Custom, Excise & Service Tax Tribunal
Kuwer Industries Ltd vs Noida on 30 October, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
REGIONAL BENCH : ALLAHABAD
COURT No. I
APPEAL Nos. E/1058-1060/2012-EX[DB]
(Arising out of Order-in-Original No. 23-COMMR-NOIDA-2011-12 dated
31/01/2012 passed by Commissioner, Customs, Central Excise & Service
Tax, Noida)
M/s Kuwer Industries Ltd
(In Appeal No.E/1058/2012-EX[DB])
Shri J B Aggarwal
(In Appeal No.E/1059/2012-EX[DB])
Shri Tarun Aggarwal
(In Appeal No.E/1060/2012-EX[DB]) Appellant(s)
Vs.
Commissioner, Central Excise, Noida Respondent(s)
Appearance:
Shri Nishant Mishra (Advocate) for Appellant(s) Shri Pawan Kumar Singh (Superintendent) AR for Respondent(s) CORAM:
Hon'ble Mrs. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Anil G. Shakkarwar, Member (Technical) Date of Hearing : 04/09/2018 Date of Pronouncement : 30/10/2018 FINAL ORDER NOs 72523-72525 / 2018 Per: Anil G. Shakkarwar The present appeal stand filed against the order of the Commissioner vide which he has confirmed the duty of Excise to the tune of Rs.1,20,44,930/- along with imposition of penalty of identical amount on the manufacturing unit M/s Kuwer Industries Ltd. In addition penalties stand imposed 2 APPEAL Nos. E/1058-1060/2012-EX[DB] upon Shri J B Aggarwal, Managing Director & Shri Tarun Aggarwal, Director to the extent of Rs.10,00,000/- each in terms of Rule 26 of the Central Excise Rules.
2.1. As per facts on record stated in show cause notice dated 03.06.2010 are that the appellant were engaged in the manufacture of Metalized Polyester Film falling under Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985. Their factory was visited by the Central Excise officers on 16.10.2007, which was put to search. The officers also searched the business premises of the related buyers, transporters and the residence of the Directors of the manufacturing unit.
2.2. During the course of checking of the appellant‟s factory in the presence of their Director Shri Tarun Aggarwal and Supervisor & Authorized Signatory Shri Vinod Kumar Mishra and in the presence of two independent witnesses, physical stocks of the Cenvatable inputs as also the final product were verified. Such verification resulted in shortages of the raw material as also the final product. The appellant‟s representatives admitted such shortages detected by the officers and promised to deposit the duty there on. 2.3. During the course of further checking, the officers recovered certain records and by entertaining a bona fide belief that the same contained entries relating to clandestine activities of the appellant, the records were put under seizure vide Panchnama dated 16.10.2007.
3 APPEAL Nos. E/1058-1060/2012-EX[DB]2.4. The appellant‟s were issuing their invoices by generating the same through a computer installed in their factory. Scrutiny of the same revealed that the last invoice issued from the said computer was Invoice No. 458 dated 15.10.2007. Further, it was noticed that the invoices between the two Invoice No.454 and 458 as shown generated from the said computers was missing i.e. there was no details of invoice No.455, 456 & 457 all dated 15.10.2007. On further examination, it was noticed that the computer software was so customized to generate the same number of invoice repeatedly. Shri Vinod Kumar Mishra, supervisor & authorized signatory, available on the spot explained that Production Supervisor provides the schedule of dispatches to him on the direction of Shri Tarun Aggarwal, Director on the basis of which he used to prepare the packing slip manually and subsequently invoices were generated on the computer system and forwarded to the production department for dispatch/clearance from the factory. He also deposed that the computer software and the computer was customized to their needs and requirements. As the computer system revealed discrepancies as regards the invoices generated by it, the visiting officers resumed the CPUs along with the other resumed files.
2.5. Statements of various persons were recorded, either on the spot or subsequently during the course of further investigation. Scrutiny of the resumed records also revealed 4 APPEAL Nos. E/1058-1060/2012-EX[DB] that one file appearing at S.No.24 of the Annexure-C to the Panchnama dated 16.10.2006 contained several invoices which had been regenerated after the clearance, dispatch and receipt of the goods. Further, the copies of the missing invoice S.No.455, 456 & 457 from the computer system was found to be contained in the said file.
2.6. To investigate the matter further, CPU of the Computer resumed from the assessee‟s factory was scrutinized and the data was retrieved in the presence of the appellant‟s technical staff. The de-sealing of the CPU and retrieval of data were recorded under Panchnama dated 15.11.2007. The same was again scrutinized on 10.12.2007 in the presence of appellant‟s authorized representatives as also in the presence of independent witnesses and proceedings were recorded in Panchnama dated 10.12.2007. The data print out were duly signed by Shri Vinod Kumar Mishra, appellant‟s representative.
2.7. It is further seen that in the statement recorded on various dates during the course of investigation the appellant‟s authorised representatives as also Shri Tarun Aggarwal, Director admitted the fact that the computer software installed in their factory computer was customized and was capable of generating the invoices over and over again. It was admitted by them that the said software was so designed that the same was capable of regeneration of invoices subsequent to deletion of original one and that was 5 APPEAL Nos. E/1058-1060/2012-EX[DB] the reason for some missing number of invoices in the said computer. Shri Tarun Aggarwal, Director also explained that the data relates to clandestine removal of the goods by the company and he agreed with the statement of Shri Vinod Kumar Mishra. On comparing all the computer printout data with the invoices recovered vide file No.24, it was found that the invoices showing the removal of the goods initially were subsequently deleted from the said computer and invoice of the same number was again regenerated. For further strengthening their case Revenue recorded the statement of Transporters, whose premises was also put to search and their incriminating records were recovered on 15.10.2007 itself. The authorized representative of one transporter M/s Om Tempo Transport Services, from whose premises rough hand-written Purchees (chits) were resumed, deposed that the said Purchees contained the details pertaining to the quantity of goods issued by M/s KIL, invoices issued were given to the drivers and used for transporting the goods, acknowledgement from the receiver of the goods was obtained on the back of said invoices which were ultimately returned to the appellant. On comparison of the said Purchees with the invoices issued by M/s KIL on the corresponding date it was found that they do not relate to any of the invoices in most of the cases. In his subsequent statement Shri Satish Kumar, Proprietor M/s Om Tempo Transport Services recorded on 12.03.2008, it was deposed that the invoice were being issued 6 APPEAL Nos. E/1058-1060/2012-EX[DB] only for transit and after the delivery of the goods the same were brought back. Most of the time no statutory documents were issued for transportation of goods. Statement of various other transporters as also drivers were also to the same effect. 2.8. During the course of further investigations, Revenue also approached the appellant‟s buyers, Shri Ravidner Kumar Kochhar, Director of M/s SRV Print Pack Pvt Ltd. Patpar Ganj who in his statement recorded on 23.06.2008 deposed that the orders for purchase of the goods were being made telephonically and freight were paid by the suppliers. On being confronted with invoices/challans contained in file No.24 recovered from the premises showing dispatch/sale of goods to his company, he deposed that the materials referred in the said invoices has been received by his Company and payments were made in cash. He further, deposed that the goods were sent by the manufacturer in their own vehicles and no freight was paid by them and invoices in question was not entered in their records.
2.9. Statement of one Shri Sanjay Kapoor, Proprietor of M/s Kapoor Print Pack was also recorded on 04.08.2008, wherein he stated that purchase order were placed on telephone. Transportation was arranged by the supplier who submitted that the goods being received by them were duly entered in their statutory records. On being shown invoice No.161 dated 25.05.2007, he accepted to have received the goods and payments were made by cheque. Inasmuch as the said 7 APPEAL Nos. E/1058-1060/2012-EX[DB] invoice was not available in the assessee‟s factory, the Revenue officers entertained a view that the appellant was clearing their goods in a clandestine manner by adopting the modus operandi by preparing a parallel copy of computer generated invoice bearing same serial number. Accordingly, it was viewed that after the delivery of the goods the invoices were being destroyed by appellant and related data was deleted from the computer system. The fact of deletion of invoices from the computer system was evidenced from the data retrieved from the computer.
2.10. On the above basis proceedings were initiated against the appellants by way of issuance of said show cause notice dated 03.06.2010 proposing confirmation of demand of duty and imposition of penalties resulting in passing of present impugned order by the Commissioner.
3. Heard the learned counsel for the appellant, who has submitted the following grounds:-
Grounds for charge of clandestine removal and demand of duty against M/s Kuwer Industries Ltd. (KIL), as recorded in the Order-in-Original are:-
(i) Printouts of data retrieved from the CPU, resumed on 16.10.2007 from the factory premises of KIL, reveals the details of actual quantum of clearance of finished goods, as CPU allegedly contained a software with the help of which it was possible to generate the same number of invoice repeatedly;8 APPEAL Nos. E/1058-1060/2012-EX[DB]
(ii) Statements dated 16.10.2007, 10.12.2007 & 4.2.2008 of Shri Vinod Kumar Mishra, wherein he stated:-
(a) Modus of addition/deletion of invoices in the computer system and that data retrieved from CPU contains details of clandestine removal by KIL;
(b) Deletion of invoices no. 455, 456 & 457 all dated 15.10.2007, on the directions of Shri Tarun Aggarwal, Director;
(c) Invoices contained in File No. 24 were signed by him and all such invoices were brought back in factory after dispatch & delivery of goods and later on deleted from Computer, on the directions of Shri Tarun Aggarwal, Director;
(iii) Statements of Shri Atilesh Kumar Yadav (owner of trucks), Shri Ishwar Singh, Shri Pradeep Nangia, Shri Sanjay Kumar (drivers of trucks), to the effect that Shri Vinod Kumar Mishra used to issue documents and purchee for freight and they have transported goods under cover of invoices contained in File No. 24;
(iv) Statement of Shri Satish Kumar, proprietor of M/s Om Tempo Services wherein he stated that he transported goods without issuing GR and that goods were sent on various purchees issued by Shri Vinod Kumar Mishra; 9 APPEAL Nos. E/1058-1060/2012-EX[DB]
(v) File resumed at Sl. No. 24 of Annexure-C to Panchnama dated 16.10.2007, allegedly containing regenerated invoices, not recorded in statutory records;
(vi) Shortage of finished goods and cenvatable inputs, on stock verification conducted on 16.10.2007, in respect of which Rs.4,99,024/- was deposited by KIL; and
(vii) Alleged admission of Shri Tarun Aggarwal, Director of KIL.
In respect of the aforesaid grounds/allegations in the Order-in-Original, he submitted as under:-
A. PRINTOUTS OF DATA RETRIEVED FROM CPU NOT AN ADMISSIBLE EVIDENCE-
Since, revenue is relying upon printouts of data retrieved from CPU, which is an electronic evidence, hence Section 36B of Central Excise Act comes into play.
Under Section 36B (1) (c), a statement contained in a document and included in a printed material produced by a computer i.e. computer printout, is admissible as evidence, if the conditions mentioned in sub-section (2) and other provisions contained in Section 36B are satisfied in relation to the statement and the computer in question.
Condition of Sub-section (4) of Section 36B not fulfilled:-10 APPEAL Nos. E/1058-1060/2012-EX[DB]
Certificate referred to under sub-section (4) of Section 36B by a person occupying responsible official position, was never produced and hence condition of sub-section (4) are not satisfied Section 36B is identical to Section 65B of Evidence Act, 1872, which was considered by Apex Court in the case of Anvar P.V vs. P.K Basheer (2014) 10 SCC 473 and it was held that:-
"15. Under Section 65-B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following 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 65-B(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.
16. 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 11 APPEAL Nos. E/1058-1060/2012-EX[DB] taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice.
17. Only if the electronic record is duly produced in terms of Section 65-B of the Evidence Act, would the question arise as to the genuineness thereof and in that situation, resort can be made to Section 45-A-- opinion of Examiner of Electronic Evidence." The aforesaid judgment has been followed by Apex Court in the case of Harpal Singh vs. State of Punjab (2017) 1 SCC 734.
Further, condition of providing certificate referred to in sub-section (4) cannot be relaxed in the present case, since such as condition, even if held to be procedural, can be ignored or relaxed only in a case when the CPU is under possession of revenue only, since till date the said CPU has not been given back to Appellants.
Reliance in this regard is placed on the judgment of Delhi High Court in the case of HDFC Bank Ltd. vs. Surhit Services Pvt. Ltd. 2018 SCCOnline Del 8220, wherein Apex Court judgment in the case of Shafhi Mohammad vs. State of Himachal was considered and it was held that:
12 APPEAL Nos. E/1058-1060/2012-EX[DB]
"6. The Trial Court appears to have taken an over- technical approach in this matter by holding that in view of the defects in the certificate under Section 65B of the Evidence Act, the suit is liable to be dismissed. The Authorised Representative of the Bank has also created greater confusion in his cross examination by not recognizing the signatures in the 65B certificate. A comparison of the signatures in the 65B certificate with evidence by way of affidavit clearly shows that the same Authorised Representative has signed both the documents. The Statement of account being a document proved under the Bankers' Books Evidence Act, there was no requirement to even go into the issue of Section65B of the Evidence Act. This is the settled position in law. Recently the Supreme Court, in Shafhi Mohammad v. State of Himachal Pradesh, [SLP(Crl.) No. 2302/2017 dated 30th January, 2018], has held that the requirement of Section65B of the Evidence Act is not always mandatory and that requirement of the said certificate, which is a procedural requirement, can be relaxed by Courts in the interest of justice. The Supreme Court observed as under:
"11. The applicability of procedural requirement under Section65B(4) of the Evidence Act of furnishing certificate is to be applied only when such electronics evidence is produced by a person who is in a position to produce such certificate being in control of the said device and not of the opposite party. In a case where electronic evidence is produced by a party who is not in possession of a device, applicability of Sections 63 and 65 of the Evidence Act cannot be held to be excluded. In such case, procedure under the said Sections can certainly be invoked. If this is not so permitted, it will be denial of justice to the person who is in possession 13 APPEAL Nos. E/1058-1060/2012-EX[DB] of authentic evidence/witness but on account of manner of proving, such document is kept out of consideration by the court in absence of certificate under Section65B(4) of the Evidence Act, which party producing cannot possibly secure. Thus, requirement of certificate under Section 65B(h) is not always mandatory.
12. Accordingly, we clarify the legal position on the subject on the admissibility of the electronic evidence, especially by a party who is not in possession of device from which the document is produced. Such party cannot be required to produce certificate under Section 65B(4) of the Evidence Act. The applicability of requirement of certificate being procedural can be relaxed by Court wherever interest of justice so justifies."
Condition of clause (a) of sub-section (2) also not fulfilled -
In the present case, computer printout containing the statement was admittedly produced on 15.11.2007 and 10.12.2007, during the period, when the same was not regularly used by Appellant.
Since the CPU in question was regularly used by Appellant till 16.10.2007 only the same was never used for the purposes of regular business activity, hence it cannot be said that on 15.11.2007 and 10.12.2007, the CPU in question was regularly used by Appellant and hence conditions of clause (a) of sub-section (2) are also not satisfied in the present case.
14 APPEAL Nos. E/1058-1060/2012-EX[DB]B. ALLEGATION THAT CPU CONTAINED SOFTWARE ENABLING GENERATION OF SAME NUMBER OF INVOICE REPEATELDY, NOT ADMISSIBLE IN ABSENCE OF EXPERT OPINION-
Allegation in Order-in-Original that CPU contained a software with the help of which, it was possible to generate same number of invoice repeatedly, is without any basis and not tenable in the absence of any opinion to the said effect, by an Expert Examiner of Electronic Evidence, as provided under Section 45A of Evidence Act, 1872, which provides as under:-
45A. Opinion of Examiner of Electronic Evidence.-- When in a proceeding, the court has to form an opinion on any matter relating to any information transmitted or stored in any computer resource or any other electronic or digital form, the opinion of the Examiner of Electronic Evidence referred to in section 79A of the Information Technology Act, 2000 (21 of 2000), is a relevant fact.
Explanation.--For the purposes of this section, an Examiner of Electronic Evidence shall be an expert. The word „Court‟ has been defined under Section 3 of Evidence Act to include all persons, legally authorized to take evidence. Section 14 of Central Excise Act confers power upon Central Excise Officer (definition of which includes Ld. Commissioner) to take evidence, hence Section 45A of Evidence Act is applicable in respect of proceedings before Ld. Commissioner. 15 APPEAL Nos. E/1058-1060/2012-EX[DB]
In the present case, no such expert opinion was taken and Ld. adjudicating authority erroneously reached to the conclusion of software permitting regeneration of invoices.
At any rate, Order-in-Original records taking help of Shri Virendra Sharma, Tax Assistant, Central Excise, Noida, who has not been shown to an expert in computer systems and therefore the conclusion reached by learned Adjudicating Authority regarding software used in CPU is without any basis and completely erroneous.
C. STATEMENT DATED 16.10.2007 & 10.12.2007 OF SHRI VINOD KUMAR MISHRA, NOT ADMISSIBLE AS EVIDENCE-
Impugned Order-in-Original extensively relies upon statements dated 16.10.2007 & 10.12.2007 tendered by Shri Vinod Kumar Mishra, who was never produced for cross-examination.
Once Revenue failed to provide opportunity of cross- examination of Shri Vinod Kumar Mishra, then his statements cannot be relied upon as evidence, as held by Hon‟ble Allahabad High Court in the case of CCE vs. Parmarth Iron Pvt. Ltd. 2010 (260) ELT 514 All, as under:-
16. We, therefore, have no hesitation in holding, that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that 16 APPEAL Nos. E/1058-1060/2012-EX[DB] the witnesses whose statements were recorded and relied upon in the show cause notice, are liable to be examined at that stage. If the Revenue chose not to examine any witnesses in adjudication, their statements cannot be considered as evidence.
However, if the Revenue chose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross examination for the evidence or statement to be considered.
Since Revenue was relying on the statements of Shri Vinod Kumar Mishra, hence it was the responsibility of the Revenue to produce Shri Vinod Kumar Mishra for cross-examination, which has not been done in the present case. It was held by Hon‟ble Delhi High Court at Para 42 of CCE vs. Vishnu & Co. Pvt. Ltd. 2016 (332) ELT 793 Del to the effect that prosecution has to produce prosecution witness. Revenue has also not invoked Section 9D of the Central Excise Act for non-appearance of Shri Vinod Kumar Mishra.
Once Shri Vinod Kumar Mishra was not produced by revenue for cross examination, then his statements cannot be read as „evidence‟ and consequently the same cannot be relied upon by the Revenue.
Even otherwise, as per the revenue‟s own case, it was Shri Vinod Kumar Mishra alone, who was not only 17 APPEAL Nos. E/1058-1060/2012-EX[DB] preparing packing slips but was also generating and deleting invoices from computer and issuing purchees, hence his cross-examination was absolutely necessary, when he made a serious charge against Shri Tarun Aggarwal, Director of KIL.
Further when, as per statement of Shri Vinod Kumar Mishra, the file resumed at Serial N. 24 contained invoices/challans signed by him, then his cross examination was mandatory, as he was the author of documents relied upon by Revenue as held in Para 14 of Bareilly Electricity Supply Co. Ltd. vs. Workman and Ors reported at (1971) 2 SCC 617 by Hon‟be Supreme Court D. STATEMENTS OF TRUCK DRIVERS NOT ADMISSIBLE AS EVIDENCE-
In view of the law referred to above, if revenue chose to reply upon statements of these persons, it was for the revenue to produce these persons for cross- examination and since the same has not been done, statements of these persons cannot be read as evidence against Appellant.
At any rate, statements of these persons are to the effect that Shri Vinod Kumar Mishra used to provide them documents relating to goods and purchee for freight. Hence, it was necessary to ascertain this fact from Shri Vinod Kumar Mishra, who, inspite of specific 18 APPEAL Nos. E/1058-1060/2012-EX[DB] request made by Appellant, was never produced for cross-examination.
Further, it is highly impractical to presume that a truck driver, will remember even after a period of more than a year, the number of invoice, in respect of goods transported by him. Thus, the statements of truck drivers appear to be tutored and hence it was necessary for the revenue to produce them for cross-examination, which has not been done, hence statements given by them, cannot be read as evidence against Appellant. E. STATEMENTOFSHRI SATISH KUMAR NOT RELEVANT -
In view of the law referred to above, if revenue chose to reply upon statements of Shri Satish Kumar, it was for the revenue to produce him for cross- examination and since the same has not been done, his statement cannot be read as evidence against Appellant.
At any rate, his statement that goods were transported by him without GR, is of no relevance, since in normal practice GR are not issued by tempo owners, transporting goods by tempos and Shri Satish Kumar is admittedly proprietor of M/s Om Tempo Services. Further, his statement that goods were being transported under cover of purchee issued by Shri Vinod Kumar Mishra, also cannot be admitted as gospel truth, in absence of production of Shri Vinod Kumar Mishra for cross-examination.
19 APPEAL Nos. E/1058-1060/2012-EX[DB]
Further, the two chits mentioned in the Order-in- Original relates to goods received for job-work and returned after completion of job-work, for which evidence is available as per Annexure -13 at Page 172, Annexure -14 at Page 173 & Annexure -15 at Page 180 of appeal paper book.
F. FILE CONTAINING 129 INVOICES, ALLEGED TO BE REGENERATED INVOICES Finding in the Order-in-Original that file resumed at Sl. No. 24 of Annexure-C of Panchnama dated 16.10.2007 contains 129 regenerated invoices, is based on statement of Shri Vinod Kumar Mishra and statements of truck owner and truck drivers.
However, Shri Vinod Kumar Mishra, who stated that he signed the invoices/challans found in the file and that the file contained regenerated invoices, was not produced for cross-examination, and hence his statement cannot be relied upon to reach any conclusion. Similarly, the truck owner and driver, whose statements have been relied upon in Order-in- Original, were also not produced for cross examination and hence there statements cannot be relied upon. Once, the aforesaid statements, which are the basis of allegation of regeneration of invoices, cannot be relied upon, there remains no other evidence on record, to show that invoices found in resumed file, were 20 APPEAL Nos. E/1058-1060/2012-EX[DB] regenerated invoices. Appellant has never admitted the fact of regeneration of invoices or that the file resumed contained regenerated invoices.
G. NO SHORTAGE OF FINISHED GOODS OR INPUTS -
On the day of search, no weighment of finished goods or cenvatable inputs was done and shortage were arrived at on the basis of eye estimation and average weight. At any rate, it is settled law that shortage in itself does not lead to the conclusion of clandestine removal as held by this Hon‟ble Court in the cases of K.L. Steels Ltd vs. CCE, Meerut 1998 (100) E.L.T. 406 (Tribunal), Sisco Industries Ltd vs. CCE, Allahabad 2013 (297) E.L.T. 457 (Tri. - Del) and Roll Tubes Ltd vs. CCE, Kanpur 2013 (294) E.L.T. 458 (Tri. - Del).
Further, mere deposit of Rs.4,99,024/- by Appellant, cannot lead to inference of admission by Appellant, in absence of any evidence on record to show that weighment of stock was done on the date of search. H. ALLEGED ADMISSION OF SHRI TARUN AGGARWAL, DIRECTOR-
It is submitted that at no point of time, Shri Tarun Aggarwal, admitted regarding parallel invoices or regeneration of invoices or any clandestine removal and therefore finding to the contrary in the Order-in-Original is incorrect.
21 APPEAL Nos. E/1058-1060/2012-EX[DB]
In his statement dated 16.10.2007 i.e. on the date of search, he could not explain the alleged shortage, as the shortage was alleged on eye estimation basis without any weighment. Similarly, in his statement dated 6.2.2008, he stated that Shri Vinod Kumar Mishra was working for KIL from the last 3 to 4 months only and therefore the findings recorded in Order-in- Original on the strength of statement of Shri Vinod Kumar Mishra for the period 2006-07 is without any basis.
At any rate, the admission, if any, of Shri Tarun Aggarwal, is in respect of Invoice No. 455, 456 & 457, all dated 15.10.2007, in respect of which, burden was on Revenue to show that confession was voluntary and not obtained as an outcome of threat etc., which has not been discharged in the present case. Reliance is placed on Para 34 of Vinod Solanki vs. UOI 2009 (233) ELT 157 SC.
J. ABSENCE OF SUFFICIENT AND TANGIBLE EVIDENCE TO PROVE CLANDESTINE REMOVAL-
It is a settled law that clandestine removal is a serious charge, which is required to be discharged by production of sufficient and tangible evidence in the nature of purchase of raw material, use of electricity, additional labour, sale of final product, clandestine removal, mode and flow of funds etc., as held in Para 12 22 APPEAL Nos. E/1058-1060/2012-EX[DB] of Continental Cement Company vs. UOI 2014 (309) ELT 411 (All).
In the present case, Revenue has failed to produce any cogent and tangible evidence and clandestine removal has been alleged only on the ground of presumptions and assumptions, which is clear from the fact that no enquiry has been conducted regarding electricity consumption, additional labour, excess purchase of raw material, flow back of consideration etc. K. PENALTY OF MANAGING DIRECTOR/DIRECTOR WRONGLY IMPOSED-
Learned Commissioner has imposed a penalty of Rs. 10,00,000.00/- each on Shri J.P. Aggarwal M.D. and Shri Tarun Aggarwal Director under Rule 26 of Central Excise Rules, 2002. It is submitted that in the impugned order nor in the show cause notice there is any evidence to show that these persons have in any way been involved in removing transporting, etc., of the offending goods liable to confiscation. In fact no goods have been seized and ordered to be confiscated. It is a settled law that if there is no confiscation, penalty is not to be imposed under Rule 26 of Central Excise Rules, 2002. Therefore, penalty under Rule 26 is not warranted.
4. Heard the learned AR, who has submitted the following grounds:-
23 APPEAL Nos. E/1058-1060/2012-EX[DB]
(a) The Authorized Signatory of the appellants is a responsible person and his confessional statement about the retrieved data for the year 2006-07 and 2007-08 satisfies the conditions of certificate under sub Section (4) of the Section 36B of Central Excise Act, 1944. He has signed the retrieved data and also explained the details. Further, Shri Tarun Aggarwal, Director has also signed the said data during statement dated 06.02.2008 without offering any comments.
Neither the director nor the authorized signatory disowned the contents of retrieved data. The signing of the data by Director of the appellants without any comments implies certification under sub Section (4) of Section 36B.
(b) Lack of expert opinion regarding capability of CPU to generate same number of invoice repeatedly.
The regeneration of invoices by computer is specifically admitted by Shri Vinod Kumar Mishra, Authorized Signatory and Shri Tarun Aggarwal, Director in their statements. The file resumed at sl.no.24 of Annexure C to the Panchnama dated 16.10.2007 contained invoices which had been regenerated after dispatch of the goods to various parties, subsequent to the receipt back of the original invoices. Invoices bearing serial Nos.455, 456 and 457 were also found in the file. Hence, lack of expert opinion regarding regenerating capacity of the computer to generate same number of invoice repeatedly does not affect the findings of Order-in-Original/investigation.
24 APPEAL Nos. E/1058-1060/2012-EX[DB]
(c) Regarding cross-examination of officers. The request for cross-examination of Shri Vinod Kumar Mishra, Authorized Signatory and of Shri Virendra Kumar Sharma was made by appellants. The request was acceded and notices were sent to concerned persons several times. However, vide their letter date 12.09.2011, the appellants changed their stand and instead of the cross-examination of persons desired earlier, cross-examination of the officers has been desired.
5. After having gone through the case record as reflected in appeal paper book and the submissions from both the sides and the rulings by Hon‟ble High Courts and Supreme Court relied upon by the learned counsel for the appellants we note that the Hon‟ble Allahabad High Court has ruled in the case of Commissioner of Central Excise, Meerut-I vs. Parmarth Iron Pvt. Ltd. (supra) in Para 16 that if Revenue chooses to rely on the statements then in that event the persons whose statements are relied upon have to be made available for cross examination for the evidence or statements to be considered. We further note that Hon‟ble Supreme Court in the case Bareilly Electricity Supply Co. Ltd. (supra) in Para 14 has ruled that if a letter or other document is produced to establish some evidence which is relevant to the enquiry the writer must be produced or his affidavit in respect thereof be filed and opportunity accorded to the Opposite Party who challenges this fact and that the same is in accordance with 25 APPEAL Nos. E/1058-1060/2012-EX[DB] the principle of natural justice as also in accordance with the procedure under order 19 of the Civil Procedure Code and the Evidence Act. We further note that Hon‟ble Delhi High Court in the case of Commissioner of Central Excise, Delhi-I vs. Vishnu & Co. Pvt. Ltd. in Para 42 has held to the effect that the responsibility is on the prosecution to produce prosecution witnesses for cross examination. We further note that the Hon‟ble Allahabad High Court has ruled in the case of Continental Cement Company vs. Union of India (supra) in Para 12 as follows :-
"12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects:
(i) To find out the excess production details.
(ii) To find out whether the excess raw materials have been purchased.
(iii) To find out the dispatch particulars from the regular transporters.
(iv) To find out the realization of sale proceeds.26 APPEAL Nos. E/1058-1060/2012-EX[DB]
(v) To find out finished product receipt details from regular dealers/buyers.
(vi) To find out the excess power consumptions."
6. We further note that Section 45A of Evidence Act, 1872 requires opinion of examiner of electronic evidence in respect of any matter relating to any information stored in any computer resource. On the back ground of above stated provisions of law and rulings by Hon‟ble High Court and Supreme Court we find that Shri Vinod Kumar Mishra and the other transporters were not produced for cross examination by the appellant and that it was responsibility of Revenue to produce them for cross examination since same were prosecution witnesses. As ruled by Hon‟ble Allahabad High Court it can be inferred that unless the witnesses were cross examined statements given by them cannot be relied as evidence for any adjudication. In the present case, therefore, the statements given by Shri Vinod Kumar Mishra and other transporters cannot be relied for arriving at any decision against the appellant. Further the contention of appellant that sub Section (4) of Section 36B has not been complied with in respect of computer printouts also is tenable in law. Further the allegations were that the computer printouts were perused and signed by Shri Vinod Kumar Mishra and the contention of appellant was that Shri Vinod Kumar Mishra was not produced for cross examination. Therefore, the printouts are doubtful as evidence. We further 27 APPEAL Nos. E/1058-1060/2012-EX[DB] note that in the absence of expert opinion by examiner of electronic evidence the allegations that the computer was capable of repeatedly generating invoices with the same number is not established beyond doubt. We further note that for on examination of allegations in respect of clandestine removal on the criteria laid down by Hon‟ble High Court as referred to above in the case of Continental Cement Company the allegations of clandestine removal are not established in the present case. We further note that the learned counsel for the appellants has submitted that there was no weighment of finished goods or inputs and the estimation was on the basis of eye estimation and the same has not been rebutted by Revenue through their submission, therefore, we hold that there was no shortage of either raw materials or the finished goods.
7. In view of the above discussion we hold that allegations made against the appellant are not sustainable. We, therefore, set aside the impugned order and allow the appeals with consequential benefit to the appellants as per law.
(Pronounced in Court on 30.10.2018)
Sd/- Sd/-
(Anil G. Shakkarwar) (Archana Wadhwa)
Member (Technical) Member (Judicial)
Ankit