AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 90
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....use notice that the officers from DGCEI, Head Quarters, New Delhi searched the factory, office and residential premises on March 30, 2013 of M/s. Super Smelters Limited (in short M/s. SSL, Durgapur) and other locations. In course of searches, the officers, inter alia, seized external data storage device and file containing details of cash book for the month of March, 2011. From the External Data Storage Device details relating to sale of finished goods, namely M.S. Wire Rods in coiled form, billets by M/s. SSL. Durgapur had been retrieved. Statement was recorded on 30.3.2011 from Sri Ravi Bhusan Lal, on 20.07.2012 from Sri Sitaram Agarwal, Chairman-cum-Managing Director of M/s. SSL. Durgapur.The Additional Director, DGCEI, New Delhi sent details to Siliguri Central Excise Commissionerate on 24.1.2014 wherein information regarding buyers of 'M.S. Rods' from M/s, SSL, Durgapur were provided. It appeared in the said information that the appellant had purchased M.S. Wire Rods (coiled form) from M/s. SSL. Durgapur during the period 2010-11. On that basis Sri Arun Goyal, former Director of the appellant company was summoned and his statement was recorded on 21.8.2014 and 8.9.2014....
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....Statements of Sri Sita Ram Agarwal, Director of M/s. SSL had been recorded and relied on in the show cause notice. Such statements were obtained behind the back of the appellant. Even in such statement name of the appellant company M/s. North East Engg. Company (P) Ltd. has not been mentioned by the employee or director of M/s. SSL. But such statements had been relied on in the show cause notice. 2.3. The appellant wanted to cross-examine Sri Ravi Bhusan Lal and Sri Sitaram Agarwal of M/s. SSL at the time of hearing of the case to prove that the appellant did not purchase any materials from M/s. SSL at any point of time. This request was not considered by the Adjudicating authority. 2.4. The appellant stated that in the present case the demand of duty had been raised only on the basis of the records and documents stated to have been seized from the premises of M/s. SSL and the residential premises of the employee of the said company. There was no such corroboration from the appellant's end. Sri Arun Goyal, the former director, clearly denied that the appellant company purchased any material from M/s. SSL. No corroboration was there in their books of accounts that they pur....
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....the goods cannot be proved. 3. In view of the foregoing, he submits that the proceedings are legally not sustainable both against the company as well as against the Director. 4. The Ld Consultant places reliance on the following case laws : 2008 (230) E.L.T. 240 (All.) KUMAR TRADING COMPANY Versus COMMISSIONER OF TRADE TAX, LUCKNOW Trade Tax Revision No. 195 of 2007, decided on 24-9-2007 2009 (243) E.L.T. 154 (Tri. - Ahmd.) RUTVI STEEL & ALLOYS Versus COMMISSIONER OF CENTRAL EXCISE, RAJKOT 5. In view of the foregoing, he prays that the impugned order may be set aside and the appeals may be allowed. 6. The learned AR reiterates the findings of the Adjudicating Authority. He submits that in the Computer Printouts taken from the premises of SSL and the statements recorded from their officials, it was found that they were supplying the raw materials to various wire manufacturers, including the appellant. From such printouts, it was found that appellant had cleared the finished wires without payment of Excise duty. Therefore, he justifies the confirmed demand. 7. Heard both sides and p....
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....Chd-II/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 (hereinafter referred to as "the Act") by relying upon the statements recorded under Section 14 of the Act without first admitting them in evidence in accordance with the procedure prescribed in this regard by Section 9D(1)(b) of the Act. 4. In view of the fact that the case of the petitioner is essentially premised on Section 9D of the Central Excise Act, 1944, it would be appropriate to reproduce the said provision, in extenso, thus : "9D. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) ....
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....ces 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 within the parameters of Section 9D(1). 9. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 10. Once the ambit of Section 9D(1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub-section, which are contained in clauses (a) and (b) thereof. 11. Clause (a) of Section 9D(1) refers to the following circumstances : (i) when the person who made the statement is dead, (ii)....
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...., 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 would, even otherwise, have to be recorded as mandatory. 15. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 16. C....
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....nce 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 adjudicating authorities are bound by the general principles of evidence, stands affirmed in the judgment of the Supreme Court in C.C. v. Bussa Overseas Properties Ltd., 2007 (216) E.L.T. 659 (S.C.), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd. v. C.C., 2001 (137) E.L.T. 637 (T). 22. It is clear, from a reading of the Order-in-Original dated 4-4-2016 supra, that Respondents No. 2 has, in the said Orders-in-Original, placed extensive reliance on the statements, recorded during investigation under Section 14 of the Act. He has not invoked clause (a) of sub-section (1) of Section 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to Respondent No. 2 to r....
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....ho 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, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the Hon'ble Supreme Court in Arya Abhushan Bhandar v. U.O.I., 2002 (143) E.L.T. 25 (S.C.) and Swadeshi Polytex v. Collector, 2000 (122) E.L.T. 641 (S.C.). 25. The writ petition is allowed in the aforesaid terms. 12. We find that the ratio laid down in above case law is squarely applicable to the facts of the present case. Therefore, we hold that the recorded statements have no evidentiary value in the present case. 13. We find that the computer printouts have been obtained from the computers of third party, for which we observe that the procedure specified under Section 36(B) of the C....
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....wing conditions are satisfied : (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evide....
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....bunals which have been confirmed by the High Courts that electricity consumption alone if adopted as a basis of the demand, the same is not tenable. The respondents can take the electricity consumption pattern as a corroborative piece of evidence, but, in absence of substantive proofs like - (a) Details about the purchase of the raw material within the manufacturing units and no entries are made in the books of account or in the statutory records. (b) Manufacturing of finished product with the help of the aforesaid raw material, which is not mentioned in the statutory records. (c) Quantity of the manufacturing with reference to the capacity of production by the noticee unit. (d) Quantity of the packing material used. (e) The total number of the employees employed and the payment made to them. In this case, statements of the labourers ought to have been reduced in writing, by the department which ought to refer that over and above of the salary paid by the noticee, some other type of remunerations in cash or kind have been paid by the noticee, such statements are must. (f) Ostensible discrepancy in the stock of raw mater....