Custom, Excise & Service Tax Tribunal
J J Extrusionpvt Ltd vs -Jamshedpur Commissionerate on 24 February, 2025
1
Excise Appeal No. 75846 of 2022
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
Excise Appeal No.75846 of 2022
(Arising out of Order-in-Original No.22/Commissioner/2022 dated 02.08.2022 passed by
Commissioner of CGST & Central Excise, Jamshedpur)
M/s J.J.Extrusion Private Limited
(Plant -Chhota Sijulata Hesel, Tata Chaibasa Road, Rajnagar, Near Navodaya Vidyalaya,
Dist.-Seraikela, Kharsawan,Jharkhand-831 112)
Appellant
VERSUS
Commissioner of Central Excise & Service Tax, Jamshedpur
(Outer Circle Road, Bistupur, Jamshedpur-831 001)
Respondent
APPERANCE :
S/Shri Nitin Pasari, Anand Kumar Pasari, Akshat Agarwal & Parikshit Karmakar, all Advocates for the Appellant S/Shri Sameer Chitkara (Commissioner) & P.K.Ghosh, Authorized Representative for the Respondent CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR.RAJEEV TANDON, MEMBER (TECHNICAL) FINAL ORDER NO.75422/2025 DATE OF HEARING : 11 DECEMBER 2024 DATE OF PRONOUNCEMENT : 24 FEBRUARY 2025 Per Ashok Jindal :
The appellant is in appeal against the impugned order
2. The facts of the case are that the appellant is engaged in the manufacturing of excisable goods of Aluminum Profiles (Aluminum Section of different shape and size) and cleared the goods on payment of duty.
2.1 An intelligence was collected and developed by the officers of Preventive Branch of the Jamshedpur Commissionerate on the basis of which a search operation was carried out at the office as well as factory premises on 21.03.2017. In the course of search and seizure the Officers of Central Excise 2 Excise Appeal No. 75846 of 2022 & Service Tax purportedly seized 3 pen drives and 2 computers for the officer premises and printouts from one of the said computers were taken. Similarly a laptop was also seized from the premises of the factory. During the course of investigation, statements were also recorded of Shri Gautam Kumar Jaiswal, Director, Sri Pankaj Dubey, Smt. Shreya Sarkar and other officers and stalls of the Appellant Company under Section 14 of the Act.
2.2 The Revenue relied upon the statements of Shri Pankaj Dubey, wherein he has mentioned that he was looking after the works of liasoning, banking and realization of payments from the parties and has no knowledge about the contents of pen drive and computer data as he does not know how to work on a computer. Ms.Shreya Sarkar and Shri Gautam Kumar Jaiswal can only explain about the nature of the documents.
2.3 The statement of Smt.Shreya Sarkar, Accountant of Appellant Company, was also recorded on 21.03.2017. In her statement, she gave the details of the raw material used in the factory, from where it was purchased and the payments of the same were made full in advance through cheques/ NEFT/ RTGS/ e- payments only. She also stated that the purchase orders for raw materials were made on the directions of Shri Gautam Kumar Jaiswal, Director of the Appellant Company as he is the decision maker of the Company. Further she stated that the computers and pen drives seized from the office premises are used for company purposes only and contained data and information related to the Appellant Company only and out of the 3 pen drives seized, one of them is her personal i.e. i-ball pen drive. She also stated that the note books are maintained by the directors of the company and the Creditor/Debtor ledger is maintained by the accountant, Shri Arun Chaudhary.
3Excise Appeal No. 75846 of 2022 2.4 The statement of Shri P. K. Jha, Factory Supervisor of the Appellant, was also recorded on 21.03.2017, who stated that the dispatch of the goods were done as per the directions given by the factory office at Jamshedpur and all the management related to production, clearance, Central Excise and dispatch invoices are prepared by the Accountant Shri Arun Chaudhary and also gave his address and phone number. He also stated that the Production report is prepared by Shri Guddu Kumar, who is the Production Supervisor of the factory and confirmed the same. Further he stated that the seized laptop and documents belongs to the Appellant Company.
2.5 The statement of Shri Gautam Kumar Jaiswal, Director of Appellant Company, was also recorded on 30.03.2017. In his statement, he requested the Department to provide him with the documents and data of computers seized by them for updating Central Excise returns and smooth functioning of business activities. Further on being asked he manufacturing final product and maintenance of RG-1 Register. He was asked to put his signature on the seizure memos and annexures thereto. Further he was asked to go through the statements of Shri Pankaj Dubey and Ms. Shreya Sarkar. He agreed to the statemerita made by them and put his signature there as a token of confirmation He also admitted that the returns of ER-1 has been filed up to December, 2015 only as from that time he could not file the same due to problems with his Chartered Accountant and will be filed as soon as they get the copies of the seized documents. He also submitted that the clearance of excisable goods is done only under the cover of Central Excise Invoices and named some of his consignees. Further, he stated by him that since the Accountant namely Arun Chaudhary left the job due to some problems with the Directors, RG 23 A Part-II could not be maintained after Sl. No. 210.
4Excise Appeal No. 75846 of 2022 2.6 The consignees of the Company were summoned and their statements were also recorded on 24.04.2017. Shri Amar Pratap, Proprietor of M/S Aman Aluminum & Glass in his statements accepted that proper search was conducted at his business premise and the seized documents were recovered from there, wherein a ledger was found. He also stated that they have received the goods from Appellant Company and the entries for the same have been made in the ledger. Further, he was asked to tally the entries from the ledger seized from his office and the party ledger contained in the pen drive bearing File No.J.J./57/2/2017 and on doing the same he stated that the entries relating to payments match, he was asked to go through the ledger seized from his office. Certain figures were written, there for which he stated that those were the actual quantity of aluminum sections purchased and received by them and actual payment made by them to the Appellant Company. It was also found that certain pages was torn out from the seized ledger in response to which he stated that it was torn by him only as it contained wrong entries.
2.7 Md.Manzurul Hassan, Partner of M/s Hassan Brothers, in his statement dated 25.04.2017 stated that they purchased Aluminum Sections from the Appellant Company bearing Invoice No. 109, 127, 188 and 214 dated 15.11.2016, 03.12.2016, 12.01.2017 and 21.02.2017. They were asked to reproduce the bank statements pertaining to the period 01.09.2016 to 28.02.2017 to which he requested to present in a week. On being asked to tally the payment details from the party ledger at page 34 recovered from the pen drive- bearing file no J.J./57/2/2017 he stated and admitted that he figures match and also admitted that the quantity received and amount paid by them were the same as reflected in the party ledger aforementioned and invoices were issued for less quantity and less amount.
5Excise Appeal No. 75846 of 2022 2.8 On the basis of the statements and the documents recovered and printouts taken from the Pen Drives, it was alleged that the appellant is engaged in the clandestine manufacture and clearance of goods without payment of duty.
2.9 Therefore, a show-cause notice dated 23.12.2020 was issued to the appellant for the period September, 2015 to March, 2017 for a demand of Rs.2,96,52,134/- along with interest and to impose penalty on the appellant.
2.10 The matter was adjudicated and the demand proposed in the show-
cause notice was confirmed.
2.11 Aggrieved from the said order, the appellant is before us.
3. The ld.Counsel appearing on behalf of the appellant submitted that in this case, the demand has been raised against the appellant on the basis of documents recovered from the factory premises and pen drives recovered from the employees of the appellant company and thereafter, the printouts were taken thereof without following the procedure laid down under Section 36B of the Central Excise Act, 1944. Therefore, the demand against the appellant is not sustainable.
3.1 He also submitted that the statements recorded during the course of investigation, were never examined in Chief nor allowed to cross-examination to the appellant, therefore, the said statements are not admissible evidence in terms of Section 9D of the Central Excise Act, 1944.
3.2 Further, it is his submission that during the course of investigation, the name of the buyers, the suppliers of raw materials, the transporters were available, but no proper investigation was done by the Department from them to establish the clandestine manufacture and clearance of goods or excess received of raw materials.
6Excise Appeal No. 75846 of 2022 3.3 He further submitted that no evidence has been brought on record of excess consumption of electricity and clandestine manufacture and clearance of goods. He submitted that although the investigation was completed in 2017 and thereafter, after three (3) years again, the statement was recorded and the show-cause notice was issued, which is highly time barred.
Therefore, the impugned order is to be set aside.
4. On the other hand, the ld.A.R. for the Revenue, reiterated the findings of the impugned order.
5. Heard both the parties and considered the submissions.
6. We find that to establish the clandestine manufacture and clearance of goods, this Tribunal in the case Arya Fibre Private Limited Vs. Commissioner of Central Excise, Ahmedabad II reported in 2014 (311) ELT 529 (Tri.-
Ahmedabad) has laid down to establish the clandestine removal of goods, wherein this Tribunal has held as under :
"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 the following :
(i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions;
(ii) Evidence in support thereof should be of :
(a) raw materials, in excess of that contained as per the statutory records;
(b) instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty;
(c) discovery of such finished goods outside the factory;7
Excise Appeal No. 75846 of 2022
(d) instances of sale of such goods to identified parties;
(e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him;
(f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty;
(g) statements of buyers with some details of illicit manufacture and clearance;
(h) proof of actual transportation of goods, cleared without payment of duty;
(i) links between the documents recovered during the search and activities being carried on in the factory of production; etc."
As none of the said procedure has been followed to establish the clandestine manufacture and removal of goods, in that circumstances, the charge of clandestine manufacture and removal of goods is not sustainable. Moreover, whole of the case hatches on printouts obtained from the pen drive, which was relied upon during the course of investigation. Without following the procedure under Section 36B of Central Excise Act, 1944, we find that whether the said documents recovered from the pen drive and computer, are admissible or not ?
7. The said issue has been examined by this Tribunal in the case of M/s Trikoot Iron & Steel Casting Limited vs. Additional Director General (Adjn.) Directorate General of GST Intelligence (Adjudication Cell) in Excise Appeal No.55779 of 2023 vide Final Order No.58546 of 2024, wherein this Tribunal held as under:-
"15. To examine the issues that have been raised, it would be necessary to first examine section 36B of the Central Excise Act. It is reproduced:8
Excise Appeal No. 75846 of 2022 "Section 36B- Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence.
(1) Notwithstanding anything contained in any other law for the time being inforce,-
(a) a microfilm of a document or the reproduction 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 asa ―computer printout‖).
(2) The conditions referred to in sub-section (1) in respect of a computer printout shall be the following namely:-
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 anyactivities regularly carried on over that period by the person having lawful control over the use of the computer,
(a) 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 isderived;
(b) throughout the material part of the said period, the computer was operating 9 Excise Appeal No. 75846 of 2022 properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and
(c) the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of the saidactivities.
(3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether-
(a) by a combination of computers
operating over that period;or
(b) by different computers operating in
succession over that period;or
(c) by different combinations of computers
operating in succession over that
period;or
(c) in any other manner involving the
successive operation over that period, in whatever order, of one or more computers and one or more combination ofcomputers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer;and references in this section to a computer shall be construed accordingly.
(4) In any proceedings under this Act and the rules made thereunder where it is desired to give a statement in evidence by virtue of this section, a 10 Excise Appeal No. 75846 of 2022 certificate doing any of the following things, that is to say,-
(a) identifying the document containing the statement and describing the manner in which it wasproduced;
(b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by acomputer,
(c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to be to the best of the knowledge and belief of the person statingit.
(5) For the purposes of this section,- (a) Information shall be taken to be
supplied to 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 11 Excise Appeal No. 75846 of 2022 takento be supplied to it in the course of those activities;
(c) a document shall be taken to havebeen produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriateequipment.
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 anyotherprocess.‖
15. Section 3 of the Evidence Act defines "document" asfollows:
―Document.--―Document‖meansanymatter expressed or described upon any substance by means of letter, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording thatmatter.‖
16. "Evidence" in section 3 of the Evidence Act is defined as follows:
"Evidence."--"Evidence‖meansandincludes--(1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact underinquiry;
Such statements are called oral evidence;
(2) all documents including electronic records produced for the inspection of the Court; such documents are called documentaryevidence.‖ 12 Excise Appeal No. 75846 of 2022
18. Section 36B of the Central Excise Act deals with cases where any document is required to be produced as an evidence in proceedingsundertheCentralExciseActandtheRulesframed thereunder. Such certificate should be signed by a person occupying a responsible position in relation to the operation of the device in question or the management of the relevant activities. In such a case it shall be evidence of any matter which is stated therein. It specifically mandates production of a certificate:
(i) identifying the document containing the statement and describing the manner in which it wasproduced;
(ii) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by acomputer,
(iii) dealing with any of the matters to which the conditions mentioned in sub-section (2)relate.
19. The Central Excise Act contains a specific provision that describes the manner in which the admissibility of computer print outs will be accepted as evidence in proceedings initiated under the Central ExciseAct.
20. In respect of section 65B of the Evidence Act, which is parimateria to the provisions of section 36B of the Central Excise Act, it would be relevant to refer to the observations made by the Supreme Court in Anvar P. V. The Supreme Court, held that evidence relating to electronic record shall not be admitted in evidence unless the requirement of section 65B of the Evidence Act is fulfilled. The relevant paragraphs of the said judgment arereproduced:
―13.Anydocumentaryevidencebywayofan 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 13 Excise Appeal No. 75846 of 2022 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 EvidenceAct:
(i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of thatcomputer;
(ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the saidactivity;
(iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents;and
(iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the saidactivity.14
Excise Appeal No. 75846 of 2022
14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedingspertainingtoanelectronicrecord,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
wasproduced;
(c) The certificate must furnish the
particulars of the device involved in the production of thatrecord;
(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 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 ofjustice.
15Excise Appeal No. 75846 of 2022
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 electronicevidence.
17. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65B ofthe Evidence Act are not complied with, as the law now stands in India.
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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 NavjotSandhu 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 certificate in terms of Section 65B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, isinadmissible.
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24. The situation would have been different had the appellant adduced primary evidence, by making available in evidence, the CDs used for announcement and songs. Had those CDs used for objectionable songs or announcements been duly got seized through the police or Election Commission and had the same been used as primary evidence, the High Court could have played the same in court to see whether the allegations were true. That is not the situation in this case.
16Excise Appeal No. 75846 of 2022 The speeches, songs and announcements were recorded using other instruments and by feeding them into a computer, CDs were made therefrom which were produced in court, without due certification. Those CDs cannot be admitted in evidence since the mandatory requirements of Section 65B of the Evidence Act are not satisfied.
It is clarified that notwithstanding what we have stated herein in the preceding paragraphs on the secondary evidence on electronic record with reference to Sections 59, 65A and65BoftheEvidenceAct,ifanelectronicrecordas such is used as primary evidence under Section 62 of the Evidence Act, the same is admissible in evidence, without compliance of the conditions in Section 65B of theEvidenceAct.‖
21. The aforesaid judgment of Supreme Court in Anvar P. V. was followed by the Supreme Court in ArjunPanditraoKhotkarvs.
5KailashKushanraoGorantyal& others though with a slight modification. The Supreme Court held that if the original device is not produced, then electronic record can be produced in accordance with section 65B (1) of the Evidence Act together with the requisite certificate under section 65B (4). The relevant portions of the judgment of the Supreme Court are reproducedbelow:
―18.Sections65Aand65BoccurinChapterVofthe Evidence Act which is entitled ―Of Documentary Evidence‖. Section 61 of the Evidence Act deals with the proof of contents of documents, and states that the contents of documents may be proved either by primary or by secondary evidence. Section 62 of the Evidence Act defines primary evidence as meaning the document itself produced for the inspection of the court. Section 63 of the Evidence 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 17 Excise Appeal No. 75846 of 2022 hereinafter mentioned. Section 65 of the Evidence Act is important, andstatesthatsecondaryevidencemaybegivenofthe 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
5. AIR 2020 SC 4908 electronic records being proved in accordance with the provisions of Section 65B. Section 65B speaks of ―admissibility‖ of electronic records which dealswith―existence‖and―contents‖ofelectronic 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 marginal note to Section 65A indicates that ―special provisions‖ as to evidence relating to electronic records are laid down in this provision. The marginal note to Section 65B then refersto ―admissibility of electronic records‖.
21. Section 65B(1) opens with a non-obstante clause, and makes it clear that any information that is 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, and shall be admissible in any proceedings without further proof of production of the original, as evidence of the contents of the original or of any facts stated therein of which direct evidence would be admissible.Thedeemingfictionisforthereasonthat 18 Excise Appeal No. 75846 of 2022 ―document‖asdefinedbySection3oftheEvidenceAct does not include electronic records.
22. Section 65B(2) then refers to the conditions that must be satisfied in respect of a computer output, and states that the test for being included in conditions 65B(2(a)) to 65(2(d)) is that the computer be regularly used to store or process information for purposes of activities regularly carried on in the period in question. The conditions mentioned in sub- sections 2(a) to 2(d) must be satisfied cumulatively.
23. Under Sub-section (4), a certificate is to be produced that identifies the electronic record containing the statement and describes the manner in which it is produced, or gives particulars of the device involved intheproduction of the electronic record to show that the electronic record was produced by a computer, by either a person occupying a responsible official position in relation to the operation of the relevant device; or a person who is in the management of "relevant activities" - whichever is appropriate. What is also of importance is that it shall be sufficient for such matter to be stated to the ―best of the knowledge and belief of the person stating it‖. Here, ―doing any of the followingthings...‖ must be read as doing all of the following things, it being well settled that the expression ―any‖ canmean ―all‖giventhecontext.xxxxxxx.
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30. Coming back to Section 65B of the Indian Evidence Act, subsection (1) needs to be analysed. The sub-section begins with a nonobstante clause, and then goes on to mention information contained 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;andifsuchconditionsaremet, 19 Excise Appeal No. 75846 of 2022 the ―document‖shallthenbeadmissibleinany proceedings. The words ―...without further proof or production of the original...‖ make it clear that oncethe deeming fiction is given effect by the fulfilment of the conditions mentioned in the Section, the ―deemed document‖nowbecomesadmissibleinevidence 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 the original "electronic
record" contained in the "computer" in which the original information is first stored - and the computer output containing such information, which then may be treated as evidence of the contents of the "original" document. All this necessarily shows that Section 65B differentiates between the original information contained in the "computer" itself and copies made therefrom
- the former being primary evidence, and the latter being secondary evidence.
32. Quite obviously, the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and 20 Excise Appeal No. 75846 of 2022 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‖, as defined, happens to be a part of a ―computer system‖ or―computernetwork‖(asdefinedintheInformation Technology Act, 2000) and it becomes impossible to physically bring such network or system to the Court, then the only means of proving information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). This being the case, it is necessary to clarify what is contained in the last sentence in paragraph 24 of 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...". This may more appropriately be read without the words "under Section 62 of the Evidence Act,...". With this minor clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to berevisited.
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72. The reference is thus answered by stating that:
(a) Anvar P.V. (supra), as clarified by us hereinabove, is the law declared by this Court on Section 65B of the Evidence Act. The judgment inTomasoBruno (supra), being per incuriam, does not lay down the law correctly. Also, the judgment in SLP (Crl.) No. 9431 of 2011 reported as Shafhi Mohammad (supra) and the judgment dated 03.04.2018 reported as (2018) 5 SCC 311, do not lay down the law correctly and are therefore overruled.21
Excise Appeal No. 75846 of 2022
(b) The clarification referred to above is that the required certificate under Section 65B (4) is unnecessary 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 62oftheEvidenceAct...‖isthusclarified;itisto 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 torevisited.
(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 production of certificate at the appropriate stage. These directions shall apply in all proceedings, till rules and directions under Section 67C of the Information Technology Act and data retention conditions are formulated for compliance by telecom and internet service providers.
(d) Appropriate rules and directions should be framed in exercise of the Information Technology Act, by exercising powers such as in Section 67C, and also framing suitable rules for the retention of data involved in trial of offences,their segregation, rules of chain of custody, stamping and record maintenance, for the entire duration of trials and appeals, and also in regard to preservation of the meta data to avoid corruption. Likewise, 22 Excise Appeal No. 75846 of 2022 appropriate rules for preservation, retrieval and production of electronic record, should be framed as indicated earlier, after considering the report of the Committee constituted by the Chief Justice's Conference in April,2016.‖ (emphasis supplied)
22. It transpires from the aforesaid two judgments of the Supreme Court in Anvar P. V. and ArjunPanditraoKhotkarthat:
(i) Any documentary evidence by way of an electronic record under the Evidence Act can be proved only in accordance with the procedure prescribed under section 65B of the Evidence Act. The purpose of this provision is to sanctify secondary evidence in electronic form generated by acomputer;
(ii) 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) of section 65 of the Evidence Act are satisfied, without further proof or production of theoriginal;
a. In view of the provisions of section 65(4) of the Evidence Act, a certificate must accompany the electronic record like computer printout,compact disc, video compact disc or pen drive, pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence;
b. Only if the electronic record is duly produced in terms of section 65B of the Evidence Act, that the question of its genuineness would arise. The Evidence Act does not contemplate or permitthe proof of an electronic record by oral evidence if the requirements of section 65B of the Evidence Act is not compliedwith;
23Excise Appeal No. 75846 of 2022 c. 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 d. This would not apply in a case where the appellant adduces primary evidence by making available in evidence the electronicrecords.
(iii) A Bench of the Tribunal in AgarvanshiAluminium Ltd.vs. Commissioner of Customs (I), Nhava Sheva6 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 andclearance of excisable goods. It was found by the Tribunal that printouts were neither authenticated nor recovered under Mahazar... The Tribunal rejected the printouts... Nothing contained in the printout generated by the PC can be admitted as evidence." In this case also, we find that the parallel situation as to the decision of Premier Instruments & Controls (supra).
13. Therefore, the printout generated from the PC seized cannot be admitted into evidence for non-
fulfillment of statutory condition of Section 36B of the Central Excise Act, 1944.‖ (emphasis supplied) __________________________ 24 Excise Appeal No. 76846 of 2022
6. 2014 (299) ELT 83 (Tri.-Mum)
(iv) In Popular Paints and Chemicals vs. Commissioner of Central Excise and Customs, Raipur7, the Tribunalobserved:
―15.2. Thus, it has been clearly laid down by the Supreme Court that the computer printout can be admitted in evidence only if the same are produced in accordance with the provisions of Section 65B (2) of the Evidence Act. A certificate is also required to accompany the said of computer printouts as prescribed under section 65B(4) of Evidence Act. It has been clearly laid down in para 15 of this judgment that all the safeguards as prescribed in Section 65B (2) & (4), 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 tempering, alteration, transposition, excision etc without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. We may add here that the provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act are parimateria.
15.3 It is evident from the appeal that the investigation officers while seizing has failed to take safeguards as mandated under section 36B of Central Excise Act. Further the cloning process of the hard-disks and retrieval of the data is admissible for want of cross examination of, Sh. VipulSaxena,who has done cloning of the data from the computer system. We, therefore, hold that the computer printouts cannot held to admissible evidence in terms of Section 36B (2) & (4) of the Central ExciseActinthecaseathand.‖ (emphasis supplied) ______________________ 25 Excise Appeal Nos.75846 of 2022
7. Excise Appeals No. 52738 of 2016 decided on 06.08.2018
25. In Global Extrusion Private Limited and Ors.
vs. Commissioner of Central Excise & ST, Rajkot 8, the Tribunal 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 said Act. It is also noted that none of the conditions under Section 36B (2) of the Act, 1944 was observed. In such situation, it is difficult to accept the printout as an evidence to support the allegations of the revenue. It is noted that the requirement of certificate under Section 36B (4) is also to substantiate the 26 Excise Appeal Nos.75846 of 2022 veracity of truth in the operation of electronic media. We also agree with the ______________________________________
8. Excise Appeal No. 11963 of 2016 decided on 15.01.2024 contention of the appellants that at the time of sealing and de-sealing of the external data storage device as well as the time of obtaining printouts therefrom, a certificate should have been obtained as per the provision of Section36B of the Act. No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellants was obtained by the department, the credibility of the computer printout getsvitiated.‖ (emphasis supplied)
26. The aforesaid decisions of the Tribunal, which are in the context of the provisions of section 36B of the Central Excise Act, hold that a printout generated from the personal computer that has been seized cannot be admitted in evidence unless the statutory conditions laid down in section 36B of the Central Excise Act are complied with. The decisions also hold that if the data is not stored in the computer but officers take out a printout from the hard disk drive by connecting it to the computer, then a certificate under section 36B of the Central Excise Act is mandatory.
27. The contentions advanced by learned counsel for the appellant and the learned authorized representative appearing for the department have to be examined in the light of the aforesaid observations.
28. What transpires from the two Panchnamas dated 04.07.2013 and 15.07.2013is:-
27Excise Appeal Nos.75846 of 2022
(i) The officers found that VaibhavGoel"removeda hard disc from his kitchen and tried to throw it away";
(ii) During the search, the officers found "three computer monitors installed in a room onthe first floor of rear side of the house above the dog house in which some documents and seven pen-drives were alsofound";
(iii) However, no CPU was found in the said room.
On being asked, MohitVaish, Accountant informed that there is "one desktop computer connected with the CPU, which is installed in the kitchen of the said premises and these monitors are working as extension of the computer in the kitchen and connected throughcable";
(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 harddisc";
(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 thekitchen;
(vii) The officers asked VaibhavGoel to connect the hard disc found in the corner near dog house with the CPU installed in thekitchen;
(viii) On the direction of VaibhavGoel, MohitVaish started the CPU after connecting the said harddisc;
(ix) On being asked by the officers to take the printouts of data captured in the software, VaibhavGoel informed that being a MS Dos based software, "printout cannot be taken without configuringprinter 28 Excise Appeal Nos.75846 of 2022 Canon LBP 2900B (available in the residence) with site key and license key‖.
(x) On being asked how these keys can be taken, VaibhavGoel stated that he would have to talk to an expert and on direction of VaibhavGoel, MohitVaish spoke to one Dua, who on mobile informed after some time that site key is 'EIGIDADEJTBO' and license key is'HJHTVOGSVQ'.
(xi) MohitVaish configured the printer and started taking printouts of sale, purchase and cash data, which is stated to contain both accounted and unaccounted transaction;
(xii) Some printouts from one of the pen drive Toshiba 4GB that was recovered were also taken after connecting the same with theCPU;
(xiii) Since the whole process of taking of printouts of the data in the CPU and the pen-drive was taking time and printing stated mal-
functioning, the officers discontinued the process of taking printout and seized the three Hard disks and seven pen drives properly. Details of the seized hard discs and pen drives were mentioned in Annexure-A to the Panchanama;
(xiv) Subsequently, on 15.07.2013 another
Panchnama was drawn. The Panchnama
records that the hard drive mentioned at serial no. 1 was attached with the CPU and printers resumed from the residence of VaibhavGoel on 04.07.2013 and printouts of the data stored in the hard drive and Toshiba 4GB pen drive weretaken;
(xv) The other hard drives and pen drives did not contain any relevant data and so printouts were nottaken.
29. It is not in dispute that the hard disk from which the 29 Excise Appeal Nos.75846 of 2022 printouts were subsequently taken was not found installed in the CPU. The Panchnama drawn on 04.07.2013 records that the officers found that VaibhavGoel had removed a hard disc from his kitchen and had tried to throw it away. The panchnama does not mention that any officer had seen VaibhavGoel actually remove the hard disc from the CPU. It only records that VaibhavGoel had removed a hard disc from the kitchen and had tried to throw it away. At a different place, the panchnama records that the officers conducted a thorough search of the entire residential premises and found one hard disc hidden in a corner lying near the dog house. What needs to be noticed is that if VaibhavGoel had thrown the hard disk, it would not have been found hidden in a corner of a room near the dog house. The seven pen drives were also recovered from a room on the first floor of the rear side of the house. In the said room three computer monitor were also installed without a CPU. The officers 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 VaibhavGoel was seen removing the hard disk from the CPU and indeed it would not have been possible for VaibhavGoel to remove this hard disk from the CPU in the presence of all the officers and throwitaway.Thereisnothingontherecordtolinktheharddiskto 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 USBinterface.
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 that the CPU did not contain the harddisk. The hard disk was in fact picked up from the corner 30 Excise Appeal Nos.75846 of 2022 of the room. No attempt was made by the department to admit the hard disk and the pen drive in evidence. The required certificate under section 36B (4) of the Central Excise Act was also not produced. Thus, no reliance can be placed on the printouts, in view of the two judgments of the Supreme Court in Anvar P. V. and ArjunPanditraoKhotkarand the three decisions of the Tribunal in AgarvanshiAluminium, Popular Paints and Chemicals and GlobalExtrusion.
33. The adjudicating authority, on its own, examined the oral evidence on the points required to be stated in the certificate. This is not permissible in law. The confirmation of demand is based only on the printouts taken after connecting the hard disk and the pen drive to thecomputer.
34. It is, therefore, not possible to accept the contention advanced by the learned authorized representative appearing for the department that panchnama itself should be treated as a certificate or thattheadjudicatingauthoritywasjustifiedinitselfexamining whether the conditions set out in section 36B (4) of the Central Excise Act had been satisfied.
35. The impugned order dated 30.06.2021 passed by the adjudicating authority, therefore, cannot be sustained. It is, accordingly, set aside in so far as the appellant is concerned and the appeal is allowed.‖
8. As in this case, no such procedure has been followed in terms of Section 36B of the Act, therefore, following the decision of this Tribunal in the case of Trikoot Iron & Steel Casting Limited (supra), the printouts taken from the computer, are not admissible evidence.
9. Further, we take note of the fact that the statements recorded during the course of adjudication, are not examined in Chief and allowed cross objection to the appellant, therefore, the same are not 31 Excise Appeal Nos.75846 of 2022 admissible evidence as held by this Tribunal in the case of Narsingh Ispat Limited & Other Vs. Commissioner of CGST & Central Excise, Jamshedpur vide Final Order No.75556-75557/2024 dated 21 March 2024, wherein this Tribunal has observed as under :
"8.1. The Appellant submits that the statement recorded by a Gazetted officer is relevant in an adjudication proceeding only if the procedure prescribed under Section 9D of the Central Excise Act is followed. For the sake of ready reference the said Section is reproduced below:
"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 15 Appeal No.: E/76044 & 76046/2023-DB proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, -
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
(2) The provision of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court."
8.2. The Appellant submits that in terms of Section 9D(2), the person who made the statement is to be examined as a witness by the adjudicating authority before relying on his statement.
32Excise Appeal Nos.75846 of 2022 Since, the adjudicating authority has not followed the procedure prescribed under Section 9D, he contended that the statements cannot be relied upon to confirm the demands. In support his claim, the Appellant relied upon the following decisions:
(i) Ambica International Vs. Union of India [2016-TIOL1238-HC-
P&H-CX] (ii) G-Tech Industries Vs. Union of India [2016 (339) E.L.T. 209 (P&H)] 8.3. We observe that the decisions cited by the appellant support their argument. The relevant paragraphs of the decision in the case of M/s. G-Tech Industries (supra) are reproduced below: -
"13. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two 16 Appeal No.: E/76044 & 76046/2023-DB 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) (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 subsection are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory."
33Excise Appeal Nos.75846 of 2022 8.4. We observe that the adjudicating authority has not followed the procedure prescribed under Section 9D, accordingly, we hold that the statements cannot be relied upon to confirm the demands. Thus, the answer to question number (iii) raised at paragraph 7 (supra) is in the negative."
10. We, therefore, hold that the statements recorded during the course of investigation, were not tested in terms of Section 9D of the Central Excise Act, 1944, therefore, the same are not admissible evidence to establish the clandestine manufacture and clearance of goods.
11. In view of the above observations, we hold that the charge of clandestine manufacture and clearance of goods is not sustainable on the basis of faulty investigation. Therefore, the charge of clandestine manufacture and removal of goods is set aside.
12. Consequently, the demand of duty is also not sustainable.
Accordingly, the demand of duty is also set aside.
13. As there is no demand is sustainable against the appellant, therefore, no penalty can be imposed on the appellant.
14. In view of this, we set aside the impugned order and allow the appeal with consequential relief, if any.
(Pronounced in the open court on 24.02.2025) (Ashok Jindal) Member (Judicial) (Rajeev Tandon) mm Member (Technical)