the following infirmities: (A) The applicable excise duty and VAT on the alleged clandestine clearance has not been taken into account while calculating the excise duty demand. The rate per unit which has been taken while computing the impugned demand amount includes is the market rate which includes excise duty and VAT. Therefore, the applicable excise duty and VAT amount ought to be excluded for the purposes of computation. On this ground alone, the impugned demand stands reduced by a sum of Rs. 7,56,23,397/-. (B) The Ld. Adjudicating Authority while computing the demand has considered clearances which were duly reflected in the excise returns and on which duty stands paid. Thus, a sum of excise duty amounting to Rs. 63,77,823/- is sought to be recovered from the appellants which ....
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....g, concealing, selling or purchasing, and/or that they dealt with in any other manner, any excisable goods which he knew or had reason to believe that such goods are liable to confiscation under the Act. In the absence of any order for confiscation under Rule 25 and imposition of penalty thereunder on the appellant-companies, penalty under Section 26 on the co-appellants cannot be sustained. It has been consistently held that penalty under Rule 26(1) cannot be imposed if there is no order for confiscation. (iii) Reliance in this regard is being placed on the following judgements: • Shri Kushal Raj Jain Vs. Commissioner, Central Excise, Jaipur reported in 2025 (7) TMI 411 (Tri. - Del.) • M/s GR Ispat Udyog, M/s L.G. Steel Corporation, M/s R.G. Steel Products Versus CCE & ST-Chandigarh-ii reported in 2019 (8) TMI 1231 (Tri. - Chan.) B. No substantial evidence has been brought out against the Co-Appellants. Further, when the allegation of clandestine removal is itself not sustainable, there could be no question of imposition of penalty: (i) In terms of the detailed submissions advanced in regard to the appellant-companies, it would be evident that th....
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....king sheets regarding the stock taking report was received by the assessee and the same is acknowledged by them through their letter dated 06.09.2023 under Ref No. IDTHO/KOL/CP/339. Further the relevant RUDs of the subject Show cause notice was voluminous and the same was provided to the assessee through a pen drive in a sealed cover as mentioned in the letter of the Deputy Director, DGGI, KZU under letter no. DGGFINV/MISC/260/2022-Gr-B-0/o Pr ADGDGGI-Kolkata-Part(1)/7457 dated 09.10.2023. C and D: As regards the denial of the appellant's prayer for cross examination of 20 witnesses as asked by the notices, and whether the said denial has caused any prejudice to the noticees, it is seen from the records that the entries made in the private records were corroborated by the employees either of the Noticee No -1, Noticee No-6, Noticee No-11 and Noticee No-15. Further from the records, it is seen that some buyers who purchased the finished goods from the noticees without payment of duty have also confirmed that they had received these goods without the cover of proper excise documentation and without payment of duty. Considering these evidences available in record, it is c....
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....ence Act. It empowers the court to presume the existence of any fact which it thinks likely to have happened. In that process court shall have regard to the common course of natural events, human conduct etc. in relation to the facts of the case. Accordingly, I opine that usage of the words "assume"/ "presume" by the noticees in their reply to SCN, in negative way, is blasphemous and disappointing attitude shown to the investigation conducted by DGCEI, KZU. H: The fact of suppression of production and clandestine removal was evident from the private records maintained by the noticees. The Show Cause issuing authority has given a detailed finding in the impugned SCN examining the various entries made in the private note books and in Pen Drive/Hard Disc recovered from the possession of the employees and their corroboration which firmly proves that clandestine removal of finished products has been indulged by the notices. The detailed observation regarding clandestine removal of goods is already discussed by the adjudicating authority in paragraph no. 14.7 of the De-novo 0-1-0 No. 01/COMMR/CGST & CE/HALDIA/ADJN/2024 dated 31.05.2024. I: Recovery of lawful information....
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....eing procedural can be relaxed by Court wherever interest of justice so justifies. Accordingly, in the light of the above judgement it is evident that the requirement of producing a certificate under Section 65B(4) (which is pari materia with Section 36B of Central Excise Act 1944) is procedural and not always mandatory and thus the print outs of electronic devices recovered from the possession of the employees of the manufacturing noticees have evidencial value and can be adduced as evidence to the SCN. N: In paragraph 2.4 of the Show Cause Notice it has been prudently proved that documents recovered from such five premises contains the data of removal of finished goods under cover of central excise invoices issued by the noticees with payment of central excise duty and that was confirmed from their statutory records like "Daily Stock Account" (DSA). Recovery of lawful information of the notices from private premises, being knocked by the noticees several times, is the tangible evidence that those five premises were secretly used by the noticees to suppress the clandestine removal of finished goods, even if there was no existence of agreement between the owners of the pre....
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....n, Kharagpur, Dist. Midnapore (West), West Bengal, PIN - 721305, found to be under the occupation of his tenant, Shri Bimal Seal. E to I: As mentioned in respect of M/s. Rashmi Metaliks Ltd. (Unit-I) 7.1. Additionally, the Ld. Authorized Representatives of the Revenue also made the following submissions in support of their contentions: - (i) Investigation was started on the basis of specific intelligence regarding all the addresses mentioned at OIO Page 13 of 570. All the searches were conducted in the presence of independent Panchas and the representatives of M/s. Rashmi Group of Companies. (ii) Documents recovered during searches include dispatch challan, sale bill, computer generated register, production sheet, purchase documents, sale invoice, payment particulars, bank transactions, party-ledgers, weighment slips, statement of exports, sauda-books, order for sale, etc. in relation to clandestine removal of wire rods, sponge irons, pellets, pig-iron, TMT, billet, etc. (iii) Detailed calculation in 11 working-sheets regarding stock-taking report were prepared by the DGCEI officers in the presence of independent Panchas and the representative....
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....udicating authority is directed to complete the adjudication proceedings within further 8 weeks of the receipt of reply from the appellants, as may be practicable. Needless to say that the appellants would cooperate with the Adjudicating Authority and would not seek documents which were not requested for earlier or would not seek unnecessary adjournments." 9.1. In the remand proceedings, there was a request on behalf of the appellants to provide the relied upon / non-relied upon documents, which were supplied to the appellants on 09.10.2023, despite a direction that the said documents were to be provided to the appellants within a period of four weeks. The appellants filed a reply on 08.02.2024 and thereafter, the impugned order has been passed, wherein the ld. adjudicating authority has ordered as under: - "30.1 I confirm the demand of Rs.33,75,07,475/- (Rupees thirty three crores seventy five lakh seven thousand four hundred and seventy five) only, (comprising Cenvat duty of Rs. 32,76,77,054/-, Education Cess of Rs.65,53,608/-and Secondary & Higher Education Cess of Rs. 32,76,813/-) and order recovery of the same from M/s. Rashmi Metaliks Ltd. Unit-I. (i.e. 'the N....
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.... 31.2. I order for recovery of appropriate interest under Section 11AA of the Central Excise Act, 1944, against confirmed demand amount at Para 31.1 above; 31.3. I impose a penalty of Rs. 10,93,71,399/- (Rupees Ten crores Ninety three lakh seventy one thousand three hundred and Ninety nine) only on M/s. Rashmi Metaliks Ltd. Unit-II. (i.e, the 'Noticee No.6') in terms of Section 11AC (1) (c) read with Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002: 31.4 I impose a penalty of Rs.2,00,00,000/-(Rupees Two Crores) only on Shri Sajjan Patwari, (Noticee No.7), erstwhile or present Director of M/s. Rashmi Metaliks Ltd. Unit-II (i.e. Noticee No.6') under Rule 26 (1) of the Central Excise Rules, 2002. 31.5 I impose a penalty of Rs.2,00,00,000/- (Rupees Two Crores) only on Shri Sanjay Kumar Patwari, (Noticee No.8), erstwhile or present Director of M/s. Rashmi Metaliks Ltd. Unit-II (i.e.'Noticee No.6') under Rule 26 (1) of the Central Excise Rules, 2002. 31.6 I impose a penalty of Rs.50,00,000/- (Rupees Fifty Lakhs) only on Shri Salil Roy, (Noticee no. 9), erstwhile or present Directo....
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....er recovery of the same from M/s. Rashmi Cement Ltd. Unit-III, (i.e. "the Noticee No.15") in terms of Section 11A(10) of the Central Excise Act, 1944: 33.2. I order for recovery of appropriate interest under Section 11AA of the Central Excise Act, 1944 against confirmed demand amount at Para 33.1 above; 33.3 I impose a penalty of Rs. 17,73,58,794/- (Rupees seventeen crores seventy three lakh fifty eight thousand seven hundred and ninety four) only on M/s. Rashmi Cement Id. Unit-III. (i.e. "the Noticee No.15") in terms of Section 11AC(1)(2) read with Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002: 33.4 I order for appropriation of the amount of Rs.1,50,00,000/- (Rupees One Crore Fifty Lakhs) only, already paid by M/s. Rashmi Cement Ltd., Unit-III, (i.e. the 'Noticee No. 15') in e-payment mode on different dates such as on 21.01.2013, 07.03.2013, 21.03.2013, 30.04.2013, 21.05.2013 and 24.06.2013 against the demand confirmed above; 33.5 I impose a penalty of Rs. 3,00,00,000/- (Rupees Three Crores) only on Shri Sajjan Patwari, (Noticee No. 16), erstwhile or present Director of M/s. Rashmi Ceme....
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....hed goods has been made against the appellants on the basis of investigation conducted at several premises, of employees and ex-employees of the appellants, and two premises of the appellants, during the course of which certain print-outs from pendrives, along with note pads and miscellaneous documents, were recovered. Thereafter, statements of those employees / ex-employees / directors of the appellant-companies were recorded. On this basis, it has been concluded that the appellants were engaged in the activity of clandestine manufacture and clearance of goods without payment of duties. 11.1. To allege clandestine removal of goods, guidelines have been laid down by this Tribunal in the case of M/s. Arya Fibres Pvt. Ltd. v. Commissioner of Central Excise, Ahmedabad [2014 (311) E.L.T. 529 (Tri. - Ahmd.)] which are as follows: - "40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are....
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....decision is that reliance on private/internal records maintained for internal control cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. A co-ordinate Bench of this Tribunal has, in another decision, reported in the E.L.T. issue of 5-8-2013 (after hearings in the present appeals were concluded), once again reiterated the same principles, after considering the entire case-law on the subject [Hindustan Machines v. CCE [2013 (294) E.L.T. 43]. Members of Bench having hearing initially differed, the matter was referred to a third Member, who held that clandestine manufacture and clearances were not established by the Revenue. We are not going into it in detail, since the learned Counsels on either side may not have had the opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case-law, including most of the decisions cited before us now, considered them, and come to the above conclusion. In....
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....forts were also made to find out as to how much is the production capacity of the appellants' plants, as to how much quantity had been cleared by them on payment of duty or as to how much quantity had been manufactured in excess of such quantity. 11.4. No statements of buyers, to corroborate the alleged illicit manufacture and clearance of goods by the appellants, have been recorded. The alleged buyers are not the actual buyers as there is no direct transaction between the appellants and such buyers. 11.5. It is observed that the transportation of such a huge quantity of goods also could not be proved; only the statement of some owners of transportation companies have been recorded, who could not verify the clearance of the goods. In fact, statements of drivers have also not been recorded, to prove transportation of such goods. 11.6. In such circumstances, by relying upon the decision in the case of M/s. Arya Fibres Pvt. Ltd. (supra), we hold that the charge of clandestine removal has only been made on the basis of assumptions and presumptions, without any thorough investigation. 11.7. In this regard, we take note of the fact that the Revenue has heavily relied on the d....
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....order of the CESTAT on the issue of clandestine removal of 606 ACs by the appellant without payment of duty suffers from serious errors and, therefore, cannot be sustained in law." 11.8. Further, in the case of Commissioner of Central Excise, Kolkata-III v. M/s. Sai Sulphonate Pvt. Ltd. [2022 (380) E.L.T. 441 (Cal.)], the Hon'ble High Court at Calcutta has observed as under: - "6. In our considered view, the Tribunal rightly granted the relief to the assessee as allegation of clandestine removal is a very serious charge and the onus of establishing the same is first on the department and upon the onus being discharged in the manner common to law, then and then only the burden of proof shifts to the assessee. In the instant case, admittedly there was no material on record establishing the charge of clandestine removal and such charge was made against the assessee by way of an inference taking note of the ratio adopted in the manufacturing process." 11.9. In view of the above, we answer the issue in favour of the appellants, that the allegation of clandestine removal of goods cannot be based on assumptions and presumptions without providing any corroborative evidence. ....
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....ecorded in para 16 that the Accountant is now not available and his whereabouts could not be traced is not acceptable for the reason that at the time of the raid and the seizure of the notebook, the said Accountant was very much present. Be that as it may, the Revenue is required to show that appellants have purchased raw materials valued more than Rs. 1.09 crores. It is the specific plea of the appellants that the inputs are supplied under licence under the Explosives Act and they are required to purchase only through governmental sources. This was explained by the Managing Partner when he was examined by the Investigating officers. Therefore, at the time of investigation, it was the duty of the said officers to have contacted the supplier of Governmental agency and examined them and should have seen through their records as to whether the appellants have purchased such huge quantities of inputs for manufacture of the fireworks. The said nonexamination of the supplier of raw material which is controlled and a licensed commodity is fatal to this case and it can be easily concurred that Revenue has not proved the case with regard to the purchase of raw materials for manufacture of f....
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....necessary to have some positive evidence of clandestine production and removal of the goods. Admittedly, no such evidence is produced by the Revenue therefore, demand against the appellant is not sustainable. 10. We further take note of the fact that in the case of Commissioner of Central Excise, Haldia versus Lord's Chemicals Ltd. 2010 (258) E.LT. 48 (Cal.) the Hon'ble High Court observed as under. "2. Admittedly, a show cause notice was issued on the presumption that the entries, as recorded in the private note book maintained by the labour contractor, should be taken as the clearance figures of finished products from the factory. It is settled law that such presumption is not permissible. The presumption, on the basis of which the show cause notice was issued, was misplaced in the absence of any corroborating, reliable and independent evidence. Therefore, the Tribunal below was right in rejecting the contention of the revenue and in accepting the contention of the assessee. Therefore, the appeal is summarily dismissed. 11. Therefore, on the basis of private documents recovered from the factory of the appellant cannot be the basis to allege clan....
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....Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab and Haryana. Reliance has been placed by the Counsel for the Revenue on the decision in the matter of Commissioner of Central Excise v. Kalvert Foods India Pvt. Ltd. (Laws (SC) 2011 838)=2011 (270) E.L.T. 643 (S.C). That decision turned on its own facts. In para 19 of the judgement, it was concluded as below: "19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation f threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. Beside....
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....course of investigation. The statements recorded and the contents therein are given below in brief: 13.1 A statement of Shri Sushil Kumar Roy, Associate (Commercial) of JBIL-III was recorded in which he inter alia stated that data sheet retrieved from pen drives were the details of Billets sold 'on bills' as well as 'without bills'; that whenever tax invoice number is not given some of them 'might be' for without bill dispatches because in some of such cases, bills might have been issued from JBIL-IV but entries were made in the pen drives only to keep account. We find that this statement is not very categorical about the clandestine clearances. 13.2 A statement of Shri Kanhaiya Agarwal, weighbridge in-charge of JBIL-III was recorded on 17.07.2014, wherein he inter alia stated that he used to make weighment of goods at the weigh bridge of all incoming raw material as well as of outgoing finished goods. On being asked to explain about the pink weighment slips and slip pad as recovered from JBIL-III, he stated that weight of the material which has to be cleared without invoices was being mentioned in these pink weighment slips which was later handed over to Shri Sus....
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....for such dispatches was received in JBIL group in cheque or cash respectively. 13.8 None of the persons who have given the statements as mentioned above have retracted their statements initially. The Appellants asked for cross examination of the witnesses whose statements have been relied upon to demand duty. The cross examination conducted by the adjudicating authority and the replies given by the witnesses during cross examination are furnished below: 13.9 The gist of cross-examination of various witnesses is as under:- 13.9.1 Sushil Kumar Roy in respect of statement 17-07-2014 (i) The pen drive in question was provided to him by Mr Gautam Banerjee who was an associate like him in the company. (ii) All the entries, which were found in the pen drives, were not made by him. (iii) These entries were made by other associates like Shri Gautam Banerjee, Shri Samiran Bose and Shri Krishanu Bhattacharya. (iv) The data which was fed by him in the pen drives was fed on different computers. (v) He was pressurized to make these statements. (vi) He was told by the officers that if he did not make such statements,....
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....o Sarkar in respect of statement 17-11-2014 (i) He was never asked by anyone to prepare the invoice without the pink coloured weighment slips. He also denied that he was asked by anyone not to record any production in the production records. He also denied having been asked by anyone not to record any raw material received in the factory. (ii) That there were instances where pink slips were issued but no invoice was issued as due to break down of vehicle or order having been cancelled. 13.9.5 Shri Diptendu Samul in respect of statement dated 17-07-2014 Wherever some message of payment on cash was cited in the Show Cause Notice it was clarified by Shri Diptendu Samul that the said purchase was accounted for in their records. 13.9.6 Anup Kumar Agarwal in respect of statement 11-12-2014 (i) He was responsible only for procurements of raw materials. Hence he was not in a position to comment about dispatches. (ii) Denied having dealt with the sale of finished goods by JBIL or any dispatches of the goods. (iii) Stated that he had left JBIL at the time recording of his of the statement. He was advised by the DGCEI off....
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....lowed cross examination on selective basis. But, she has not taken into account the retractions made by them during cross examination. 13.11. The Appellants stated that the procedure set out under Section 9D is a mandatory procedure and without following this procedure no reliance can be placed on any statement recorded under Section 14 of the Central Excise Act, 1944. We agree with the contention of the Appellants. In the case of G-Tech Industries Vs Union Of India reported in 2016(339) ELT 209 (P&H), the Hon'ble Punjab and Haryana High Court has given an elaborate findings regarding the procedure to be followed under Section 9D. The relevant Part of the judgement is reproduced below: 3. The petitioner seeks, by means of the present writ petition, to challenge Order-inOriginal No. V(29)15/ce/Commr.Adj/ChdII/44/2015, dated 4-4-2016 issued by respondent No. 2 whereby respondent No. 2 has confirmed differential Central Excise Duty (hereinafter referred to "as duty") demand of Rs. 7,08,38,008/- with interest and equivalent penalty. It is contended that the impugned order-in-original has been passed in flagrant violation of Section 9D of the Central Excise Act, 1944 (....
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....n proceedings as well. 7. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 8. As already noticed herein above, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a Gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls wi....
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....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 in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 14. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the Gazetted Central Excise officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they....
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....n 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 recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. 19. Clearly, if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 20. Reliance may also usefully be placed on Para 16 of the judgment of the Allahabad High Court in C.C.E. v. Parmarth Iron Pvt Ltd., 2010 (260) E.L.T. 514 (All.), which, too, unequivocally expound the law thus : "If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements cannot be considered as evidence." 21. That adjudic....
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.... Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examination-in-chief before the adjudicating authority, i.e., before Respondent No. 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No. 2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, would be open to the Revenue to rely on the said statements to support the case sought to be made out in the show cause notice. (iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating authority, i.e., on Respondent No. 2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, wit....
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.... by their earlier statements. It is one thing to overlook this feature on the premise that all of them were under the pressure and control of the noticees. The other approach is to view this with some caution and ask what might be the case if the remaining witnesses were also produced for cross-examination? Importantly, what would be the prejudice caused to the noticees, in such circumstances, by their non-production for cross-examination? Thus a doubt is created in favour of the noticees when such witnesses do not turn up for cross-examination. It is the latter approach that has weighed with the CESTAT. That, in view of this Court, was a possible approach and does not render its order perverse on that score. 13.13. In the case of Hi Tech Abrasives Ltd Vs Commissioner of C.Ex and Cus, Raipur, reported in 2018 (362) ELT 961 (Chattisharh), the Hon'ble High Court has held that unless the procedure laid down in Section 9D of the Central Excise Act, 1944 is followed in letter and spirit, no reliance can be placed on any statement recorded under Section 14 of the Central Excise Act, 1944. The relevant part of the judgement is reproduced below: 9. Findings on Substantial....
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....) 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 the Court. On scanning the anatomy of the said provision, we find that the statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of inquiry or proceeding under the Act shall be relevant for the purposes of proving truth of the facts which it contains only when it fulfills the conditions prescribed in clause (a) or as the case may be, under clause (b). While clause (a) deals with certain contingencies enumerated therein, clause (b) provides that statement made and signed would be relevant for the purposes of proving the truth of the facts contained in that statement only when the person whom made the statement is examined as witness before the Court. (her, the adjudicating authority). 9.2 At this juncture, we need to notice the provision contained in Section 9D which provides that sub-section (1) shall, as far as may be, applied in relation to the proceedings under the Act, other than the proceeding before the court, as they apply in relation to proceeding....
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....ired to be present in the proceedings before the adjudicating authority but the adjudicating authority is obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Therefore, we would say that even mere recording of statement is not enough but it has to be fully conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. The rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the stat....
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....he decisions cited above." 13.1. Further, in the case of Commissioner of Central Excise, Delhi-I v. M/s. Kuber Tobacco India Ltd. [2016 (338) E.L.T. 113 (Tri. - Del.)], the Tribunal at Delhi has dealt with the said issue and observed as under:- "7. We have gone through the facts of the case wherein the certain machines were installed at Sandeep Poultry Farm Khasra No. 63/3, Village Khera Khurd, New Delhi-110082 found wherein 'Kanchan/Kanchann' brand gutka and 'wiz' brand pan masala manufactured clandestinely without declaring the said premises as registered premises for manufacture of the said gutka. The contention of M/s. Kuber is that they were not involved in the activity of manufacture of gutkhas and the said activity was illicit and misused of their brand name and goodwill of the appellant by certain elements who were manufacturing duplicate goods bearing M/s. Kuber brand names and clearing them in the market. The facts of the care are not in dispute, the appellants have raised the dispute that the statements recorded during the course of investigation cannot be relied upon as admissible evidence in terms of the provisions of Section 9D(2) of the Act. In that circu....
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....es are absent, therefore, the statement, which has been made during the course of inquiry/investigation, before a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the fact contained therein as observed by Hon'ble Delhi High Court in the case of J.K. Cigarettes (supra) wherein Hon'ble High Court has observed as under :- 12. Bare reading of the above section manifests that under certain circumstances, as stipulated therein, statement made and signed by those persons before any Central Excise Officer of a gazetted rank during the course of inquiry or proceedings under this Act can be treated as relevant and taken into consideration if under the given circumstances such a person cannot be produced for cross-examination. Thus, this provision makes such statements relevant for the purposes of proving the truth of the facts which it contains, in any prosecution for an offence under the Act in certain situations. Sub-section (2) extends the provision of sub-section (1) to any proceedings under the Act other than a proceeding before the Court. In this manner, Section 9D can be utilized in adjudication proceedings before the Collector as well....
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....he case in the proper perspective and on the basis of what is placed before the Court. Even with regard to the prayer for permitting the applicant to cross-examine the plaintiff, the prayer is misconceived as the question of cross-examination arises only when a witness has tendered evidence in chief-examination. Under section 138 of the Indian Evidence Act, cross-examination follows chief-examination, but not without chief-examination. If there is no chief-examination, there is no cross-examination. It is only witness who is examined in chief who can be cross-examined. Therefore, a prayer for cross-examination of the plaintiff even when the plaintiff has not been examined in chief is ridiculous and not provided for under Section 138 of the Indian Evidence Act. The Trial Court has rightly rejected the application. No scope for interference with an order of this nature. 11. We further find that in the case of Swiber Offshore Construction Pvt. Ltd. (supra), this Tribunal has further observed as under : 6. We therefore have no hesitation in holding that the impugned Order passed by the Commissioner as an adjudicating authority is appealable order in terms of Section 1....
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....which the witness testified on his examination-in-chief. Direction for re-examination. - The reexamination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in reexamination, the adverse party may further cross-examine upon that matter." 10. We therefore find force in the submission of the ld. counsel for the appellant. We find no reason to justify rejection of request made by the appellant to the adjudicating authority in light of Section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be considered as relevant and admitted in evidence in the interest of justice. 12. We further find in the case of Bussa Overseas Properties Ltd., this Tribunal again observed as under :- 24. The fact that in cases relating to smuggling or indeed any case civil or criminal cannot or need not been proved for degree of mathematical precision or that the department governed by strict rules of evidence is again no answer. The department is certainly bound by the contents of the Customs Act, 1962 and the ge....
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....ble during the course of adjudication and the same has not been considered judicially." (Emphasis supplied) 13.2. In terms of Section 9D of the Central Excise Act, for relying upon the statements recorded during the course of investigation, the adjudicating authority was required to examine the witnesses, in chief, and also to form the opinion that, having regard to the facts and circumstances of the case, the statements of the witnesses should be admissible as evidence. Thereafter, the witnesses were required to be offered for cross-examination. In the absence of examinationin-chief, cross-examination cannot be provided and the same would be a futile exercise. 13.3. Admittedly, in this case, the ld. adjudicating authority, in the impugned order, has observed as under: - "e) I find that considering the statement recorded by the witnesses and acceptances of documents recovered and seized by them voluntarily brings the evidential value of the statements under Section 24 of the Evidence Act. Accordingly, I find that such statement recorded under Section 14 of the Act of 1944 can be relied upon by the adjudicating authority. I have no doubt that the statements o....
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....y a gazetted officer of Customs under Section 108 of Customs Act, 1962 (identical to the provisions of Section 14 of the Central Excise Act, 1944) is not hit by the provisions of Section 25 of the Evidence Act and the same is admissible as evidence, if it has been made voluntarily and is not vitiated on account of any threat, inducement etc. envisaged in Section 24 of the Evidence Act. For invoking the provision of Section 24, there must be evidence from which it appears that the factor mentioned in it exist, without which, a bald retraction of the statement has to be rejected as an afterthought. I find that Applying the above criteria, the retraction of statements of witnesses must be dismissed as an afterthought and statements have to be treated as his true, correct and voluntary statement." [Ref. - under (VIII) at pg. 402-403 of 570 of the OI-O dt. 31.05.2024] 13.3.1. Finally, he has concluded as under: - "...Even after such disclosure, how they claim for cross examine their own employees? After passing of nearly 7 years after Issuance of SCN on 21.09.2016, no one can dream of that the employees of the manufacturing noticees will sing in the same tune what they have dep....
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....acturing notices." (Emphasis supplied) [Ref. - under (V)(a) at pg. 382 of 570 of the O-I-O dt. 31.05.2024] 14.1. The ld. adjudicating authority has relied upon the decision in the case of Shafhi Mohammed v. The State of Himachal Pradesh vide judgement dated 30th January, 2018. However, we find that the said decision has been examined by the Larger Bench of the Hon'ble Apex Court in the case of Arjun Panditrao Khotkar v. Kailash Khushanrao Gorantyal [(2020) 7 SCC 1], wherein the Hon'ble Apex Court has observed as under: - "45. Thus, it is clear that the major premise of Shafhi Mohammad [(2018) 2 SCC 801: (2018) 2 SCC 807] that such certificate cannot be secured by persons who are not in possession of an electronic device is wholly incorrect. An application can always be made to a Judge for production of such a certificate from the requisite person under Section 65-B(4) in cases in which such person refuses to give it. 46. Resultantly, the judgment dated 3-4-2018 of a Division Bench of this Court reported as Shafhi Mohd. v. State of H.P.[(2018) 5 SCC 311: (2018) 2 SCC (Cri) 704], in following the law incorrectly laid down in Shafhi Mohammad [(2018) 2 SCC 80....
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....eproduction of the image or images embodied in such microfilm (whether enlarged or not); or (b) a facsimile copy of a documents; or (c) a statement contained in a document and included in a printed material produced by a computer (hereinafter referred to as a "computer printout"). (2) The conditions referred to in sub-section (1) in respect of a computer printout shall be the following namely:- (a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities 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 or of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating pro....
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.... a computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment; (b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities; (c) a document shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment. Explanation - For the purposes of this section,- (a) "computer" means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and (b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process. 16. Section 3 of the E....
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..... Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure prescribed under Section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under Section 65B(2). Following are the specified conditions under Section 65B(2) of the Evidence Act: (i) The electronic record containing the information should have been produced by the computer during the period ove....
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....cords can lead to travesty of justice. 16. Only if the electronic record is duly produced in terms of Section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A - opinion of examiner of electronic evidence. 17. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65B of the Evidence Act are not complied with, as the law now stands in India. xxxxxxxxxxx 22. xxxxxxxxxxx. Section 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Section 65A and 65B. to that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this court in Navjot Sandhu case (supra), does not laydown the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements under Section 65B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certif....
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....ce Act speaks of the kind or types of secondary evidence by which documents may be proved. Section 64 of the Evidence Act then enacts that documents must be proved by primary evidence except in the circumstances hereinafter mentioned. Section 65 of the Evidence Act is important, and states that secondary evidence may be given of "the existence, condition or contents of a document in the following cases...". 19. Section 65 differentiates between existence, condition and contents of a document. Whereas "existence" goes to "admissibility" of a document, "contents" of a document are to be proved after a document becomes admissible in evidence. Section 65A speaks of "contents" of electronic records being proved in accordance with the provisions of Section 65B. Section 65B speaks of "admissibility" of electronic records which deals with 'existence' and 'contents' of electronic records being proved once admissible into evidence. With these prefatory observations let us have a closer look at Sections 65A and 65B. 20. It will first be noticed that the subject matter of Sections 65A and 65B of the Evidence Act is proof of information contained in electronic records. The mar....
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....tained in an electronic record produced by a computer, which is, by a deeming fiction, then made a 'document'. This deeming fiction only takes effect if the further conditions mentioned in the Section are satisfied in relation to both the information and the computer in question; and if such conditions are met, the 'document' shall then be admissible in any proceedings. The words "...without further proof or production of the original..." make it clear that once the deeming fiction is given effect by the fulfilment of the conditions mentioned in the Section, the "deemed document" now becomes admissible in evidence without further proof or production of the original as evidence of any contents of the original, or of any fact stated therein of which direct evidence would be admissible. 31. The non-obstante clause in sub-section (1) makes it clear that when it comes to information contained in an electronic record, admissibility and proof thereof must follow the drill of Section 65B, which is a special provision in this behalf - Sections 62 to 65 being irrelevant for this purpose. However, Section 65B(1) clearly differentiates between the "original" document - which would be ....
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....y if the original document itself is produced. This can be done by the owner of a laptop computer, computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where the "computer" happens to be a part of a "computer system" or "computer network" and it becomes impossible to physically bring such system or network to the Court, then the only means of providing information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). The last sentence in Anvar P.V. (supra) which reads as ".. if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act..." is thus clarified; it is to be read without the words "under Section 62 of the Evidence Act,..." With this clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to revisited. (c) The general directions issued in paragraph 62 (supra) shall hereafter be followed by courts that deal with electronic evidence, to ensure their preservation, and pro....
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....nce Act is not complied with; (v) An electronic record by way of secondary evidence shall not be admitted in evidence unless the the requirements of 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. 23. A Bench of the Tribunal in Agarvanshi Aluminium Ltd. vs. Commissioner of Customs (I), Nhava Sheva [2014 (299) E.L.T. 83 (Tri. - Mum.)], where the issue was with respect to section 36B of the Central Excise Act, also observed: "12. ...... it is clear that for admissibility of computer printout there are certain conditions have been imposed in the said section. Admittedly condition 4C of the said section has not been complied with and in the case of Premier Instruments & Controls (supra) this Tribunal relied on the case of International Computer Ribbon Corporation - 2004 (165) E.L.T. 186 (Tri.-Chennai) wherein this Tribunal has held that "computer printout were relied on by the Adjudicating Authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal t....
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....ibunal observed: "19. Ongoing through the aforesaid provisions, we find that Section 36B(2) provides the conditions in respect of computer printouts. In the present matter the computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the appellants. It was also not shown that information of the kind contained in the computer printout was regularly supplied by the appellant to the computer in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, to show that the information contained in the printout had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. In the present case, the data was not stored in the computer but the officers had taken the printout from the Hard Disk drive by connecting to the computer. The officers had not obtained any certificate as required under Section36B of the sai....
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....ises and these monitors are working as extension of the computer in the kitchen and connected through cable"; (iv) On searching the kitchen, the officers recovered "Computer (CPU, Monitor, Keyboard and Mouse) which was switched on and CPU was found without cover and without having any hard disc"; (v) The officers conducted a thorough search of the entire residential premises and found "one of the hard disc hidden in a corner lying near the dog house"; (vi) The officers also found two hard discs from the cupboard of the kitchen; (vii) The officers asked Vaibhav Goel to connect the hard disc found in the corner near dog house with the CPU installed in the kitchen; (viii) On the direction of Vaibhav Goel, Mohit Vaish started the CPU after connecting the said hard disc; (ix) On being asked by the officers to take the printouts of data captured in the software, Vaibhav Goel informed that being a MS Dos based software, "printout cannot be taken without configuring printer Canon LBP 2900B (available in the residence) with site key and license key". (x) On being asked how these keys can be taken, Vaibhav Goel stated that he wou....
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....fficers were informed that one desktop computer connected with the CPU is installed in the kitchen and these monitors are working as extension of the computer in the kitchen and were connected through a cable. Ultimately the officers recovered CPU, Monitor, Keyboard and Mouse in the room, but the CPU was found without cover and hard disk. The Panchnama does not record that Vaibhav Goel was seen removing the hard disk from the CPU and indeed it would not have been possible for Vaibhav Goel to remove this hard disk from the CPU in the presence of all the officers and throw it away. There is nothing on the record to link the hard disk to the CPU, nor is there anything to link that the hard disc and the pen drive stored information contained in the computer. 30. A hard disk is a rigid magnetic disk that stores data. A pen drive is a data storage device that includes flash memory with an integrated USB interface. 31. The printouts, which are the sole basis for holding that the appellant had indulged in clandestine removal, were taken both on 04.07.2013 and on 15.07.2013 by placing the recovered hard disc and pen drive in the CPU. 32. It is, therefore, clear th....
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....fty Lakh only) and Rs.1,50,00,000/- (Rupees One Crore Fifty Lakh only). It is the contention of the Revenue that the above payments made by the appellants amount to admission of clandestine removal of goods by them. 15.1. It is well settled that any amount deposited during the course of pendency of investigation is only a deposit made under protest and the said deposit is not an 'admission' of clandestine removal of goods. The same view has been taken by this Tribunal in the case of M/s. MSP Sponge Iron Ltd. v. Commissioner of C.G.S.T., C.Ex. & Customs, Rourkela [2020 (3) TMI 15 - CESTAT, Kolkata], wherein it has been observed as under: - "9. I further find that merely deposit of money at the time of investigation would not amount to acceptance of allegations of clandestine manufacture and removal as alleged by the department. It is well settled law that, payment of money at the time of investigation would be treated as a deposit under protest, which is held in following judgements:- i. Bayshore Glass Trading Pvt. Ltd. Vs CC, Kolkata, 2002 (148) ELT 1243 (Tri-Kol.) ii. CCE, Lucknow Vs Eveready Industries India Ltd., 2017 (357) ELT 11 (All.) ii....
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....ting team to ascertain as to whether the premises from which the said documents were recovered were owned by the appellants or whether the appellants have any link with the said premises at all, or not. Merely on the basis of recovery of documents from the said premises, which are the residences of their employees and ex-employees, without establishing that the said employees and ex-employees were having possession of such documents in a legal manner, the impugned demands cannot be confirmed against the appellants. 16.1. Further, we take note of the fact that the author(s) of the purported documents have also not been established in this case. 16.2. We also find that the documents recovered from the possession of third-parties i.e., employees or ex-employees who were alleged to be having secret documents of clandestine removal of goods by the appellants, were not made party to the Show Cause Notice. Therefore, such documents recovered are not admissible as evidence to allege clandestine removal of goods in this case. 16.3. In these set of facts, we are of the view that the allegation of clandestine removal of goods cannot be sustained on the basis of documents recovered fr....