Custom, Excise & Service Tax Tribunal
Geetham Steels Pvt Ltd vs Salem on 21 February, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
i. Excise Appeal No. 40947 of 2015
(Arising out of Order-in-Original No.13/2014 - C. Ex. dated 29.12.2014
passed by Commissioner of Central Excise, Salem)
M/s. Geetham Steels Pvt Ltd .... Appellant
S.F. No. 272/4D and 4H,
Vasanthapuram Village,
Nallur, Namakkal - 637 001.
Versus
Commissioner of GST & Central Excise, ....
Respondent
No.1, Foulks Compound,
Anai Road, Salem
ii. Excise Appeal No. 40950/2015 C. Natarajan
iii. Excise Appeal No. 40948/2015 Rani Deivanai
iv. Excise Appeal No. 40949/2015 N. Kirubakaran
v. Excise Appeal No. 40625/2015 Sri Kamalaganapathy Steel
Rolling Mills Ltd.,
vi. Excise Appeal No. 40372/2015 Ran India Steels Pvt Ltd
vii. Excise Appeal No. 40657/2015 Dindigul Steel Rolling Mills Pvt
Ltd
viii. Excise Appeal No. 40566/2015 Attur Steels Pvt Ltd
ix. Excise Appeal No. 40611/2015 NGA Steels Pvt Ltd
x. Excise Appeal No. 40721/2015 Salem Alloys
xi. Excise Appeal No. 40722/2015 S. Sidesh Kumar
xii. Excise Appeal No. 41848/2015 Salem Automech
xiii. Excise Appeal No. 40636/2015 Sri Vela Smelters Pvt Ltd
xiv. Excise Appeal No. 40585/2015 Sakthi Ferro Alloys India Pvt Ltd
xv. Excise Appeal No. 40682/2015 Akshara Industries Ltd
APPEARANCE:
Shri S. Durairaj, Advocate (Sl. Nos. i to v)
Shri M. Karthikeyan, Advocate & Ms. P. Varshini, Advocate (Sl. Nos. vi & vii)
Shri S. Venkatachalam, Advocate (Sl. No. viii)
Shri M.A. Mudimannan, Advocate (Sl. No. ix)
Shri M. Kannan, Advocate (Sl. Nos. x, xi, xii)
Shri R. Balachandar, Advocate (Sl. No. xiii)
None for Sl. Nos. xiv & xv Present for the Appellant
Shri Sanjay Kakkar and Shri Anoop Singh, Authorised Representatives for the
Respondent
CORAM:
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON'BLE MR. AJAYAN T.V. MEMBER (JUDICIAL)
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FINAL ORDER No.40260-40274/2025
DATE OF HEARING: 03.12.2024
DATE OF DECISION 21.02.2025
Per AJAYAN T.V.
The issues involved in these following appeals being same and
connected, and arising out of the same Order in Original No.
13/2014-Cex dated 29.12.2014, these appeals were heard together
and are disposed of by this common order.
Sl. Appeal No. Name of the Duty Penalty (in
No. Appellant Demanded (in Rs.)
Rs.)
1 E/40947/2015 Geetham Steels Pvt 1,70,97,731/- 1,70,97,731/-
Ltd
2 E/40950/2015 C. Natarajan 25,00,000/-
3 E/40948/2015 Rani Deivanai 5,00,000/-
4 E/40949/2015 N. Kirubakaran 5,00,000/-
5 E/40625/2015 Sri Kamalaganapathy 4,60,967/- 4,70,967/-
Steel Rolling Mills
Ltd.,
6 E/40372/2015 Ran India Steels Pvt 4,24,000/-
Ltd
7 E/40657/2015 Dindigul Steel Rolling 97,000/-
Mills Pvt Ltd
8 E/40566/2015 Attur Steels Pvt Ltd 4,22,000/-
9 E/40611/2015 NGA Steels Pvt Ltd 85,000/-
10 E/40721/2015 Salem Alloys 1,20,000/-
11 E/40722/2015 S. Sidesh Kumar 1,20,000/-
12 E/41848/2015 Salem Automech 50,000/-
13 E/40636/2015 Sri Vela Smelters Pvt 1,86,000/-
Ltd
14 E/40585/2015 Sakthi Ferro Alloys 80,000/-
India Pvt Ltd
15 E/40682/2015 Akshara Industries 75,000/-
Ltd
2. Shorn of unnecessary details, the facts to the extent they are
relevant for consideration, are that M/s Geetham Steels Pvt Ltd,
(hereinafter referred to as GSPL) were holding central excise
registration as manufacturers of M.S Ingots. On intelligence
gathered that GSPL were evading payment of central excise duty
by clandestinely clearing M.S. ingots manufactured, without
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payment of duty, the factory and office premises of GSPL were
searched by the officers of DGCEI on 28.09.2010, which resulted
in recovery of incriminating records, seizure of one pen drive, one
computer and a hard disk and various other incriminating
documents. On the same day, i.e. on 28.09.2010, the premises of
M/s. Senthil Steel of Shri. A. Selvaraj, Scrap merchant and the
premises of M/s Bakyalakshmi Metal Mart of Shri. K. Murugesan,
Scrap Merchant were searched and various incriminating
documents seized. Search conducted on 28.09.2010 at the
premises of the managing director of GSPL Shri. C. Natarajan
resulted in the seizure of certain incriminating records and two
savings bank pass books of two different accounts of Union Bank
of India. Search was also conducted on 28.09.2010 at the
residential premises of one Shri. P. Kumar who had previously
worked as Accountant in GSPL. During the course of the search of
the premises, some chits with details regarding cash expenditure
incurred, two pen drives were found and seized. As there was no
computer at the residential premises of Shri. Kumar, the officers
along with Shri Kumar and the witnesses browsed the contents of
the two pen drives in a nearby browsing center and print outs
were taken from the pen drives, and put in a box file.
3. On the day of search operations, i.e. 28.09.2010, statements of
various persons concerned in the respective premises were recorded
under Section 14 of the Central Excise Act, 1944 from,
a. Shri. Pintu, Lab Chemist of GSPL
b. Shri. P. Kumar, former Accountant of GSPL
c. Shri. C. Natarajan, the MD of GSPL
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d. Shri. A. Selvaraj, Proprietor of Shri Senthil Steels, Namakkal
e. Shri. K. Murugesan Murugan, Proprietor of M/s Bakya Lakshmi
Metal Mart, (BLM for short) Namakkal
4. A further statement was also recorded from Shri. P. Kumar on
08.10.2010. Thereafter, on 11.10.2010, the 2 pen drives seized from
Shri. P. Kumar, were imaged in the presence of Shri. Kumar and two
independent witnesses, print outs of documents in the said pen drives
were taken and yet another statement dated 11.10.2010 of Shri.
Kumar was recorded. Again, the CPU seized from the office premise
of GSPL on 28.09.2010 was examined on 13.10.2010 in the presence
of Shri. C. Natarajan and two independent witnesses and printout of
data contained therein were taken. The printouts from the CPU of
GSPL Office were put into two files which were also seized under the
Mahazar dated 13.10.2010 and a statement of Shri. Natarajan, MD
of GSPL was recorded on 13.10.2010.
5. A month later, on 25.11.2010, the hard disk seized from the premises
of GSPL was examined in the presence of Shri Natarajan, MD of GSPL
and two independent witnesses under Mahazar and a statement was
also recorded from Shri. Natarajan.
6. Subsequent to the search conducted on 28.09.2010, GSPL gave a
letter to the Salem Commissionerate on 29.12.2010 stating that the
959.01 MT of MS ingots as per their production register on
01.09.2010 had been found defective and hence had been
transferred to their raw material account. Subsequently, the
Headquarters Preventive unit of Salem Commissionerate, conducted
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a search of the premises of GSPL and submitted to the DGCEI,
records such as the E.R 1 Return for the months from September
2010 to November 2010, Daily Production Register RG 1 for the
period from September 2010 to March 2011 and Raw Materials
Account for the period from September 2010 to March 2011, seized
under the said Mahazar.
7. More than seventeen months after the first search of GSPL on 28-09-
2010, a follow up investigation was conducted on 07.03.2012 at the
end of the buyers of GSPL and on 07.03.2012 the premises of M/s
Balaji Steel Industry, Trichy, (hereinafter referred to as BSI in short)
was searched and a note pad was recovered from the table of Shri.
S. Gnanasekaran, Factory-in-Charge of BSI and a statement was also
recorded from him. As a part of follow up investigation, the premises
of M/s Sri Kamalaganapathy Steel Rolling Mills Ltd, Namakkal (here
in after referred to also as SKSRM) was searched on 07.03.2012 and
various incriminating documents were seized under a mahazar and
statements were recorded from Shri. M. Damodharan, Manager,
SKSRM, Shri. Thirugnanasambantham, Accounts Manager of SKSRM
and Shri R. Chandrasekharan, Accounts Assistant of SKSRM on
07.03.2012.
8. The factory premises of GSPL was again searched on 21.06.2012 and
certain incriminating documents like Account of Raw Materials,
Incoming Register, Bank Account Statements, Invoices issued to
SKSRM and BSI were seized during the search under Mahazar dated
21.06.2012. A statement was also recorded from Shri Natarajan MD
of GSPL on 21.06.2012.
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9. Statements were also recorded from various transport operators and
investigations were also conducted at the end of the suppliers of raw
materials, as detailed below:
a. Statement dated 28.12.2012 from Shri. Sidesh Kumar, Managing
Partner, M/s Salem Alloys (SA), Salem who were supplying
materials to GSPL under Invoices.
b. Statement dated 10.01.2013 of Shri A. Raja. Managing Partner of
M/s Vyapuri Chettiar & Co, Salem (VCC) who had supplied Scrap
to GSPL.
c. Statement dated 15.01.2013 of Shri. V. Shivalingam, Proprietor,
M/s Vasantham Steels, Erode, (VS) who had sent scrap to GSPL
10. Subsequently on 22.10.2013, the two pen drives seized from the
residence of Shri P. Kumar under Mahazar dated 28.09.2010, the
CPU and Hard disk seized from the Office premises of GSPL under
Mahazar dated 28.09.2010 and the CPU seized from the residential
premises of Shri Natarajan, MD, GSPL, under Mahazar dated
28.09.2010 were subjected to 'imaging' by an independent Cyber
Forensic Analyst, Shri. M Maharajan of M/s Ascent Technologies,
Chennai, under Mahazar proceedings in the presence of Shri.
Natarajan and in the presence of two independent witnesses, in the
DGCEL, Office at Coimbatore, subsequent to which proceedings a
statement was recorded from Shri. C. Natarajan, M.D, GSPL on
22.10.2013.
11. Thereafter, under Mahazar proceedings, on 25.10.2013, in the
presence of independent witnesses and Shri. P. Kumar, former
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Accountant of GSPL computer print outs were taken from the working
copy of the pen drive with inscription 'Transcend", seized from the
residence of Shri P. Kumar, and subsequent to the mahazar
proceedings, a statement was recorded from Shri. P Kumar on
25.10.2013.
12. On scrutiny of such documents and other information, the lower
authority came to a conclusion that GSPL cleared clandestinely a total
quantity of 13587 MTs of MS Ingots, during the months of August
and September, 2010, without payment of central excise duties; that
there was a shortage of 1001 801 MT of M5 Ingots as on 28.09.2010
when the factory premises of GSPL was searched on 28.09.2010 and
that this quantity of Ingots had been manufactured and cleared
clandestinely; that from the records seized during the search of the
premises of SKSRM and BSI, and the statements recorded from
persons in charge the said factories, it appeared that GSPL had
manufactured and cleared clandestinely a quantity of 76.82 MTs of
MS Ingots during the month of February 2012, without payment of
Central Excise duties to SKSRM and BSI; that it appeared from the
data in the 'Computer printout from Pen Drive with inscription
Transcend that GSPL have clandestinely manufactured and cleared a
total quantity of 2193.52 MTs of MS Ingots during the period from
February 2010 to June 2010, without payment of Central Excise
duties, to various parties. It also appeared from the data in the
'Computer printout from Pen Drive with inscription Transcend' that
GSPL had availed of an amount of Rs. 51,31,557/- as CENVAT credit
based on invoices issued by various dealers, without actual receipt of
any inputs, during the period from February 2010 to June 2010.
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Lower authority was also of the view that M/s. SKSRM had removed
TMT bars without payment of duty and that M/s. Sri Vela Smelters
Pvt ltd, M/s. Dindugul Steel Rolling Mills, M/s. RAN India Steel, M/s.
Attur Steels, M/s. NGA Steels have all failed to account inputs
received by them from GSPL. Lower authority also took a view that
M/s. Salem Alloys, M/s. Sakthi Ferro Alloys (India) Pvt Ltd, M/s.
Salem Automech and M/s. Akshara Industries Ltd, have deliberately
and wilfully passed on cenvat credit through dealer invoices without
actual supply of goods on which such cenvat credit was being passed
on. The lower authority was also of the view that GSPL, the Managing
Director and two other directors of GSPL, the firms SKSRM, M/s. Vela
Smelters, M/s. Dindugul Steel Rolling mills, M/s. RAN India, M/s.
NGA Steels, M/s Sakthi Ferro Alloys, M/s. Akshara Industries , M/s.
Salem Automach and M/s. Salem Alloys as well as the managing
partner of M/s. Salem Alloys, have by their various acts of omissions
and commissions rendered themselves liable for penalties under the
provisions of Central Excise Act and Rules.
13. A show cause notice dated 28-10-2013 was issued to the main
appellant GSPL as also to other appellants. The show cause notice
directed the main appellant to show cause as to why Central Excise
duty amounting to Rs.1,19,66,174/- on the clearance of MS ingots to
various parties without accounting and without payment of duty
during the period February 2010 to February 2012 and ineligible
credit of Rs.51,31,557/- availed during February 2010 to May 2010
should not be demanded by invoking extended period, interest be
not demanded and penalty not imposed on them under the provisions
of Section 11AC of the Central Excise Act, 1944 (CEA in short) read
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with Rule 25 of Central Excise Rules, 2002 ( CER in short).Show cause
notice was also issued to SKSRM as to why Central Excise duty
amounting to Rs.4,60,967/- on the clearance of TMT rods without
payment of duty made out of MS ingots procured from GSPL without
payment of duty should not be demanded under Section 11A(1) and
the said amount paid should not be appropriated against the said
demand, interest should not be demanded and penalty not imposed
on them under the provisions of Section 11AC of the Central Excise
Act, 1944 read with Rule 25 of Central Excise Rules, 2002 and also
why penalty should not be impose on them under Rule 26 of the
Central Excise Rules, 2002. Show cause notices were also issued to
other appellants for imposition of penalties under Rule 26 of the
Central Excise Rules, 2002.
14. After receipt of replies and written submissions filed either before
or during the personal hearings conducted on 25.11.2014,
11.12.2014 and 23.12.2014, which were attended by the
representatives of the Appellants, except for M/s. Attur Steels who
did not appear or respond with respect to the personal hearings
offered, but nevertheless had filed their written reply to the show
cause notice; the Adjudicating Authority passed the impugned order
by confirming the demands, demanded interest thereof and also
imposed penalties on the main appellant as well as other appellants
herein.
15. The matter was heard on various dates during which the counsels
representing the Appellants and the Authorised Representative
appearing for the Respondents made their written submissions which
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were taken on record. The counsels of the Appellants and the
Authorised representatives for the Respondents were again heard by
this bench in this matter on 28-11-2024 and on 03-12-2024, upon
which date, on conclusion of hearing, the orders were reserved.
16. Shri. S. Durairaj, Ld. Advocate appearing on behalf of the
appellant GSPL and its directors Mr. C. Natarajan, Smt. Rani Devanai
and Mr. N. Kirubakaran, submitted as under:
a) Based on the computer printouts retrieved from the pen drives,
seized on 28.9.2010 from the residence of Shri P. Kumar, former
employee of the appellant's company.
(i) Rs.58,90,251/- was demanded on the grounds that 2193.52
metric tons of MS Ingots were cleared clandestinely during Feb,
2010 to June 2010.
(ii) Further, an amount of Rs.51,37,557/- was demanded on the
grounds that it is ineligible cenvat credit on the MS Scrap, which
was not received but credit was taken during Feb 2010 to June
2010. The department interrogated the drivers of the vehicles
based on the lorry numbers in the invoices. The drivers have
deposed that they have not transported MS Scrap. The demand
based on such deposition alone without corroborative and tangible
evidences is not sustainable when payments were made to the
suppliers. Reliance is placed on the decision rendered in the case
of Motabhai Iron and Steel Industries vs. CCE-2014 (302) ELT 69
(Tri.Ahmd) and in the case of RS Industries vs. CCE-2003 (153)
ELT 114 (Tri.Del).
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b) On 28.9.2010, two pen drives were seized from the residence of
Shri P. Kumar, who was former employee of the Company.
Officers took those pen drives to a nearby by browsing centre viz.
Archana Software Tech and took print outs as recorded in the
Mahazar dated 28.9.2010. Again on 11.10.2010, print outs were
taken from those two pen drives in the Office of Director General
of Central Excise Intelligence, Regional Unit, Coimbatore as
recorded in Mahazar dated 11.10.2010. Again on 22.10.2013,
these pen drives were further subjected to the process of imaging
through an external agency viz., M/s Ascent Technologies in the
Office of the Director General of Central Excise Intelligence,
Regional Unit, Coimbatore as recorded in Mahazar dated
22.10.2013. On 25.10.2023, computer printouts were taken from
these two pen drives in the Office of the Director General of
Central Excise Intelligence, Regional Unit, as recorded in Mahazar
dated 25.10.2023. Thus, it is proved beyond doubt that electronic
evidences were handled in a casual manner through unauthorized
agencies without satisfying the conditions stipulated in Section
36B of Central Excise Act, 1944. Certificate under Section 36(B)
(4) of the Central Excise Act. 1944 is not furnished by the
department. Reliance is placed on the decision rendered by the
Supreme Court in the case of Anvar P.V. Vs. PK Basheer and
Others in Civil Appeal No. 4226 of 2012. Reliance is also placed
on the decision rendered in the case of Shri Chakra Cements Ltd.
vs. CCE-2008 (231) ELT 67 (Tri. Bang).
c) The demand of Rs.32,50,479/- demanded on the basis of
production reports for August, 2010 and September, 2010 is not
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sustainable. The charts in the SCN itself indicates that on some
dates the RG-1 production is more than that shown in these
production reports. The quantity mentioned in the production
report is only tentative and not final because of other quality
control parameters and the MS ingots are subjected to testing to
find out blowholes and only those that qualify are entered in RG1
while those that do not meet the parameters and are defective are
remelted. Since the unit was new and manpower was also new,
the desired production could not be achieved. Frequent power
shutdown was also another problem for the re-melting. Therefore,
the quantity mentioned in the production sheets cannot be
considered as reaching the RG-1 Stage. No other corroborative
evidences evidencing suppression of purchases, suppression of
production, excess consumption of electricity than what is
required, production capacity, transportation of clandestine
purchases and sales, cash flow back and evidences/depositions
from the alleged suppliers and buyers were adduced. Reliance is
placed on the decisions in CCE vs. Shree Nakoda Ispat Ltd-2014
(308) ELT 612 (Tri-Del) and Shingar Lamps. (P) Lid. V. CCE-2002
(150) ELT 290 (Tri-Del). No cogent and tangible evidences are
adduced for the suppression of production and Section 9D (2) has
not been followed.
d) Rs. 25,58,588/- demanded on the alleged shortage of MS Ingots
is not sustainable because during the course of investigation itself,
it was properly explained to the investigating officers that a
quantum of 959.010 MTs of RG-1 Stock was remelted due to
quality problems as per Notification No.67/95-CE and the
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transactions were also duly reflected in the ER-1 Return. The
closing balance of MS Ingots as on 28.9.2010 was re-melted. Such
quantum was shifted from the RG-1 Stuck to raw material stock
(defective ingots on 28.9.2010. The stock transfer was also shown
in the ER-1 return for the month of Sep, 2010. Necessary entries
were also made in the RG-1 stock and raw material stock register.
Such defective ingots were remelted and fresh ingots were
produced. Necessary entries were made in the RG-1 stock.
register and raw material stock register. All the defective ingots
were remelted and converted into fresh ingots during Oct, 2010
and Nov, 2010. All the fresh ingots were cleared on payment of
duty subsequently. These transactions were also verified by the
Officers of Salem Commissionerate and submitted reports to the
investigation authorities. Such reports are also relied in the SCN
[A-35 and A-36]. ER-1 and ER-6 returns for Sep, 2010 to Nov,
2010 would establish that all the defective ingots were remelted
and subsequently cleared on payment of duty. No adverse report
was submitted by the Officers. No other corroborative evidences
evidencing suppression of purchases, suppression of production,
excess consumption of electricity than what is required,
production capacity, transportation of clandestine purchases and
sales, cash flow back and evidences/depositions from the alleged
suppliers and buyers were adduced. Reliance is placed on the
decisions in CCE Vs. Siddhi Vinayak Sponge Iron (P) Ltd, 2014
(308) ELT 154 (Tri-Del), Ambeecee Consolidated Enterprises India
(P) Ltd vs. CCE Delhi 2014 (307) ELT 791 (Tri Del), Bharathiya
Tar Udyog Vs. CCE-2014 (307) ELT 377 (Tri. Del) and CCE vs.
Trela Footwear Exports (P) Ltd.
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e) Rs.2,66,856/- demanding alleging that MS Ingots were removed
in February, 2012 is not sustainable because no other cogent and
tangible evidences are adduced by the department.
f) No reliance can be placed on the depositions of various persons
as the same are not supported by any cogent and tangible
evidences. The deposition under Section 14 should be
corroborated by independent evidences. When no such
independent corroborative evidences are available, no credibility
can be given to such depositions Merely because a statement
under Section 14 has been obtained by the Central Excise officers
does not mean that it has to be ipso facto accepted as truthful. Its
evidentiary value has to be judged in conjunction with the other
evidences as per the ratio of the decision rendered in the case of
M/s Orient Enterprise Vs. Collector 1986 (23) ELT (507) and in the
case of M/s Manindra Chandra Dey Vs. CC reported in 1992 (58)
ELT 192-Cal. wherein it is held that confessional statements, even
if found admissible, should be treated as light weight documents
needing independent corroboration. Further, the statutory
obligation under Section 9(D) (2) must also be discharged, i.e.
examination in chief and cross examination. In the instant case,
it is not satisfied. Therefore, no reliance can be placed on such
depositions against the appellants.
g) Reliance is placed on Manish Dixit vs. State of Rajasthan - AIR
2001 SC 93 (2001) Cr LJ 133 wherein the Court said that even
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otherwise an entry in the register would not have been sufficient
to charge anybody with liability.
h) In the case of Kashmir Vanaspathi Vs. CCE reported in 1989 (39)
ELT 655, it has been held that note books maintained by labourers
are not a dependable record In the case of M/s. Ashwin Vanaspathi
Industries Vs. CC reported in 1992 (59) ELT 175-Tri, it is held that
the liability cannot be proved on the basis of private registers.
i) In the case of M/s. Gurpreet Rubber Industries vs. CCE-1996 (82)
ELT 347-Tri, it is held that note books maintained by casual
labourers are not a dependable record to establish the liability.
j) The decisions rendered in the following case laws are relied on to
contend that private registers, mere slips, notebook maintained
by workers etc. are not sufficient evidence to prove clandestine
removal unless supported by corroborative evidence and that
admissibility of the printed material under Section 36B is made
subject to fulfilment of certain conditions:
a. M/s. Kirtibhai Manganbhai Patel vs. CCE-2003 (159) ELT
1162-Tri.
b. MTK Gurusamy vs. CCE-2001 (130) ELT 344-Tri.
c. Essvee Polymers vs. CCE-2004 (165) ELT 291-Tri.
d. TGL. Poshak Corporation vs. CCE-2002 (140) ELT 187-Tri.
e. Premium Packaging Private Ltd. vs. CCE-2005 (184) ELT 165
(Tri)
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k) As far as directors are concerned, Shri. C. Natarajan has not given
a confessional statement, Smt. N Rani Deivanai and Sri. N.
Kirubakaran have not been interrogated and there is no proposal
for confiscation of goods and under such circumstances penalty
cannot be imposed on the Directors. Reliance is placed on decision
in M/s. Yamuna Machine Works (P) Ltd v CCE, 2013 (298) ELT 86
(Tri-Ahmd).
l) Shri P.Kumar's statements were countered by C.Natarjan during
investigation itself. Shri P.Kumar's statements are based on the
disputed computer printouts. Reliance was placed on those
computer print outs without fulfilling the conditions under Sections
36A and 36B others depositions are vague and without
corroborative evidences.
m) Reliance is also placed on the recent decisions expounding on
Section 9D(2) and 36B(4) of the CEA, 1944 which also lay down
that clandestine removals must be established with corroborative
evidence, namely, Shree Balaji Furnaces P Ltd & Other v CCE &
CGST - Alwar, 2024 (10) TMI 8- CESTAT, New Delhi, Trikoot Iron
& Steel Casting Ltd v Additional Director General (Adjn), DGGI
(Adjudication Cell), 2024 (10) TMI 672- CESTAT, New Delhi,
Premier Power Products (CAL) Pvt Ltd v CCE, Haldia
Commissionerate, 2024 (9) TMI 177- CESTAT, Kolkata, Navbharat
Fuse Co Ltd and Shri Vishal Singh vs. CCE, Raipur - 2020 (1) TMI
321, Reynolds Petro Chem Ltd vs. CCE, Surat - (2022) 1 Centax
58, Global Extrusion Ltd & Others vs. CCE, Rajkot - 2024 (1) TMI
17
772 and Narsingh Ispat Ltd vs. CCE and Vice Versa - 2024 (3)
TMI 1037.
17. The Ld. Advocate submits that the entire demand against GSPL is
not sustainable; consequently, the demand of interest and imposition
of penalties on GSPL and Directors are also not sustainable and
therefore the impugned order is liable to be set aside and the appeals
are to be allowed.
18. Shri. S. Durairaj, Ld. Advocate submits on behalf of M/s. SKSRM
that:
a) The appellant had sought relief under Sabka Vishwas Legacy
Dispute Resolution Scheme (SVLDRS in short) which was rejected
on the ground that the main noticee has not opted for SVLDRS,
but however the same relief was granted to another co-appellant
Balaji Steel Industry and therefore the case may be remanded to
the Respondent to consider similar relief as granted to Balaji Steel
Industry.
b) That without prejudice to the above, the demand is confirmed on
the basis of two weighment slips recovered from the appellants'
premises on 7.3.2012, which do not indicate the material weighed.
A slip recovered from the appellants' premises on 7.3.2012 was
also an unauthenticated slip, which is not lucid. Further, no other
corroborative and tangible evidences are adduced to prove the
receipt of unaccounted MS Ingots and the unaccounted clearance
of TMT bars.
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c) That he reiterates the reliance on the decisions cited earlier to
contend that private registers, mere slips, notebook maintained
by workers etc. are not sufficient evidence to establish liability and
that reliance cannot be placed on deposition of various persons
without any independent corroborative evidences substantiating
the same.
d) That even otherwise they had paid Rs.4,60,967/- on 16-03-2012
and the allegation is that such raw material could have been
received in March 2012 out of which finished products TMT rods
could have been cleared in March 2012 and in view of the payment
in March 2012 interest liability would not arise.
19. Submissions on behalf of the other appellants on whom penalties
under Rule 26 was imposed was made by the other learned
Advocates and apart from echoing the submissions made by the
learned counsel for GSPL regarding the unreliability of the data
recovered from the pen drives seized from Shri. Kumar, utilising
unauthorised persons and that the computer printout relied upon in
the proceedings to establish clandestine clearance of ingots by GSPL
do not satisfy the requirements of Section 36B of the CEA as put forth
by GSPL and further that the computer printouts do not satisfy any
of the stipulations contained in sub-section (2) of Section 36B; the
common thread of the submissions are:
a) The data contained in the computer printout relating to
clandestine removal have not been corroborated with other
evidences.
19
b) That though they were investigated and records seized statements
have not been recorded from them (RAN, DSRM, Attur Steel,)
c) That no investigation was done and no statement was recorded
from the appellant or its employees (SVSPL)
d) the evidences relied upon in the notice to corroborate the data
contained in the computer printouts is relating to the second
demand relating to reversal of cenvat credit and no evidence has
been let in to corroborate the data contained in the computer
printout relating demand of duty on alleged clandestine clearances
for the relevant period
e) that penalty under Rule 26 cannot be imposed on a "legal entity"
and can only be imposed on an individual, for which proposition
reliance is placed on the decisions in Kakateeya Fabs (P) Ltd v
CCE, 2018 (15) GSTL 350 (Tri-Del), R.S. Jhaveri & Co. Exports vs.
CCE-2010 (252) ELT 375 (Tri. Ahmd), Ponneri Steel Industries,
reported in 2008 (221) E.L.T. 290 (Tri. - Chennai), Universal
Radiators Ltd, reported in 2008 (223) Ε.L.Τ. 630 (Tri. - Chennai),
M/S. Steel Tubes of India Ltd, reported in 2007 (217) E.L.T. 506
(Tri. LB), Woodmen Industries, reported in 2004 (164) E.L.T. 339
(Tri. Kolkata) which stands affirmed by the Hon'ble Apex Court
2004 (170) Ε.Ε.Τ. A307 (S.C.), and in the case of. Aditya Steel
Industries v CCE, 1996 (84) ELT 229 (T).
f) That no enquiry with transporters was conducted to know whether
they have delivered any MS Ingots from GSPL without any valid
documents.
g) the entire case is based on presumptions and assumptions as no
evidence is available for the purchase of raw material in excess of
the accounted quantity by the appellants, no evidence is available
20
for the payment for the alleged purchase of raw materials, no
evidence available for payment of freight charges
h) The printouts recovered from the pen drive of Shri. Kumar is not
admissible as an evidence in terms of Section 36B of the Central
Excise Act, 1944, and relied on case laws in Jindal Nickel & Alloys
v CCE, ,2012 (279) ELT 134 (Tri-Del), Sakeen Alloys Pvt Ltd v
CCE, 2013(296) ELT 392 (Tri-Ahmd), S.N.Agrotech v CC, 2018
(361) ELT 761 (Tri-Del), Rhino Rubber Pvt Ltd v CCE, 1996 (85)
ELT 260 (T), CCE v Rajaguru Spinning Mills (P) Ltd, 2009 (243)
ELT 280 (Tri-Chennai), R.M.Brothers v CCE, 2015 (328)ELT 124
(Tri-Del) and Jai Mata Industries Ltd v CCE, 2013 (293) ELT 539
(Tri-Del).
i) there is no corroborative evidence available to substantiate the
correctness of the entries made in the various documents, private
diaries, note books, computer sheets etc. and relied on case laws
cited in their synopsis, in Kashmir Vanaspati (P) v CCE, 1989 (39)
ELT 655 (T), Gurpeet Rubber Industries v CCE, 1996 (82) ELT 347
(T), United Metal & Steels (P) Ltd v CCE & Cus, 2003 (161) ELT
585 (Tri-Kolkata), Kamar Ali & Sons v CCE, 2006 (200) ELT 104
(Tri-Kolkata), CCE v Sumetco Alloys Pvt Ltd, 2008 (230) ELT 81
(Tri-Del), CCE v Sangamitra Cotton Mills (P)Ltd, 2004 (165) ELT
472 (Tri-Chennai) and Mahesh Silk Mills v CCE, 2014 (304) ELT
703 (Tri-Ahmd) upheld by the Hon'ble High Court of Gujarat in
Commissioner v Mahesh Silk Mills, 2015 (319) ELT A 52 (Guj) to
drive home the point that entries in the private registers, note
books etc. without any corroboration are not dependable records
to establish clandestine removal.
21
j) that it is settled law that demand cannot be made based on
surmises and conjectures, relying on Oudh Sugar Mills v UOI,
1978 ELT J 172, Ambika Chemicals v CCE, 2002 (148)ELT 101 (T)
maintained by Apex Court in 2003 (153) ELT A 299, Durga Trading
Co v CCE, 2002 (148) ELT 967 (T) maintained by Apex Court in
2003 (157) ELT A 315 (SC), T.G.L. Poshak Corporation v CCE,
2002 (140) ELT 187 (T), Shingar Lamps Pvt Ltd v CCE, 2002 (150)
ELT 290 (Tri-Del), CCE v Shingar Lamps Pvt ltd, 2010 (255)ELT
221 (P & H), R.K Patel & co v CC&CE, 2008 (227) ELT 558 (Tri-
Mumbai), CCE & Cus v R.K. Patel & Co, 2018 (16) GSTL 73 (Bom),
Super Smelters Ltd v CCCE &ST, 2020 (371)ELT 751 (Tri-Kolkata)
and Manmeet Ispat Pvt Ltd v CCE, Cus 7ST, 2019 (368) ELT 1101
(Tri-Del) .
20. Shri. S. Venkatachalam also submits a case law CC, Mumbai
Import II v Junaid Kudia, (2024) 16 Centax 504 (SC), wherein the
Honourable Supreme Court dismissed the civil appeal against
CESTAT findings that evidence in the form of computer printouts etc.
recovered during investigation could not be admitted in as much as
the investigating officers had not complied with provisions of section
138C of the Customs Act, 1962 and would further submit, without
prejudice and in the alternative that, though they have filed
declaration under SVLDRS-1, they have not been issued SVLDRS 4,
and placing reliance on the Final Order No.40508/2024 dated
01.05.2024 of this Bench in case of M/s. Aurofood Pvt Ltd v
Commissioner of GST and Central Excise, Puducherry, wherein the
Department was directed to issue discharge certificate, requests that
22
appropriate direction may be issued to the Department to close the
issue.
21. Shri. M.A. Mudimannan, Ld. Advocate on behalf of M/s. N.G.A
Steels further submits that the demand is barred by limitation since
the investigation commenced on 28.9.2010 and the SCN was issued
on 28.10.2013 after a lapse of 3 years and one month. The inordinate
delay in the issue of SCN is not explained in the SCN and the latches
being unexplained in the SCN is fatal to the invocation of extended
period and the notice is barred by limitation.
22. Shri. M. Kannan, Ld. Advocate who appeared for the appellants,
M/s. Salem Alloys, Shri S. Sidesh Kumar, MD of Salem Alloys and
Salem Automech, Salem would further submit that there was no cash
transactions with M/s. Geetham Steels Pvt Ltd; that they are in no
way connected with M/s. ABC India Ltd and no prudent person would
pay an amount of Rs.1,11,21,421/- by RTGS and receive back the
said amount in cash for availing cenvat credit of Rs11,72,909/-. That
even otherwise the amount shown as encashed by Mr. S. Sidesh
Kumar in his account and the amount shown as received from M/s.
Salem Alloys as per Bank account do not tally with the amount show
as received from M/s. Salem Alloys (receipt of cash under the name
of ABC India Ltd) as shown in the computer printout from pen drive
and there is no evidence on record to show that the appellant have
issued cenvat invoices without actual supply of goods and received
consideration for such invoices.
23
23. For the sake of completion, the written submissions of M/s.
Akshara Industries P Ltd is taken note of at this juncture, whereby it
has been contended inter-alia that the appellant is a manufacturer
and not a dealer and has never supplied scrap to anyone, let alone
GSPL; that the OIO despite recording that various transactions
attributed to Akshara Industries are not reflected in the computer
printouts and even when the statements of the transporters did not
reflect the appellant's consignments have chosen to impose penalty
even when there is no corroboration by way of visiting the appellant's
premises to ascertain whether the appellant could have dealt with
scrap and thus the imposition of penalty is exfacie illegal and liable
to be quashed.
24. Likewise, M/s. Sakthi Ferro Alloys India Pvt Ltd ( SFAIPL in short)
in their grounds of appeal denied the allegation of having issued
Cenvat documents without actual supply of scrap and stated that
there is no evidence adduced in the notice in support of the said
allegation; that they have actually supplied scrap covered by the
impugned invoices and have made payments to the transporters,
that they have also received payments from GSPL against the
supplies made to them; that there was no mention in the notice as
to whether they had returned the payments back to GSPL; that in
the absence of any sort of evidence to prove that they had supplied
cenvat invoices without actual supply of materials, the proposal to
impose penalty on them under Rule 26 of the CER, 2002 is not
sustainable; that they place reliance in the case law Prompt Castings
(P) Ltd. Vs. CCE-2012 (284) ELT 641-(Cal).
24
25. Learned Authorised Representatives Shri. Anoop Singh and Shri.
Sanjay Kakkar, after taking us through the show cause notice and
order in original submit that:
a) Issue of unaccounted manufacture of MS Ingots and clearance
without invoices and demand of Rs.32.5 lakhs are based on
statement of Shri. Pintu, loose papers seized from him and his
admissions, the mismatch in seized production reports and that
declared in RG1 have been detailed in tables 8.1.3 and 8.1.4 of
the OIO
b) The fact remains there was shortage on the day of search and the
theory of captive consumption is not tenable as neither the seized
RG 1 register upto 30.08.2010 nor the raw material register seized
on the same day show any transfer of finished goods from RG 1
to raw material register and none of the ingots were declared as
rejects when ER 1 was filed for August or Sept 2010. That the
reliance placed on the decisions in CCE Raipur v Shree Nakoda
Ispat, 2015 (1) TMI 267-CESTAT, New Delhi, Shingar Lamps Pvt
Ltd v CCE, 2002 (2) TMI 278- CEGAT, New Delhi, CCE, Raipur v
Sidhi Vinayak Sponge Iron (P) Ltd, 2015 (1) TMI 264- CESTAT,
New Delhi, Bhartiya Tar Udyog v CCE, Delhi-II, 2015 (1) TMI 170-
CESTAT, New Delhi, Commr of C. Ex, Kanpur v Trela Footwear
Exports Pvt Ltd, 2015 (1) TMI 213- CESTAT, New Delhi were
distinguishable from the facts of the instant case.
c) For the clandestine removal/sale of 2193.52 MTs of MS Ingots
during the period Feb 2010 to June 2010 is evidenced from the
data from the pen drive. Kumar has admitted to his role and he is
the person responsible for feeding data and data under the name
ABC India Pvt Ltd reflects the actual transactions of GSPL, that the
25
amount received in cash relating to the proceeds of sale of goods
removed in clandestine manner has been brought into official bank
account of GSL through private bank accounts of person related
to MD.
d) For the unaccounted procurement of raw material and availment
of CENVAT credit without actual receipt of any goods in factory,
data from the pen drives, recovered CPU from GSPL and
statements of Mr. Kumar evidence the same, all owners of vehicles
mentioned in the purchase invoices admit that their vehicle was
not used for transportation scrap to GSPL
e) That as regards requirement under Section 36B, almost all
proceedings including preliminary examination, imaging, taking
prints were carried out under panchnama proceedings and author
has confirmed the authenticity of data and fact that he was
responsible person to make such entries.
f) That though there has been procedural lapse of not following
desired condition by not issuing certificate under Section 65B (4)
nevertheless necessary conditions envisaged in Section 65B (2)
appear to have been fulfilled.
g) That conditions mentioned in Section 36B (2) have been fulfilled
and the printouts were taken from seized pen drives and computer
being used in the factory in normal course of their functioning.
Statements have been correctly recorded under Section 14 and
are binding and it is not the case were adjudicating authority has
not examined the witnesses as per mandatory procedure laid
down in Section 9D of Central Excise Act or Dept. is relying on
retracted statement as evidence. It is not case of merely reliance
on private data retrieved from pen drive but evidence in the form
26
of investigation at buyer, supplier, transporter, excess/shortage
of inputs in stock, flow back of funds, corroborate the same. It is
unthinkable that there will be official records of clandestine
manufacture and by their very nature unrecorded production can
only be found based on evidence such as private records, private
notebooks, statement of persons concerned etc. Reliance is placed
on decisions in F. Tech Engineering Co, Jignesh Pambhar v CCE &
ST, 2019 (7) TMI 1814- CESTAT, Ahmedabad, M/S Mili Detergent
Industries, M/S Superchem, Shree Jalaram Chemicals Industries,
Sonal Cosmetics (Exports) Ltd. Versus C.C. E-Ahmedabad-II 2019
(7) TMI 825 - Cestat Ahmedabad, M/S Karsh Enterprises,
Jaswinder Singh And Ajay Adwani Versus CCE & ST- Jalandhar
2021 (8) TMI1225 - Cestat Chandigarh, Harika Resins Pvt Ltd and
Sama Rajasekhar Versus Commissioner Of Customs, Central
Excise & Service Tax, Guntur 2021 (7) TMI 891 - Cestat
Hyderabad, M/s. Vishnu Chemicals Ltd, M.V. Ramana Murthy,
Central Excise Incharge and CH. Krishna Murthy, Managing
Director Versus Commissioner of Central Excise, Customs &
Service Tax, Hyderabad - I , 2019 (7) TMI 952 - CESTAT
HYDERABAD
h) That Shri. Natarajan was non cooperative and did not respond to
six summons and all his statements have to be considered to
conclude on his bonafides and he had not mentioned about stock
available in the factory when specifically asked under statement
and no evidence was placed by appellant on the day of search or
immediately thereafter that defective ingots were duly accounted
and used captively for remelting.
27
i) That there is no correlation of purchases and sales chronologically
of the computerised stock or sale ledgers/registers with the data
extracted from pen drives or with RG-1 or ER-1 returns
j) That in case of the type at hand is a civil case and preponderance
of probabilities is the level of evidence required and not proof
beyond reasonable doubt. Reliance is placed on the decisions in
Collector of Customs Vs. D. Bhoormull, 1983 (13) E.L.T.1546
(SC), Gulabchand Silk Mills Pvt. Ltd. v. CCE, 2005 (184) E.L.T.
263,Umiya Chem v. CCE, 2009 (239) E.L.T. 429, Ureka Polymers
v. CCE, 2001 (127) E.L.T. 618, CCE Vs. International Cylinders
Pvt. Ltd, (2010) 255 ELT 68 (HP),CCE Vs. International Cylinders
Pvt. Ltd,(2010) 255 ELT 68 (HP), Indian Cork Mills Ltd. and Others
Versus Collector of Central Excise, Bombay [1984 SCC Online
CEGAT 165 : (1984) 17 ELT 513 (Tri-Mum), Sri Ram Machinery
Corporation Ltd & Anr v CCE, 2017 (348) ELT 540 (Tri-Chennai)
and Metal Alloys Industries v CCE, CGST, 2023 SCC Online
CESTAT 235.
k) That as per Section 61 of the Evidence Act, it is necessary that
the contents of a document be proved either by primary or
secondary evidence. The evidence of the contents contained in a
document is hearsay evidence unless the writer thereof is
examined before a court and that under Section 36A (a) (i) of the
Central Excise Act unless the contrary is proved by the person
from whom the documents are seized, the truth of the contents of
the documents may be presumed.
l) That as per Section 67 of the Evidence Act, 1872, the signature
or handwriting of the person alleged to have signed the whole or
part of the documents has to be proved and that under Section
28
36A(a)(ii), the court/authority shall be entitled to presume that
the signature/handwriting is of the person concerned.
m) Thus, no illegality appears to have been occasioned in
appreciating the non-electronic documentary evidence in the
impugned case.
26. The authorised representatives pointed out that neither was the
plea of non-compliance with the requirements of Section 9D, nor
was any request for cross examination of any of the deponents,
taken before the lower authority.
27. In rejoinder, the counsel for GSPL submitted that they were
waiting for the Adjudicating Authority to examine the deponents who
had given statements under Section 14 and for the Adjudicating
Authority to communicate his decision, post examining the
deponents, as to whether or not they are being made available for
cross examination, as mandated under Section 9D.
28. We have considered the submissions made at length by both sides
and carefully perused the appeal records, written submissions as
well as the case laws quoted by both sides.
29. The disputes involved in these cases are whether the finding that
the main appellant has indulged in clandestine manufacture and
clearances of MS ingots during period February 2010 to February
2012 and the consequent demand of duty is lawful; whether the
demand of cenvat credit availed for the period February 2010 to May
2010 by the main appellant terming it ineligible, is licit; whether the
29
demand made on M/s. SKSRM for clearances of TMT Rods alleged to
have been cleared without payment of duty and allegedly made out
of MS ingots procured from the main appellant without payment of
duty, as confirmed in the impugned Order in Original, is tenable and
whether penalties imposed on the appellants are legal.
30. Having heard both sides at length and after perusing the records
we find that the demand of Rs.58,90,251/- confirmed on GSPL on
finding of clandestine removal of MS Ingots from February 2010 to
June 2010 and the demand of Rs.51,31,557/- of ineligible cenvat
credit taken without receipt of inputs for the period from February
2010 to June 2010, confirmed on GSPL, are principally based on the
data recovered from the pen drives seized from the premises of Shri.
N Kumar, the ex-employee of GSPL and the data in the CPU seized
from the office premises of GSPL and the appellants have raised a
plea of non-compliance with the requirements of Section 9D(2), as
deponents were not examined, and non compliance of Section 36B
of the CEA read with Section 79A of the IT Act. Similarly with respect
to the demand of Rs.32,50,479/- confirmed on GSPL on the finding
of clandestine removal of MS Ingots during August 2010 and
September 2010 as well as the demand of Rs.2,66,856/- confirmed
on GSPL for clandestine removal of MS Ingots during February 2012
to BSI and KSRM, the appellants have raised a plea of non-
compliance with the requirements of Section 9D (2) as deponents
were not examined. These pleas give rise to the following questions
of law, the answers to which will have a bearing on the tenability of
these demands and determination of the disputes that have arisen
as noted supra, such questions being:
30
A) whether compliance of Section 9D by the Adjudicating Authority
mandatory?
B) What is the import of Section 14 statement and whether it is
relevant and admissible if not subjected to the rigours of Section
9D(2) ?
C) Can a plea of non-compliance with the mandate of Section 9D
(2) be raised at the Appellate Stage when not raised before the
Adjudicating Authority ?
D) Is the electronic evidence collected admissible given the absence
of certificate issued under Section 36B(4) ?
31. We proceed to answer these questions at first and then address
the issues that arise for consideration as mentioned above, in the
facts and circumstances of the case.
32. The provisions of the Central Excise Act, 1944, relevant for
discussion, are reproduced below:
"14. Power to summon persons to give evidence and produce
documents in inquiries under this Act. -- (1) Any Central Excise
Officer duly empowered by the Central Government in this behalf
shall have power to summon any person whose attendance he
considers necessary either to give evidence or to produce a
document or any other thing in any inquiry which such officer is
making for any of the purposes of this Act. A summons to produce
documents or other things may be for the production of certain
specified documents or things or for the production of all documents
or things of a certain description in the possession or under the
control of the person summoned.
31
(2) All persons so summoned shall be bound to attend, either in
person or by an authorised agent, as such officer may direct; and all
persons so summoned shall be bound to state the truth upon any
subject respecting which they are examined or make statements and
to produce such documents and other things as may be required:
Provided that the exemptions under Sections 132 and 133 of the
Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to
requisitions of attendance under this section.
(3) every such inquiry as aforesaid shall be deemed to be a "judicial
proceeding" within the meaning of Section 193 and Section 228 of
the Indian Penal Code, 1860 (45 of 1860)."
"9D. Relevancy of statements under certain circumstances.
-- (1) A statement made and signed by a person before any Central
Excise Officer of a gazetted rank during the course of any inquiry or
proceeding under this Act shall be relevant, for the purpose of
proving, in any prosecution for an offence under this Act, the truth
of the facts which it contains, --
(a) 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 provisions of sub-section (1) shall, so far as may be, apply
in relation to any proceeding under this Act, other than a proceeding
32
before a Court, as they apply in relation to a proceeding before a
Court."
33. It would also be appropriate at this juncture to notice the similar
provisions of Customs Act, 1962, which are reproduced below:
"108. Power to summon persons to give evidence and
produce documents. -- (1) Any Gazetted Officer of customs shall
have power to summon any person whose attendance he considers
necessary either to give evidence or to produce a document or any
other thing in any inquiry which such officer is making under this
Act.
(2) A summons to produce documents or other things may be for
the production of certain specified documents or things or for the
production of all documents or things of a certain description in the
possession or under the control of the person summoned.
(3) All persons so summoned shall be bound to attend either in
person or by an authorised agent, as such officer may direct; and all
persons so summoned shall be bound to state the truth upon any
subject respecting which they are examined or make statements and
produce such documents and other things as may be required:
Provided that the exemption under section 132 of the Code of Civil
Procedure, 1908 (5 of 1908), shall be applicable to any requisition
for attendance under this section.
(4) Every such inquiry as aforesaid shall be deemed to be a judicial
proceeding within the meaning of section 193 and section 228 of the
Indian Penal Code, 1860 (45 of 1860)."
33
"138B. Relevancy of statements under certain
circumstances. -- (1) A statement made and signed by a person
before any gazetted officer of customs during the course of any
inquiry or proceeding under this Act shall be relevant, for the
purpose of proving, in any prosecution for an offence under this Act,
the truth of the facts which it contains, --
(a) 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 provisions 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."
34. As can be seen from the aforestated provisions, both S.14 and
S.9D of the CE Act are pari-materia with S.108 and S.138B of the
Customs Act respectively and therefore judicial pronouncements in
respect of these provisions of Customs Act, 1962 would also hold
good for the pari-materia provisions of Central Excise Act, 1944.
35. Nearly three decades ago, a three judge bench of the Honourable
Supreme Court, in K. I. Pavunny v
34
Asst.Collr.(H.Q).,C.Ex.Collectorate, Cochin, 1997 (90) ELT
241 (S.C), had an occasion to consider whether the confessional
statement of the appellant therein, given to the Customs officers
under Section 108 of the Customs Act, 1962 (for short, the `Act'),
though retracted at a later stage, is admissible in evidence and could
form basis for conviction and whether retracted confessional
statement requires corroboration on material particulars from
independent evidence. The Honourable Supreme Court held that:
"17. It would thus be clear that the object of the Act empowering Customs
Officers to record the evidence under Section 108 is to collect information
of the contravention of the provisions of the Act or concealment of the
contraband or avoidance of the duty of excise so as to enable them to
collect the evidence of the proof of contravention of the provisions of the
Act so as to take proceedings for further action of confiscation of the
contraband or imposition of the penalty under the Act etc. By virtue of
authority of law, the officer exercising the powers under the Act is an
authority within the meaning of Section 24 of the Evidence Act.
(1) Though the authority/officer on suspecting a person of having
committed the crime under the Act can record his statement, such a person
per force is not a person accused under the Act. (2) He becomes accused
of the offence under the Act only when a [complaint] is laid by the
competent Customs Officer in the Court of competent jurisdiction or
Magistrate to take cognizance of the offence and summons are issued.
Thereafter, he becomes a person accused of the offence. (3) A statement
recorded or given by the person suspected of having committed an offence
during the inquiry under Section 108 of the Act or during confiscation
proceedings is not a person accused of the offence within the meaning of
Section 24 of the Evidence Act. (4) Though the Customs Officer is an
35
authority within the meaning of Section 24 of the Evidence Act, by reason
of statutory compulsion of recording the statement or the accused giving
voluntary statement pursuant to his appearing either after issuance of
summons or after the appellant's surrender, such statement cannot be
characterised to have been obtained by threat, inducement or promise. (5)
The collection of evidence under Section 108 and other relevant provisions
relating to search and seizure are only for the purpose of taking further
steps for confiscation of contraband and imposition of penalty. (6) The self-
same evidence is admissible in evidence on the complaint laid by the
Customs Officer for prosecution under Section 135 or other relevant
statutes." (emphasis supplied)
36. Thereafter, the import of a retracted confession was elaborated as
under:
"25. It would thus be seen that there is no prohibition under the Evidence
Act to rely upon the retracted confession to prove the prosecution case or
to make the same basis for conviction of the accused. The practice and
prudence require that the Court could examine the evidence adduced by
the prosecution to find out whether there are any other facts and
circumstances to corroborate the retracted confession. It is not necessary
that there should be corroboration from independent evidence adduced by
the prosecution to corroborate each detail contained in the confessional
statement. The Court is required to examine whether the confessional
statement is voluntary; in other words, whether it was not obtained by
threat, duress or promise. If the Court is satisfied from the evidence that
it was voluntary, then it is required to examine whether the statement is
true. If the Court on examination of the evidence finds that the retracted
confession is true, that part of the inculpatory portion could be relied upon
to base conviction. However, the prudence and practice require that Court
would seek assurance getting corroboration from other evidence adduced
by the prosecution." (emphasis supplied)
36
37. How such corroboration can be sought is seen indicated in the
next paragraph, wherein it was stated as under:
"26. ........ Generally, the evidence in support of the violation of the
provisions of the Act consists in the statement given or recorded under
Section 108, the recovery panchnama (mediator's report) and the oral
evidence of the witnesses in proof of recovery and in connection therewith.
This Court, therefore, in evaluating the evidence for proof of the offences
committed under the Act has consistently been adopting the consideration
in the light of the object which the Act seeks to achieve."
38. Recently, in Tofan Singh v State of Tamilnadu, 2020 INSC
620: (2021) 4 SCC 1, the Honourable Supreme Court, after
analysing a long line of judgements, held that Central Excise and
Customs officers are not police officers for the purpose of Section 24
of the Evidence Act. The relevant paragraphs are as under:
"106.Both these judgments came to be considered in the Constitution
Bench judgment in Badku Joti Savant (supra). In this case, the appellant
was prosecuted under the Central Excise and Salt Act, 1944. The Court
expressly left open the question as to whether the "broader" or "narrower"
meaning of police officer, as deliberated in the aforementioned two
judgments, is correct. It proceeded on the footing that the broad view may
be accepted to test the statute in question - - see pages 701, 702. The
Court referred to the main purpose of the Central Excise Act as follows:
The main purpose of the Act is to levy and collect excise duties and Central
Excise Officers have been appointed thereunder for this main purpose. In
order that they may carry out their duties in this behalf, powers have been
conferred on them to see that duty is not evaded and persons guilty of
evasion of duty are brought to book.
xxx xxx xxx
37
Section 19 lays down that every person arrested under the Act shall be
forwarded without delay to the nearest Central Excise Officer empowered
to send persons so arrested to a Magistrate, or, if there is no such Central
Excise Officer within a reasonable distance, to the officer-in-charge of the
nearest police station. These Sections clearly show that the powers of
arrest and search conferred on Central Excise Officers are really in support
of their main function of levy and collection of duty on excisable goods."
(at page 702)(emphasis supplied)"
Xxxxx
"109. Having regard to the statutory scheme contained in the Central
Excise Act, more particularly sections 21(1) and proviso (a) to section
21(2), the Court held that a Central Excise officer had no power to submit
a charge-sheet under section 173(2) of the Cr.PC, as such officer is only
empowered to send persons who are arrested to a Magistrate under these
provisions.
110. The Court distinguished Raja Ram Jaiswal (supra), and held
that this case being under the Central Excise Act, which is a revenue
statute like the Land Customs Act, 1924 and the Sea Customs Act,
1878, would be more in accord with the case of Barkat Ram (supra)
- see page 704.
111. The next judgment in chronological order is Romesh Chandra Mehta
(supra). Here again, a Constitution Bench was concerned with the same
question under section 25 of the Evidence Act when read with enquiries
made under section 171-A of the Sea Customs Act, 1878. The Court had
no difficulty in finding that such customs officer could not be said to be a
police officer for the purpose of section 25 of the Evidence Act, holding:
"Under the Sea Customs Act, a Customs Officer is authorised to collect
customs duty to prevent smuggling and for that purpose he is invested
with the power to search any person on reasonable suspicion (Section
169); to screen or X-ray the body of a person for detecting secreted goods
38
(Section 170-A); to arrest a person against whom a reasonable suspicion
exists that he has been guilty of an offence under the Act (Section 173);
to obtain a search warrant from a Magistrate to search any place within
the local limits of the jurisdiction of such Magistrate (Section 172); to
collect information by summoning persons to give evidence and produce
documents (Section 171-A); and to adjudge confiscation under Section
182. He may exercise these powers for preventing smuggling of goods
dutiable or prohibited and for adjudging confiscation of those goods. For
collecting evidence the Customs Officer is entitled to serve a summons to
produce a document or other thing or to give evidence, and the person so
summoned is bound to attend either in person or by an authorized agent,
as such officer may direct, and the person so summoned is bound to state
the truth upon any subject respecting which he is examined or makes a
statement and to produce such documents and other things as may be
required. The power to arrest, the power to detain, the power to search or
obtain a search warrant and the power to collect evidence are vested in
the Customs Officer for enforcing compliance with the provisions of the Sea
Customs Act. For purpose of Sections 193 and 228 of the Indian Penal
Code the enquiry made by a Customs Officer is a judicial proceeding. An
order made by him is appealable to the Chief Customs Authority under
Section 188 and against that order revisional jurisdiction may be exercised
by the Chief Customs Authority and also by the Central Government at the
instance of any person aggrieved by any decision or order passed under
the Act. The Customs Officer does not exercise, when enquiring into a
suspected infringement of the Sea Customs Act, powers of investigation
which a police officer may in investigating the commission of an offence.
He is invested with the power to enquire into infringements of the Act
primarily for the purpose of adjudicating forfeiture and penalty. He has no
power to investigate an offence triable by a Magistrate, nor has he the
power to submit a report under Section 173 of the Code of Criminal
39
Procedure. He can only make a complaint in writing before a competent
Magistrate. (at pages 466-467) (emphasis supplied)"
112. Barkat Ram (supra), Raja Ram Jaiswal (supra) and Badku Joti Savant
(supra) were all referred to. The Court then laid down, what according to
it was the true test for determining whether an officer of customs is to be
deemed to be a police officer, as follows:
"But the test for determining whether an officer of customs is to be deemed
a police officer is whether he is invested with all the powers of a police
officer qua investigation of an offence, including the power to submit a
report under Section 173 of the Code of Criminal Procedure. It is not
claimed that a Customs Officer exercising power to make an enquiry may
submit a report under Section 173 of the
Code of Criminal Procedure." (at page 469)
Xxxxx
"126.The golden thread running through all these decisions - some of
these being decisions of five-Judge Benches which are binding upon us -
beginning with Barkat Ram (supra), is that where limited powers of
investigation are given to officers primarily or predominantly for
some purpose other than the prevention and detection of crime,
such persons cannot be said to be police officers under section 25
of the Evidence Act. ...." (emphasis supplied)
39. Thus, what can be gleaned from the above decisions of the Apex
Court is that a statement made under S.108/S.14, while admissible,
does not automatically translate into their being relevant to the
proceedings unless they satisfy the statutory stipulations laid down
to consider them relevant. This is because there is a difference
between relevancy and admissibility according to the general
principles of evidence law. Otherwise, this would tantamount to an
40
incongruous circular reasoning that the details contained in the
statement are being presumed to be relevant, and are relevant,
since the statement is admissible. In other words, a statement being
used as evidence to prove itself and thus becoming admissible! In
fact, the Honourable Supreme Court has in K I Pavunny's case
explicitly stated how an inculpatory statement is to be dealt with
prior to placing reliance thereon, when it was held that The Court is
required to examine whether the confessional statement is
voluntary; in other words, whether it was not obtained by threat,
duress or promise. If the Court is satisfied from the evidence that it
was voluntary, then it is required to examine whether the statement
is true. If the Court on examination of the evidence finds that the
retracted confession is true, that part of the inculpatory portion could
be relied upon to base conviction.
40. James Fitzjames Stephen, when drafting the Indian Evidence Act,
1872, defined and distinguished "Fact" from "Evidence". The
distinction remains unextinguished in the Bharatiya Sakshya
Adhiniyam, 2023 ( BSA), and the definitions are reproduced below:
"S.2(f) "fact" means and includes--
(i) any thing, state of things, or relation of things, capable of being
perceived by the senses;
(ii) any mental condition of which any person is conscious."
S. 2(e) "evidence" means and includes--
(i) all statements including statements given electronically which the
Court permits or requires to be made before it by witnesses in
relation to matters of fact under inquiry and such statements are
called oral evidence;
(ii) all documents including electronic or digital records produced for
the inspection of the Court and such documents are called
documentary evidence"
41. Thus, Fact" encompasses any thing (in the material sense), state
or relation, of things perceptible to the senses, including states of
41
mind, whereas "evidence" can ONLY be oral or documentary. Fact
refers to the thing to be proved (quid probandum) and evidence
means the means of proof or manner of proof (modus probandi).
Thus, conceptually Fact and Evidence are distinct and separate.
42. Fact can either be a fact-in-issue, which means and includes any
fact from which, either by itself or in connection with other facts, the
existence, non-existence, nature or extent of any right, liability or
disability, asserted or denied in any suit or proceeding, necessarily
follows. [2(g) of the BSA] or a relevant fact [2(k) of the BSA]- A fact
is said to be relevant to another when it is connected with the other
in any of the ways referred to in the provisions of the Adhiniyam
relating to the relevancy of facts.
43. Evidence, on the other hand, can only be admissible or inadmissible
and this evidence can be used only to prove or disprove relevant
facts.
44. The Supreme Court in Ram Bihari Yadav vs. State of Bihar
1998 INSC 191 (2J) itself has observed that more often than not,
the expressions 'relevancy and admissibility' are used as synonyms
but their legal implications are distinct and different from for more
often than not facts which are relevant are not admissible; so also
facts which are admissible may not be relevant, for example questions
permitted to put in cross examination to test the veracity or impeach
the credit of witnesses, though not relevant are admissible. The
probative value of the evidence is the weight to be given to it which
42
has to be judged having regards to the fact and circumstances of each
case. The relevant para is as under:
"The law relating to dying declaration - the relevancy, admissibility and its
probative value- is fairly settled. More often the expressions 'relevancy and
admissibility' are used as synonyms but their legal implications are distinct
and different for more often than not facts which are relevant may not be
admissible, for example, communication made by spouses during marriage
or between an advocate and his client though relevant are not admissible;
so also facts which are admissible may not be relevant, for example,
questions permitted to be put in cross-examination to test the veracity or
impeach the credit of witnesses, though not relevant are admissible. The
probative value of the evidence is the weight to be given to it which has to
be judged having regard to the facts and circumstances of each case. In this
case, the thrust of the submission relates not to relevancy or admissibility
but to the value to be given to Exh. 2. A dying declaration made by a person
who is dead as to cause of his death or as to any of the circumstances of
the transaction which resulted in his death, in cases in which cause of his
death comes in question, is relevant under Section 32 of the Evidence Act
and is also admissible in evidence. Though dying declaration is indirect
evidence being a specie of hearsay, yet it is an exception to the rule against
admissibility of hearsay evidence. Indeed, it is substantive evidence and like
any other substantive evidence requires no corroboration for forming basis
of conviction of an accused. But then the question as to how much weight
can be attached to a dying declaration is a question of fact and has to be
determined on the facts of each case."
45. It is pertinent to note that Section 5 to 16 of the Indian Evidence
Act, 1872 (3 to 14 of BSA, 2023) pertains to relevance of facts and
sections 16 to 31 of Indian Evidence Act, 1872 (14 to 25 of BSA,
43
2023) deals with admissions and confessions and when they are
relevant or when they are irrelevant.
46. At this juncture, it will also be appropriate to notice S.141 BSA
(former S.136 of Indian Evidence Act). S.141 says:
"141. (1) When either party proposes to give evidence of any fact, the
Judge may ask the party proposing to give the evidence in what manner
the alleged fact, if proved, would be relevant; and the Judge shall admit
the evidence if he thinks that the fact, if proved, would be relevant, and
not otherwise.
(2) If the fact proposed to be proved is one of which evidence is
admissible only upon proof of some other fact, such last mentioned fact
must be proved before evidence is given of the fact first mentioned,
unless the party undertakes to give proof of such fact, and the Court is
satisfied with such undertaking.
(3) If the relevancy of one alleged fact depends upon another alleged
fact being first proved, the Judge may, in his discretion, either permit
evidence of the first fact to be given before the second fact is proved,
or require evidence to be given of the second fact before evidence is
given of the first fact"
47. Therefore, the three steps in sequence involved in applying the
principles of evidence law under BSA/IEA, would be to at first find
out whether the fact, the evidence in respect of which it is sought to
be adduced to prove it, is relevant, and the next step would be to
see whether the evidence that is being sought to be adduced to
prove such a relevant fact is admissible and lastly whether the fact
or facts so proved are sufficient to determine the issue. Sufficiency
is completely determined only by the Court/adjudicating authority
44
and is thus the Court's/adjudicating authority's evaluation of the
extent of the bearing the proven facts have in the matter as per the
standards of evidence called for in the adjudication process.
48. It is seen that, the jurisdictional High Court of Madras has taken
judicial notice of the purpose of Section 9D being added to the
Central Excise Act, in a decision rendered in Crl. Appeal No.470 of
2019 in the case of M/s. Williamson Magor and Company Ltd
v. The Assistant Collector of Central Excise Prosecution,
Madras, and the relevant paras are reproduced as below:
"8 Under our justice dispensation system, only substantive evidence for
proving a fact in issue or a relevant fact would be admissible in a Court of
law. In other words, a witness should testify about what he saw, heard,
sensed and perceived and must offer himself for cross-examination by the
adversary and hearsay evidence is inadmissible, exceptions being res
gestae evidence, admission against the interest of the maker which would
include confessions and dying declarations. A previous statement of a
person, per se, which does not fall within the above said categories, cannot
be treated as a substantive piece of evidence and can be used either to
corroborate his testimony in the Court under Section 157 of the Evidence
Act or contradict him under Section 145, ibid. In fact, one cannot even use
the statement recorded by a Magistrate under Section 164 Cr.P.C. of a
witness as a substantive piece of evidence. A statement given by a witness
to the police under Section 161(3) Cr.P.C. cannot even be used to
corroborate his testimony in the Court, but, can be used only to contradict
him. The law being thus, certain Revenue statutes like the CESA, etc.
provide for a special rule of evidence for treating a statement of a person
as a substantive piece of evidence. The Parliament, in its wisdom, reposed
faith in the investigation of Revenue offences by Revenue officers and also
45
was aware of the difficulties that would be faced by them while prosecuting
a Revenue offender in a Court of law.
9. Section 9D along with its analogous provisions, was inserted into being
added to the CESA was vide clause 19 of the Customs, Gold (Control) and
Central Excises and Salt (Amendment) Act, 1973 (Act 36 of 1973). This
amendment was a consequence of the 47th report of the Law Commission
of India on "Trial and Punishment of Social and Economic Offences"
submitted to the Government of India in February, 1972. For the purpose
of the discussion at hand the observations of the Commission were as
follows:
"14.1 Statements made in administrative adjudications: Many of the
Acts dealing with economic offences empower the enforcement officers
to summon and examine witnesses. The statements made by these
witnesses before such officers are not, however, admissible in evidence
in the subsequent criminal prosecutions. We are of the view that these
statements, if recorded by officers of sufficiently high status, to be
determined by the Government should be admissible in such
prosecutions, since they are very often the earliest officially recorded
version of the facts."
14.2 Certain conditions and safeguards will, no doubt, be necessary.
Reference in this connection may be made to the Evidence Act, which
has a provision relating to the admissibility of a statement made in a
previous judicial proceeding.
The relevant provision in the Evidence Act, is as follows:
"33. Evidence given by a witness in a judicial proceeding, or before
any person authorized by law to take it, is relevant for the purpose
of proving, in a subsequent judicial proceeding, or in a later stage of
the
same judicial proceeding, the truth of the facts which it states, when
the witness is dead or cannot be found, or is incapable of giving
46
evidence, or is kept out of the way by the adverse party, or if his
presence cannot be obtained without an amount of delay or expense
which, under the circumstances of the case, the Court considers
unreasonable:
Provided--
that the proceeding was between the same parties or their
representatives in interest;
that the adverse party in the first proceeding had the right and
opportunity to cross-examine;
that the questions in issue were substantially the same in the first as
in the second proceeding.
Explanation.--A criminal trial or inquiry shall be deemed to be a
proceeding between the prosecutor and the accused within the
meaning of this section."
14.3 We think that the safeguards mentioned in the proviso to Section
33 need not appear in the new provision which we contemplate. We are
further of the view that the Court should have a discretion to admit the
statement in evidence, if the circumstances of the case so require, even
where the maker of the statement is a witness in the proceedings before
the Court.
Though such a discretion is not very frequently met with in Indian
statute law, in this case, it is necessary for obvious reasons.
Twenty years ago, Stone stressed the importance of excluding similar
conduct evidence (even though it is relevant otherwise than via
disposition), where its effect was too prejudicial, in these words--
"where the peg is so small and the linen so bulky and dirty that a jury
will never see the peg, but merely yield to indignation at the dirt."
Somewhat similar considerations make it desirable that the Court should
47
have this power, since the provision which we are recommending is itself
new."
It is, therefore, obvious that the use of a statement made before a Central
Excise officer of a gazetted rank under the CESA cannot be pressed in aid,
if the conditions stated therein are not satisfied.
10 In this backdrop, if we analyse Section 9D of the CESA, extracted above,
it can be inferred that a statement of a person recorded by any Central
Excise officer of a gazetted rank can be treated as a substantive piece of
evidence, without he being examined in the Court, provided the
Department is able to establish the existence of the conditions set out in
sub-section (a). The conditions set out in sub-section (a) are in pari
materia with the ones set out in the first clause of Section 33 of the
Evidence Act." (emphasis supplied)
49. S.9D(1) stipulates "A statement made and signed by a person
before any Central Excise Officer of a gazetted rank during the course
of any inquiry or proceeding under this Act shall be relevant, for the
purpose of proving, in any prosecution for an offence under this Act,
the truth of the facts which it contains" and thus addresses when such
statements before a Gazetted Officer would be relevant for the
purpose of proving, "in any prosecution for an offence", the truth of
the facts which it contains. As stated supra, the relevancy of a fact is
a precondition for admitting evidence to prove such a fact. Thus, the
legal relevance of the statement, which is crucial to the proof of facts,
as evidence can only be admitted concerning relevant facts or facts
in issue, stands established by virtue of the stipulation in 9D(1). As
held by the Hon'ble High Court of Madras supra, such a statement is
48
a substantive piece of evidence, without the deponent of the
statement being examined in the Court, provided the Department is
able to establish the existence of the conditions set out in sub-section
(a).
50. S.9D(1)(a) mentions five scenarios where a person's prior
statement to the Gazetted Central Excise officer is relevant. They are
i) where the person who made the statement is dead, ii) where the
person who made the statement cannot be found, iii) where the
person who made the statement is incapable of giving evidence, iv)
when the person who made the statement is kept away by the
adverse party or v) where the presence of the person who made the
statement cannot be obtained by an amount of delay or expense
which, under the circumstances of the case, the Court considers
unreasonable. Therefore, ex-hypothesi, the Department should first
adduce evidence in the proceedings before the Court of the existence
of the aforementioned scenarios, namely that the deponent is dead,
or cannot be found or is incapable of giving evidence etc., as a
condition precedent for treating the deponent's statement as a
substantive piece of evidence.
51. S.9D(1)(b) also states that 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, then the statement made to a Gazetted Central Excise
Officer is taken as relevant and admitted in evidence. This would take
care of a scenario, of the deponent turning hostile, in which case, the
49
Court can rely on the previous statement given before the Gazetted
Central Excise Officer in the interests of justice. Whenever the witness
who gave the statement deposes and stands by his earlier statement
given before the Gazetted Officer, and if such deposition is to the
detriment of the opposite side, then the witness is to be offered for
cross-examination as otherwise it will be prejudicial to the interests
of the other side. If the witness stands by his statement and if the
cross-examination doesn't dislodge his deposition in Court, save for
some minor or inconsequential inconsistencies, then the Court can
disregard such variations and, in the facts and circumstances admit
the statement in evidence in the interests of justice as provided in
S.9D(1)(b). Thus, S.9D(1)(b) would also apply to a situation as
aforementioned, where the witness is examined in chief and
thereafter offered to the opposite side for cross-examination.
52. S.9D(2) states that the provisions 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.
53. Given that the adjudication proceedings under Section 33A of
CEA, 1944/Section 122A of Customs Act, 1962, would come within
the ambit of the phrase "any proceeding under this Act", stipulated in
S.9D (2), the provisions of sub-section (1) shall, so far as may be,
apply to such adjudication proceedings, as they apply in relation to a
proceeding before a Court. Now, it is to be seen as to what could be
the import of the phrase "so far as may be".
50
54. In Dr. Pratap Singh vs. The Director of Enforcement Fund,
Foreign Exchange Regulation Act & Ors. 1985 INSC 106: AIR
1985 SC 989, the Hon'ble Supreme Court has held that the term
"so far as may be" has to be construed to mean that those provisions
may be followed to the extent possible. The relevant para is
reproduced below:
"Sec. 37 (2) provides that 'the provisions of the Code relating to
searches, shall so far as may be, apply to searches directed under Sec.
37. Reading the two sections together it merely means that the
methodology prescribed for carrying out the search provided in Sec. 165
has to be generally followed. The expression 'so far as may be' has
always been construed to mean that those provisions may be generally
followed to the extent possible.
.........
In order to give full meaning to the expression 'so far as D may be' sub- sec. (2) of Sec. 37 should be interpreted to mean that broadly the procedure relating to search as enacted in Sec. 165 shall be followed. But if a deviation becomes necessary to carry out the purposes of the Act in which Sec. 37 (1) is incorporated, it would be permissible except that when challenged before a court of law, justification will have to be offered for the deviation. This view will give full play to the expression 'so far as may be'." (emphasis supplied)
55. Thus, S.9D (2), casts an obligation on the adjudicating authority to generally follow the provisions of S.9D (1), to the extent possible, as it would apply to a proceeding before a Court. Thus, the term "shall" preceding, the phrase "so far as may be", in this section can only mean that the adjudicating authority has been legislatively mandated to apply the provisions of S.9D (1), depending on the facts 51 and circumstances of the case, to the extent possible. In other words, the words "so far as may be" cannot be taken as a leeway to refrain from the application of S.9D(1), to the exclusion of the consideration of the word "shall", which would be contrary to the stated intent of the section.
56. Now what would this entail for the adjudicating proceeding before the adjudicating authority? It is pertinent to note that under Section 14 of the CEA/Section 108 of the Customs Act, all persons so summoned before the Gazetted Officer of the Department shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required. Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the erstwhile Indian Penal Code, 1860 (45 of 1860). Thus, the person summoned is giving the aforesaid statement at the risk of being proceeded against for perjury. That in itself, neither automatically translates into a validation of the truthfulness of the statement, nor does it attract any such presumption that what is deposed in the statement is the truth. A statement may be relevant, but it yet needs to be proved in accordance to the means known to law. The fact that a statement is made and recorded, and is statutorily said to be relevant in the IEA (BSA), does not mean it is proved. In this regard, reference to the decision of the Honourable High Court of Madras in Commissioner of Customs (Imports), Chennai I v. Sainul Abideen Neelam, 2014 (300) ELT 342 (Mad) is apposite where it was held as under: 52
14. The learned counsel for the Revenue relied on the decision of the Hon'ble Supreme Court in Surjeet Singh Chhabra v. Union of India [1997 (89) E.L.T. 646 (S.C.)] and the decision of this Court in Roshan Beevi and Others v. Joint Secretary, Government of Tamil Nadu - 1984 (15) E.L.T. 289 (Mad.) in support of his contention that statement made before the Customs Officer under Section 108 of the Customs Act, though retracted later is an admissible evidence and binding. Certainly, there is no quarrel about the said proposition. The admissibility of such statement as evidence is always there. However, the question is whether the authorities can act on such statement alone in the absence of any corroborating materials to substantiate the contents of such statement. Therefore, the admissibility of an evidence cannot and should not be taken to mean its acceptability as well. (emphasis supplied)
57. If we notice the provisions of Section 9D, what flows from it is that 9D(1) stipulates when a statement given under section 14 would be relevant for the purpose of proving, "in any prosecution for an offence", the truth of the facts which it contains and provides for various scenarios in the sub-sections thereto at (a) and (b). It is only when the Department first adduces evidence in the proceedings before the adjudicating authority, of the existence of the aforementioned scenarios in section 9D(1)(a) that the deponent's statement is taken as a substantive piece of evidence, without the deponent deposing thereto before the adjudicating authority. That would still not obviate the requirement of the Gazetted officer before whom the statement was given, deposing the factum of such statement having been recorded from the deponent- which is the method or manner of proving the recording of the statement, which statement under section 14 is already considered relevant for the 53 purpose of proving the truth of the fact it contains- that is to say, the said deposition of the Gazetted Officer stating that the deponent had indeed given the statement before him, would be the manner of admitting or mode of proof of the admissible substantive evidence.
58. Again, 9D(1)(b) provides for the deponent's statement given before the Gazetted Officer to be admitted as substantive evidence, when the person who made the statement is examined as a witness in the case before the adjudicating authority and the adjudicating authority is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. This sub section (b) of Section 9D(1) takes care of a situation where the witness who is deposing before the adjudicating authority turns hostile and on an evaluation of the circumstances of the case the adjudicating authority decides to discard the version given by the witness before it and instead place reliance on the earlier statement given before the Gazetted Officer.
As elucidated supra, this also applies in a case where the witness deposing stands by his earlier statement and is thereafter offered for cross-examination to the opposite side and in case of minor inconsistencies/no inconsistency, if the adjudicating authority is of the opinion, having regard to the circumstances of the case that the statement should be admitted in evidence in the interests of justice, the adjudicating authority can do so as per this Section 9D(1)(b).
59. However, implicit in this procedure stipulated in 9D(1)(b) is the necessary requirement for the adjudicating authority to depose all the deponents who have given statement under Section 14, save as 54 those that are unavailable in the scenarios given in 9D(1)(a), for the purposes of evaluating whether the statements are voluntary, to attest that he had deposed the contents of the statement and then take a considered decision whether the truth of the facts contained in the statement stand proved or disproved in the facts and circumstances of the case. In other words, it is only after such examination in chief, that the adjudicating authority can arrive at a considered decision, whether to declare the witness appearing before it as a hostile witness and then to decide in the facts and circumstances whether to rely on the earlier statement; or if upon finding major inconsistencies between his earlier deposition and in the contradictions brought about in cross-examination, to not rely on the earlier statement; or if it is only minor discrepancies as that which does not majorly disturb the essential truth of his deposition, to rely upon it, if in the circumstances of the case, the adjudicating deems it fit in the interest of justice.
60. Therefore, we are of the view that Section 9D(2) not only legislatively mandates the adjudicating authority to apply the provisions of S.9D(1), depending on the facts and circumstances of the case, to the extent possible , but also when read along with Section 9D(1)(b), leads to the inexorable conclusion that the adjudicating authority necessarily has to conduct an examination in chief of the deponent of the statement so as to determine not only the voluntary nature as well as truthfulness of the facts the statement given under Section 14 before the Gazetted Officer contains, but also to determine whether or not the witness is hostile, and to decide whether or not to place reliance on the statement as 55 per the mandate of Section 9(1)(b) in the circumstances of the case, as has been elaborated supra. This interpretation is also in consonance with the decision of the Honourable Apex Court in K I Pavunny's case as stated supra, wherein the Apex Court emphasised that in the case of a retracted confession the court should examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise and if the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. Such an interpretation is also in line with the decision of the jurisdictional Madras High Court cited supra and given the pari materia provisions of the Customs Act, 1962, we are of the view that the said interpretation would hold good under the pari materia provisions of Customs Act as well.
61. However, we are unable to subscribe to the view that cross- examination of the witness is a necessary pre-requisite in all circumstances. Wherever, the scenario under Section 9D(1)(a) arises, it goes without saying that there would not arise a question of the deponent being made available for cross-examination. Similarly, when the adjudicating authority, on examination of the witness under Section 9D(1)(b) forms an opinion in the facts and circumstances that the witness has resiled from his earlier statement and is to be considered hostile, and that the adjudicating authority deems it necessary to rely on the earlier statement of the witness, then again there does not arise a further necessity to make the witness available for cross-examination to the assessee. However, if the witness is deposing against the assessee, then it would be 56 necessary for the adjudicating authority to offer the said witness to the assessee/assessee's representative for cross examination if the assesse so desires and requests for cross-examination, as otherwise it would be prejudicial to the assessee. Thus, it can be seen that cross-examination of the witness deposing before the adjudicating authority is not an imperative in all circumstances and only when the deposition is to the detriment of the assessee, that the witness is to be offered for cross-examination, if the assessee so desires and requests for cross -examination.
62. Our aforesaid interpretation is also bolstered by the decision of the Honourable High Court of Bombay in Bipin Badani Vs. Union of India and Ors, 2023:BHC-AS:36767-DB and the relevant paragraphs are reproduced below:
"17. A plain reading of Section 138 B would show that this provision pertains to the relevancy of statements under certain circumstances which stipulates that a statement made and signed by a person before any Gazetted Custom Officers, may during the course of any inquiry or proceedings under the Customs Act, shall be relevant, for the purpose of proving, "in any prosecution for an offence" under the Customs Act, the truth of the facts which it contains eventualities as provided for in clauses (a) and (b) of sub-section (1). Sub-section (1)(a) stipulates the eventuality. 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; and in situation under sub-section (1)(b) when the person who made the statement is examined as a 57 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 interest of justice. Sub-section (1) therefore clearly implies that it is only in the proceedings before the Court and in the context of any prosecution for an offence under the Customs Act, the statement of a person as recorded by the Customs Officer would be held to be relevant.
18. Insofar as the second limb of Section 138B as provided for in subsection (2) of the said provision is concerned, it clearly implies that the provisions of sub-section (1) shall apply in relation to any proceedings under the Customs Act (other than a proceeding before a Court), in a manner they apply in relation to a proceeding before a Court. In other words, the relevancy of a statement which sub-section (1) of Section 138B speaks about, would be held to be admissible and relevant even in relation to any proceeding under the Customs Act, in a manner it is so applicable before a Court as provided for under sub-
section (1).
19. On such meaning which can be attributed to Section 138B, the contention of the petitioner is required to be tested. At the outset, we may observe that Section 138B per se does not provide for any cross examination, as the provision deals with relevancy of statements in the facts and circumstances of the case. As to whether an opportunity of cross examination ought to be given in regard to the statements as recorded by the Customs Officer, would be required to be considered in the course of adjudication of the show cause notice. Considering the implications, the provisions of Section 138B would bring about, we do not find that in the facts and circumstances of the case, it can be argued by the petitioner as an absolute principle of law, that an opportunity of cross examination of three witnesses ought to have been granted to the petitioner. This for more than one reason, that sub-section (2) is 58 required to be read in conjunction with sub-section (1). Sub-section (1) clearly provides for relevancy of statements as made and signed before the Gazetted Officer of the Customs only in relation to any prosecution for an offence under the Customs Act and not otherwise. Although sub- section (2) makes a provision that the provisions of sub-section (1) are applicable in relation to any proceeding under the Customs Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court, it cannot be countenanced that sub-section makes a blanket provision for cross examination of such persons whose statement have been recorded before any Gazetted Officer of the Customs during the course of any inquiry or proceedings. In fact clause
(b) of sub-section (1) makes a contrary indication, when it refers to the statement of the persons who are 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 are eventualities wherein such persons can never be available for cross examination. Sub-section (1) also does not in any manner take away the discretion of the Customs Officer to accord appropriate weightage to the material and / or evidence before him in adjudicating the show cause notice. We are thus not inclined to accept the contention as urged on behalf of the petitioner that Section 138B be read as creating an absolute right of cross examination of such persons on behalf of the noticee in the event the statements are made before any Customs Officer, during the course of any inquiry which are subject matter of consideration in adjudication of the show cause. In our opinion, such contention as urged on behalf of the petitioner, if accepted, would militate against the provisions of clause (a) of sub-section (1) of Section 138B which also includes complete discretion which is made available to the adjudicating officer, to hold statements as recorded relevant even in 59 given situation. When the provision itself manifest such discretion to the adjudicating officer, then any demand for cross examination would be required to be tested, in the facts and circumstances of the case, including by applying the test of prejudice which may be required to be discharged. For such reasons, we reject the contention of the petitioner that any absolute right was created by virtue of Section 138B on the petitioner to demand cross examination of the three witnesses in the facts of the present case." (emphasis supplied)
63. It would also be apposite to refer to the decision of the High Court of Delhi in J & K Cigarettes v. CCE, 2009 (242) ELT 189 (Del), wherein while repelling the challenge to the constitutionality of Section 9D the Honourable High Court held as under:
"28. The moot question that arises at this stage is as to whether the provision in question is arbitrary. Such a provision can still be held to be offending Article 14 of the Constitution and can be termed as arbitrary if it is established that the provision gives uncanalised and uncontrolled power to the quasi judicial authorities.
But, we are of the opinion that it is not so. The safeguards are inherent in the provision itself. In the first instance, only those statements of such persons, which are made and signed before the Central Excise Officer of a gazetted rank, are treated as admissible. Thus, protection is taken to treat the statements relevant only if they are made before an officer enjoying a higher rank/status. Secondly, (and that has already been taken note of) such statements are made relevant only under certain specified circumstances, and these are the ones which are beyond anybody's control. Thirdly (and this is most important), the quasi-judicial authority can rely upon the statement of such a person only when the stated ground 60 is proved. For example, in those cases where the person who made the statement is dead, there should be sufficient proof that he is dead. In case, where a person cannot be found, the authority would have to form an opinion, based on some material on record, that such a person cannot be found. It would not be mere ipse dixit of the officer. In case, cogent material is not there to arrive at such a finding, the persons against whom the statement of such a person is relied upon can always challenge the opinion of the authority by preferring appeal to the higher authority, which appeal is statutorily available. Same yardsticks would apply to other grounds. If the quasi judicial authority opines that a person is incapable of giving evidence, formation of such an opinion has also to be predicated on proper material on record, which could be in the form of mental or physical disability of such a person.
29. Thus, when we examine the provision as to whether this provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for forming the opinion. Only then, it would be possible for the affected party to challenge such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party 61 can always challenge that in a particular case invocation of such a provision was not warranted.
30. Therefore, it cannot be said that the provision gives uncanalised or uncontrolled power upon the quasi judicial authority. Granting of opportunity and passing reasoned order are the conditions inbuilt in exercise of power by any quasi judicial authority and, therefore, it is not necessary that these conditions should be specifically mentioned in the provision. The very fact that before power under Section 9D(2) of the Act could be exercised, the authority has to satisfy itself about the existence of any of the conditions stipulated therein, which provides clear and sufficient guidance to such quasi judicial authority to exercise its power under the section. We may also state that such arguments have been repelled by the Supreme Court on number of occasions. [See - Harishankar Bagla v. State of Madhya Pradesh, AIR 1954 SC 465; and Bhatnagars & Co. Ltd. v. Union of India, AIR 1957 SC 478]."
31. Interestingly, even in the present case, the attempt of learned senior counsel appearing for the petitioners was to show that the respondent No. 1 ought to have given prior intimation and granted an opportunity to the assessee to make its submissions on invocability of Section 9D itself and thereby enabling the assessee to take appropriate steps, as may be possible, in the circumstances of the case. He submitted that if a particular witness was not allowed to be cross-examined by stating that it was not possible to procure his presence without delay or expense, had the opportunity been given to the petitioners to meet the expenses, the petitioners would have borne the expenses and could have procured the presence of witnesses. Likewise, he argued that if the opinion was that it is the adverse party, i.e. the petitioner, who kept a particular person out of the way, the petitioner should have been confronted with that so as to enable him to contact the witness through his own resources and inform 62 him about the time and place of the cross-examination, or else, to enable the petitioners to clarify the relevant facts and assist and cooperate with the adjudicator in contacting the witness. These examples, at the most, would indicate as to how the powers are to be exercised by the adjudicating authority. That would not make the provision arbitrary. As stated in the beginning, validity of the provision is totally different from exercise of powers by an authority invoking those provisions. We may only refer, at this stage, to the judgment of the Supreme Court in the case of Mahesh Chandra v. Regional Manager, U.P. Financial Corporation, (1993) 2 SCC
279. In that case, the Supreme Court categorically observed that wherever vide power is conferred by statutes on public functionaries, the same is subject to inherent limitation that it must be exercised in just, fair and reasonable manner, bona fide and in good faith; otherwise, it would be arbitrary. In such cases, test of reasonableness is more strict. Following observations therefrom are worth quoting :-
"15. Every wide power, the exercise of which has far reaching repercussion, has inherent limitation on it. It should be exercised to effectuate the purpose of the Act. In legislations enacted for general benefit and common good the responsibility is far graver. It demands purposeful approach. The exercise of discretion should be objective. Test of reasonableness is more strict. The public functionaries should be duty conscious rather than power charged. Its actions and decisions which touch the common man have to be tested on the touchstone of fairness and justice. That which is not fair and just is unreasonable. And what is unreasonable is arbitrary. An arbitrary action is ultra vires. It does not become bona fide and in good faith merely because no personal gain or benefit to the person exercising discretion should be established. An action is mala fide if it is contrary to the purpose for which it was authorised to be exercised. Dishonesty in discharge of duty vitiates the action without anything more. An action is bad even without proof of motive of dishonesty, if the authority is found to have acted contrary to reason. "
32. Thus, we summarize our conclusions as under :- 63
(i) We are of the opinion that the provisions of Section 9D(2) of the Act are not unconstitutional or ultra vires;
(ii) while invoking Section 9D of the Act, the concerned authority is to form an opinion on the basis of material on record that a particular ground, as stipulated in the said Section, exists and is established;
(iii) such an opinion has to be supported with reasons;
(iv) before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion; and
(v) it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing statutory appeal, which provides for judicial review.
33. Thus, insofar as the vires of the provision are concerned, we find no merit in these writ petitions and dismiss the same.
64. The decision of the Honourable High Court of Punjab & Haryana in Jindal Drugs Pvt Ltd v. UOI, 2016 (340) ELT 67 (P & H), merits reproduction at this juncture and the relevant paras are as below:
"11. As already noticed hereinabove, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the 64 absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1).
12. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts.
13. Once the ambit of Section 9D(1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub-section, which are contained in clauses (a) and (b) thereof.
14. Clause (a) of Section 9D(1) refers to the following circumstances :
(i) when the person who made the statement is dead,
(ii) when the person who made the statement cannot be found,
(iii) when the person who made the statement is incapable of giving evidence,
(iv) when the person who made the statement is kept out of the way by the adverse party, and
(v) when the presence of the person who made the statement cannot be obtained without unreasonable delay or expense.
15. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self evident inference that the 65 decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioners have also invited attention to an unreported short order of the Supreme Court in UOI and Another v. GTC India and Others in SLP (C) No. 2183/1994, dated 3-1-1995 wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby.
16. 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 steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz.
(i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and
(ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
17. 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 66 Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory.
18. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned.(emphasis supplied)
19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving 67 the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. (emphasis supplied)
20. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross- examination, and cross-examination has to precede re-examination
21. It is only, therefore, -
(i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and
(ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise."
65. We refrain from reproducing other judgements in similar vein, and therefore are finally citing a decision of the Honourable High Court of Calcutta in this context. The relevant paragraphs of the decision in Sampad Narayan Mukherjee v UOI, 2019 (366) ELT 280 (Cal) is reproduced below:
"12. Although the Evidence Act, 1872 is not applicable to a proceeding under the Act of 1962 in the strict sense, the principles thereof are attracted. The adjudicating authority, the appellate authority and any other 68 authority under the Act of 1962 required to adjudicate upon any proceeding, is obliged to adhere to the principles of the Evidence Act, 1872 while deciding on any subject. The Evidence Act, 1872 envisages and stipulates that, a statement made by a witness is relevant and is admissible in evidence only when such witness is offered for cross-examination in the proceeding.
13. A party to the proceeding, introducing evidence through a natural person in the proceeding, is obliged to offer such witness for cross- examination to the opposite party. It is for the opposite party to either cross-examine such witness or to decline the same. However, till such time, the witness is offered for cross-examination to the opposite party, the statement given by such witness, in the proceeding does not become admissible as evidence in the proceeding. Such statement cannot be treated as evidence. Section 138B of the Act of 1962 carves out few exceptions from such cardinal principle in a proceeding. Section 138B(1) of the Act of 1962 stipulates that, a statement made and signed by a person before any gazetted officer of the customs during the course of any enquiry or proceeding under the Act of 1962 shall be relevant, for the purpose proving, in any prosecution of an offence under the Act of 1962, the truth of the facts which it contains 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 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 interest of justice.69
14. Cross-examination is the norm for making the statement made by a witness relevant for evaluation in the proceedings. Section 138B of the Act of 1962 carves out few exceptions and limits it to a proceeding under the Act of 1962 and a proceeding for prosecution launched before any Court of law in respect of offences under the Act of 1962. Section 138B(2) stipulates that, the provisions of sub-section (1) shall so far as may be applies in relation to any proceeding under the Act of 1962, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. In other words, the exceptions carved out under Section 138B(1) of the Act of 1962 from the general law of evidence, apply to a proceeding of adjudication under the Act of 1962, as it would apply in a proceeding before a Court for the prosecution of any offence under the Act of 1962.
15. When an adjudicating authority is faced with a proceedings in which, the prosecution introduces evidence of witnesses, then the prosecution is obliged to offer such witness for cross-examination to the noticee. Likewise, if the noticee introduces any witness in its defence, the noticee is obliged to offer its witness for cross-examination to the prosecution. Only upon such offers are made, then the evidence of such witness becomes relevant and admissible as evidence. However, the evidence of such witnesses would also become relevant and admissible, if any of the grounds stipulated in Section 138B(1) of the Act of 1962 is attracted, in a fact scenario. In a given case, a person making a statement under Section 108 of the Act of 1962 dies prior to the conclusion of the adjudication proceeding and before he can be cross-examined by a noticee, then, the statement of such witness, will not become irrelevant. The relevancy of such statement, would be saved by virtue of the provisions of Section 138B(1)(a) read with 138B(2) of the Act of 1962. For example, but for the provisions of Section 138B(1)(a) and 138B(2) of the Act of 1962, the statement made by a person under Section 108 of the Act of 1962 would 70 have become irrelevant, had he died before his cross-examination by the notice"
66. In sum, the following emanate from the aforesaid discussions and judgements :
A. The statement given under Section 14 of the Central Excise Act, 1944 (or under Section 108 of the Customs Act, 1962) in response to a summons by a gazetted customs/excise officer, is not hit by Section 25 of the Indian Evidence Act, 1872, because a customs/excise officer is not a "police officer". B. At this stage, it is merely a recorded statement--not yet admissible or relevant. It becomes relevant under the circumstances stated in S. 9D of the CE Act 1944/S.138B of the Customs Act.
C. The fact that a statement is made and recorded, and is said to be relevant as per IEA/BSA, does not mean it is proved. D. For the S.14/S.108 statement to be admissible under general circumstances there must be an examination in chief and a subsequent cross examination that would bring it into the evidentiary pool for consideration. It needs to be examined whether the statement is voluntary; in other words, whether it was not obtained by threat, duress or promise. If the adjudicating authority is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. If the adjudicating authority on examination 71 of the evidence finds that it is true, it can be relied upon in determination of the issue in dispute in the circumstances of the case.
E. However, if the condition of sub-section (a) of S.9D(1)/S.138B(1) do not exist, then it is incumbent upon the adjudicating authority to invariably examine in chief the deponent of the statement given under Section 14/Section 108 in order to determine whether or not sub-section (b) of S.9D(1)/S.138B(1) would be attracted. That is to say, implicit in this procedure is the necessary requirement for the Court to depose all the deponents who have given statement under Section 14/Section 108, save as those that are unavailable in the scenarios given in 9D(1)(a), for the purposes of evaluating whether the statements are voluntary, whether they depose to having made the recitals in the statement recorded under Section 14/Section 108 and then take a considered decision whether the truth of the facts contained in the statement stand proved or disproved in the facts and circumstances of the case. In other words, it is only after such examination in chief, that the adjudicating authority can arrive at a decision whether or not to declare the witness appearing before it as a hostile witness and then to decide in the facts and circumstances whether to rely on the earlier statement or not, as more elaborately elucidated supra. Needless to say, such examination in chief has to be conducted by the adjudicating authority in the presence of the assesse/representative of the assessee. This is in accordance with the decision of the 72 Honourable High Court of Punjab and Haryana in Jindal Drugs Pvt Ltd v. UOI, 2016 (340) ELT 67 (P & H) F. When the adjudicating authority is examining the witness, it should be noted that minor contradictions, inconsistencies or embellishments of venial or trivial nature which do not affect the kernel of the Department's case should not be taken to be a ground to reject the statement deposed before the Gazetted officer in its entirety. It is only when such contradictions/inconsistencies cast a serious doubt about the truthfulness or creditworthiness of the witness so as to render the evidence unacceptable, that the adjudicating authority may not be in a position to place reliance on such evidence. Serious contradictions and inconsistencies which materially affect the case of the Department have to be understood in clear contradistinction to mere minor discrepancies in the statement of the witness.
G. Cross-examination is thus not an absolute right and if the conditions of sub-sections (a) or (b) of S.9D(1)/S 138B(1) exist, then the statement becomes relevant and can be made admissible without cross examination in the circumstances more elaborately elucidated supra.
H. As laid down by the Hon'ble High Court in J & K Cigarettes v. CCE, 2009 (242) ELT 189 (Del), while invoking Section 9D of the Act, the concerned adjudicating authority is to form an opinion on the basis of material on record that a particular 73 ground, as stipulated in the said Section, exists and is established; such an opinion has to be supported with reasons; and before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion as it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing statutory appeal, which provides for judicial review.
67. Given that the aforesaid summation addresses the questions as to whether compliance of Section 9D by the Adjudicating Authority is mandatory and what is the import of Section 14 statement and whether it is relevant and admissible if not subjected to the rigours of Section 9D (2), we proceed to address the third question as to whether a plea of non-compliance with the mandate of Section 9D (2) can be raised at the Appellate Stage when not raised before the Adjudicating Authority.
68. We are of the view that whether the adjudicating authority ought to have complied with the mandate of 9D(2), being a pure question of law, can be raised at the appellate stage, even if not raised before the adjudicating authority as it goes to the root of the issue whether the statements recorded under Section 14 can be relied upon as a substantive piece of evidence to render findings against the appellant. The decisions of the Honourable Apex Court in M. J Exporters Pvt Ltd v UOI, 2017 (51) STR 228 (SC), and Assistant Collector of C.Ex. v. Ramdev Tobacco Company, 74 1991 (51) ELT 631 (SC), hold that question of law can be raised in a lis at any point in time. A coordinate bench of this Tribunal in Shonan Siddhart (J.V) v. CCE, Nagpur, 2017(51) STR 64 (Tri- Mumbai) has also taken a view that question of law can be raised before the Tribunal for the first time.
69. The law as laid down in J & K Cigarettes case and Jindal Drugs Pvt Ltd v. UOI, 2016 (340) ELT 67 (P & H), was prevalent during the adjudication of the present matter. As we have elucidated supra, the adjudication proceedings contemplated under the act when read with Section 9D necessarily mandates the Section 14 statement to be admitted in evidence either under Section 9D (1) (a) or under Section 9D (1)(b), by establishing the evidentiary prerequisites elaborated supra and at the bare minimum by examining the witnesses, other than in the scenarios elaborated under Section 9D (1) (a), by an examination in chief by the adjudicating authority as it is only after such examination in chief, that the adjudicating authority can arrive at a decision whether or not to declare the witness appearing before it as a hostile witness or not and then to decide in the facts and circumstances whether to rely on the earlier statement or not, as more elaborately elucidated supra. It is also the mandate of law to answer the test of fairness and reasonableness and to avoid any semblance of arbitrariness, that while invoking Section 9D of the Act, the concerned adjudicating authority is to form an opinion on the basis of material on record that a particular ground, as stipulated in the said Section, exists and is established; such an opinion has to be supported with reasons; and before arriving at this opinion, the authority would give opportunity to the 75 affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion.
70. Thus, we hold that since the adjudicating authority has not followed the mandate of Section 9D (2) in the instant case and had not given an opportunity to the affected party to make submissions post intimation of his intent to rely on such materials duly stating the reasons why he intends to arrive at the said opinion. We are therefore of the considered view that the adjudicating authority has grossly erred in placing reliance on the statements recorded under Section 14 without following the mandate of Section 9D of the CEA. The reliance placed by the adjudicating authority on all these untested statements cannot sustain. This has rendered the case of clandestine removal made against the appellants wholly unsustainable on this ground alone.
71. The only remaining question of law that arises for our consideration is whether the electronic evidence collected during investigation in this case, is admissible given the absence of certificate issued under Section 36B.
72. We observe that a three judge bench of the Honourable Apex Court has rendered a judgement on 28th January 2025 in Criminal Appeal No. 879 of 2019 in the case of Chandrabhan Sudam Sanap v The State of Maharashtra, reported in 2025 INSC 116 , wherein the Honourable Apex Court after analysing the relevant judgements pertaining to Section 65-B of the Indian 76 Evidence Act, and the failure to produce the Section 65-B(4) certificate, has held as below:
"35. However, what resolves this issue against the prosecution completely is the failure of prosecution to follow the mandate under Section 65-B of the Indian Evidence Act, and the failure to produce the Section 65-B(4) certificate. Section 65-B reads as under:-
"Section 65-B - Admissibility of electronic records. (1) Notwithstanding anything contained in this 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 (hereinafter referred to as the computer output) shall be deemed to be also a document, if the conditions mentioned in this section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence or any contents of the original or of any fact stated therein of which direct evidence would be admissible. (2) The conditions referred to in sub-section (1) in respect of a computer output shall be the following, namely:--
(a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, information of the kind contained in the electronic record or of the kind from which the 77 information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;
(c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and
(d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities. (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
(d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all 78 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 where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, --
(a) identifying the electronic record containing the statement and describing the manner in which it was produced;
(b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer;
(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 subsection it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.
(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 79 it is so supplied directly or (with or without human intervention) by means of any appropriate equipment;
(b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities;
(c) a computer output shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment.
Explanation. -- For the purposes of this section any reference to information being derived from other information shall be a reference to its being derived there from by calculation, comparison or any other process."
36. Mr. Shri Singh learned counsel for the appellant fairly submits that when the CCTV footage was introduced as evidence through PW-1 on 28.08.2014, the judgment of this Court in State (N.C.T. of Delhi) v. Navjot Sandhu @ Afsan Guru, (2005) 11 SCC 600 was holding the field. In Navjot Sandhu (supra), this Court held as follows:
"150. According to Section 63, secondary evidence means and includes, among other things, "copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies". Section 65 enables secondary evidence of the contents of a document to be 80 adduced if the original is of such a nature as not to be easily movable. It is not in dispute that the information contained in the call records is stored in huge servers which cannot be easily moved and produced in the court. That is what the High Court has also observed at para 276. Hence, printouts taken from the computers/servers by mechanical process and certified by a responsible official of the service-providing company can be led in evidence through a witness who can identify the signatures of the certifying officer or otherwise speak of the facts based on his personal knowledge. Irrespective of the compliance with the requirements of Section 65-B, which is a provision dealing with admissibility of electronic records, there is no bar to adducing secondary evidence under the other provisions of the Evidence Act, namely, Sections 63 and 65. It may be that the certificate containing the details in subsection (4) of Section 65-B is not filed in the instant case, but that does not mean that secondary evidence cannot be given even if the law permits such evidence to be given in the circumstances mentioned in the relevant provisions, namely, Sections 63 and 65."
37. However, on 18.09.2014, in the case of Anvar P.V. v. P.K. Basheer & Ors., (2014) 10 SCC 473, Navjot Sandhu (supra) was overruled. In Anvar P.V. (supra), it was held as under:
"22. The evidence relating to electronic record, as noted hereinbefore, being a special provision, the general law on secondary evidence under Section 63 read with Section 65 of the Evidence Act shall yield to the same. Generalia specialibus non derogant, special law will always prevail over the general law. It appears, the court omitted to take note of Sections 59 and 65-A dealing with the admissibility of electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by 81 Sections 65-A and 65-B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this Court in Navjot Sandhu case [State (NCT of Delhi) v. Navjot Sandhu, (2005) 11 SCC 600 : 2005 SCC (Cri) 1715] , does not lay down 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 65-B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65-B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible."
38. According to the learned counsel, since the exhibits were marked before 18.09.2014, the appellant did not have the benefit of the decision of the Anvar P.V. (supra) when the footages were marked.
39. In Shafi Mohammad v. The State of Himachal Pradesh (2018) 2 SCC 801 (delivered on 30.01.2018), a two Judge Bench of this Court after noticing Anvar P.V. (supra) held that a party who is not in possession of device from which the document is produced cannot be required to produce the certificate under Section 65-B(4) of the Indian Evidence Act. It also held that applicability of requirement of certificate being procedural can be relaxed by the Court wherever interest of justice so justifies.
40. In Sonu @ Amar vs. State of Haryana (2017) 8 SCC 570, (delivered on 18.07.2017) the following paragraphs being crucial are extracted hereinbelow:
82
"30. In R.V.E. Venkatachala Gounder [R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple, (2003) 8 SCC 752] , this Court held as follows: (SCC p. 764, para 20) "20. ... Ordinarily, an objection to the admissibility of evidence should be taken when it is tendered and not subsequently. The objections as to admissibility of documents in evidence may be classified into two classes: (i) an objection that the document which is sought to be proved is *itself inadmissible* [ The matter between two asterisks has been emphasised in original] in evidence; and (ii) where the objection does not dispute the admissibility of the document in evidence but is directed towards the * mode of proof *[ The matter between two asterisks has been emphasised in original.] alleging the same to be irregular or insufficient. In the first case, merely because a document has been marked as "an exhibit", an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken when the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The later proposition is a rule of fair play. *The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be 83 adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence.* [ The matter between two asterisks has been emphasised in original] Such practice and procedure is fair to both the parties. Out of the two types of objections, referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in superior court."
31. It would be relevant to refer to another case decided by this Court in P.C. Purushothama Reddiar v. S. Perumal [P.C. Purushothama Reddiar v. S. Perumal, (1972) 1 SCC 9] . The earlier cases referred to are civil cases while this case pertains to police reports being admitted in evidence without objection during the trial. This Court did not permit such an objection to be taken at the appellate stage by holding that:
(SCC p. 15, para 19) "19. Before leaving this case it is necessary to refer to one of the contentions taken by Mr Ramamurthi, learned counsel for the respondent. He contended that the police reports referred to earlier are inadmissible in evidence as the Head Constables who covered those meetings have not been examined in the case. Those reports were marked without any objection. Hence it is not open to the respondent now to object to their admissibility."
32. It is nobody's case that CDRs which are a form of electronic record are not inherently admissible in evidence. The objection is that they were marked before the trial court without a certificate as required by Section 65-B(4). It is clear from the judgments referred to supra that an objection relating to the mode or method of proof has to be raised at the time of marking of the document as an exhibit and not later. The 84 crucial test, as affirmed by this Court, is whether the defect could have been cured at the stage of marking the document. Applying this test to the present case, if an objection was taken to the CDRs being marked without a certificate, the Court could have given the prosecution an opportunity to rectify the deficiency. It is also clear from the above judgments that objections regarding admissibility of documents which are per se inadmissible can be taken even at the appellate stage. Admissibility of a document which is inherently inadmissible is an issue which can be taken up at the appellate stage because it is a fundamental issue. The mode or method of proof is procedural and objections, if not taken at the trial, cannot be permitted at the appellate stage. If the objections to the mode of proof are permitted to be taken at the appellate stage by a party, the other side does not have an opportunity of rectifying the deficiencies. The learned Senior Counsel for the State referred to statements under Section 161 Cr.PC, 1973 as an example of documents falling under the said category of inherently inadmissible evidence. CDRs do not fall in the said category of documents. We are satisfied that an objection that CDRs are unreliable due to violation of the procedure prescribed in Section 65-B(4) cannot be permitted to be raised at this stage as the objection relates to the mode or method of proof."
As rightly pointed out by Mr. Raja Thakare, learned Additional Solicitor General, it was held in Sonu (supra) that objection about Section 65- B(4) of the Indian Evidence Act, not being complied, cannot be taken at the appellate stage since that will deny an opportunity for the prosecution or the opposite party to rectify the defect. It was also held that the documents were not inherently inadmissible in evidence. Thereafter, the Honourable Supreme Court, went on to hold as below: 85
47. A two-Judge Bench in a referral order reported in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & Ors., (2020) 3 SCC 216 referred the following question to a larger bench:
"3. We are of the considered opinion that in view of Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108] , the pronouncement of this Court in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC (Civ) 346 : (2018) 1 SCC (Cri) 860] needs reconsideration. With the passage of time, reliance on electronic records during investigation is bound to increase. The law therefore needs to be laid down in this regard with certainty. We, therefore, consider it appropriate to refer this matter to a larger Bench. Needless to say that there is an element of urgency in the matter."
48. The reference came to be answered in the judgment reported in (2020) 7 SCC 1 by a three-Judge bench in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal & Ors. The relevant portions of which are as under:-
"45. Thus, it is clear that the major premise of Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC 807 : (2018) 2 SCC (Civ) 346 : (2018) 2 SCC (Civ) 351 : (2018) 1 SCC (Cri) 860 : (2018) 1 SCC (Cri) 865] that such certificate cannot be secured by persons who are not in possession of an electronic device is wholly incorrect. An application can always be made to a Judge for production of such a certificate from the requisite person under Section 65-B(4) in cases in which such person refuses to give it.
46. Resultantly, the judgment dated 3-4-2018 of a Division Bench of this Court reported as Shafhi Mohd. v. State of H.P. [Shafhi Mohd. v. State of H.P., (2018) 5 SCC 311 : (2018) 2 SCC (Cri) 704] , in following the law incorrectly laid down in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 :
(2018) 2 SCC 807 : (2018) 2 SCC (Civ) 346 : (2018) 2 SCC (Civ) 351 : (2018) 86 1 SCC (Cri) 860 : (2018) 1 SCC (Cri) 865] , must also be, and is hereby, overruled.
47. However, a caveat must be entered here. The facts of the present case show that despite all efforts made by the respondents, both through the High Court and otherwise, to get the requisite certificate under Section 65-B(4) of the Evidence Act from the authorities concerned, yet the authorities concerned wilfully refused, on some pretext or the other, to give such certificate. In a fact- circumstance where the requisite certificate has been applied for from the person or the authority concerned, and the person or authority either refuses to give such certificate, or does not reply to such demand, the party asking for such certificate can apply to the court for its production under the provisions aforementioned of the Evidence Act, CPC or Cr.PC. Once such application is made to the court, and the court then orders or directs that the requisite certificate be produced by a person to whom it sends a summons to produce such certificate, the party asking for the certificate has done all that he can possibly do to obtain the requisite certificate.....
52. We may hasten to add that Section 65-B does not speak of the stage at which such certificate must be furnished to the Court. In Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108] , this Court did observe that such certificate must accompany the electronic record when the same is produced in evidence. We may only add that this is so in cases where such certificate could be procured by the person seeking to rely upon an electronic record. However, in cases where either a defective certificate is given, or in cases where such certificate has been demanded and is not given by the person concerned, the Judge conducting the trial must summon the person/persons referred to in Section 65-B(4) of the Evidence Act, and require that such certificate be given by such person/persons. This, the trial Judge ought to do when the electronic record is produced in evidence before him without the requisite certificate in the circumstances aforementioned. This is, of course, subject to discretion being exercised in civil cases in accordance with law, and in accordance with 87 the requirements of justice on the facts of each case. When it comes to criminal trials, it is important to keep in mind the general principle that the accused must be supplied all documents that the prosecution seeks to rely upon before commencement of the trial, under the relevant sections of the Cr.PC.
56. Therefore, in terms of general procedure, the prosecution is obligated to supply all documents upon which reliance may be placed to an accused before commencement of the trial. Thus, the exercise of power by the courts in criminal trials in permitting evidence to be filed at a later stage should not result in serious or irreversible prejudice to the accused. A balancing exercise in respect of the rights of parties has to be carried out by the court, in examining any application by the prosecution under Sections 91 or 311 Cr.PC or Section 165 of the Evidence Act. Depending on the facts of each case, and the court exercising discretion after seeing that the accused is not prejudiced by want of a fair trial, the court may in appropriate cases allow the prosecution to produce such certificate at a later point in time. If it is the accused who desires to produce the requisite certificate as part of his defence, this again will depend upon the justice of the case -- discretion to be exercised by the court in accordance with law.
61. We may reiterate, therefore, that the certificate required under Section 65- B(4) is a condition precedent to the admissibility of evidence by way of electronic record, as correctly held in Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108] , and incorrectly "clarified" in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC 807 : (2018) 2 SCC (Civ) 346 : (2018) 2 SCC (Civ) 351 : (2018) 1 SCC (Cri) 860 : (2018) 1 SCC (Cri) 865] . Oral evidence in the place of such certificate cannot possibly suffice as Section 65-B(4) is a mandatory requirement of the law. Indeed, the hallowed principle in Taylor v. Taylor [Taylor v. Taylor, (1875) LR 1 Ch D 426] , which has been followed in a number of the judgments of this Court, can also be applied. Section 65-B(4) of the Evidence Act clearly states that secondary 88 evidence is admissible only if led in the manner stated and not otherwise. To hold otherwise would render Section 65-B(4) otiose.
73. The reference is thus answered by stating that:
73.1.Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108] , as clarified by us hereinabove, is the law declared by this Court on Section 65-B of the Evidence Act. The judgment in Tomaso Bruno [Tomaso Bruno v. State of U.P., (2015) 7 SCC 178 : (2015) 3 SCC (Cri) 54] , being per incuriam, does not lay down the law correctly. Also, the judgment in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC 807 : (2018) 2 SCC (Civ) 346 : (2018) 2 SCC (Civ) 351 : (2018) 1 SCC (Cri) 860 : (2018) 1 SCC (Cri) 865] and the judgment dated 3-4-2018 reported as Shafhi Mohd. v.
State of H.P. [Shafhi Mohd. v. State of H.P., (2018) 5 SCC 311 : (2018) 2 SCC (Cri) 704] , do not lay down the law correctly and are therefore overruled. 73.2. The clarification referred to above is that the required certificate under Section 65-B(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 device concerned, 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 65-B(1), together with the requisite certificate under Section 65- B(4). The last sentence in para 24 in Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108] which reads as "... if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act ..." is thus clarified; it is to be read without the words "under Section 62 of the Evidence Act,...". With this clarification, the law stated in para 24 of Anvar P.V. [Anvar P.V. v. P.K. 89 Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108] does not need to be revisited." (Emphasis supplied)
49. This judgment has put the matter beyond controversy. In view of the above, there is no manner of doubt that certificate under Section 65-B(4) is a condition precedent to the admissibility of evidence by way of electronic record and further it is clear that the Court has also held Anvar P.V. (supra) to be the correct position of law.(emphasis supplied)
73. Thus, the aforesaid most recent judgement of the Honourable Supreme Court case, after analysing all the relevant previous judgements, has reiterated beyond the pale of any doubt that certificate under Section 65-B (4) [pari materia with Section 36B(4)], is a condition precedent to the admissibility of evidence by way of electronic record and affirming the law as laid down in Anvar P.V. It is not anybody's case that the judgement in Anvar P.V was not the law of the land at the time of adjudication in the present case.
74. We find that the said issue wouldn't detain us much longer in view of the decision of the Principal Bench of this Tribunal in M/s. Trikoot Iron & Steel Casting Ltd v. Additional Director General (Adjn.), Directorate General of GST Intelligence (Adjudication Cell), reported in 2024 (10) TMI 672-CESTAT NEW DELHI. In this decision, the Tribunal has, after noticing the statutory provisions of Section 36B (4) held that as the required certificate under Section 36B (4) of the Central Excise Act was not 90 produced, no reliance can be placed on the printouts, in view of the judgements of the Supreme Court in Anvar P.V. and Arjun Panditrao Khotkar. The relevant paragraphs of the aforementioned Tribunal decision is 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:
"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 in force,-
(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 as a "computer printout").
(2) The conditions referred to in sub-section (1) in respect of a computer printout shall be the following namely:-
(a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer, 91
(b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived;
(c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents;
and
(d) the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of the said activities.
(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 of computers, 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.
92(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 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 was produced;
(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 a computer,
(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 stating it.
(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 taken to be supplied to it in the course of those activities; 93
(c) a document shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment.
Explanation - For the purposes of this section,-
(a) "computer" means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and
(b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process."
16. Section 3 of the Evidence Act defines "document" as follows:
"Document. - "Document" means any matter 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 that matter."
17. "Evidence" in section 3 of the Evidence Act is defined as follows:
"Evidence." -- "Evidence" means and includes -- (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; Such statements are called oral evidence;
(2) all documents including electronic records produced for the inspection of the Court; such documents are called documentary evidence."
18. Section 36B of the Central Excise Act deals with cases where any document is required to be produced as an evidence in proceedings under the Central Excise Act and the Rules framed 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 94 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 was produced;
(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 a computer,
(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 Excise Act.
20. In respect of section 65B of the Evidence Act, which is pari materia 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 Tribunal thereafter goes on to reproduce relevant paragraphs of Anvar P.V and Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & Others, noticing that the latter judgement was with a mild modification 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) and then in para 22 held as under:
95
22. It transpires from the aforesaid two judgments of the Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar that:
(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 a computer;
(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 the original;
(iii) 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;
(iv) 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 permit the proof of an electronic record by oral evidence if the requirements of section 65B of the Evidence Act is not complied with;
(v) An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements of section 65B of the Evidence Act has satisfied; and
(vi) This would not apply in a case where the appellant adduces primary evidence by making available in evidence the electronic records.
96The Tribunal thereafter goes on to notice the decisions of the Tribunal in Agarvanshi Aluminum Ltd vs. Commissioner of Customs (I), Nhava Sheva 2014 (299) ELT 83 (Tri.-Mum), Popular Paints and Chemicals vs. Commissioner of Central Excise and Customs, Raipur and Global Extrusion Private Limited and Ors. Vs. Commissioner of Central Excise & ST, Rajkot and then held as under:
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.
75. We are consciously avoiding prolixity by refraining from citing multiple judgements on similar lines relied upon by the appellants.
Therefore, by following the aforementioned binding judgements of the Honourable Apex Court as well as in conformity with the views expressed by coordinate benches of this Tribunal earlier, we hold that the Adjudicating Authority has grossly erred in placing reliance on the printouts obtained from the pen drives, computer and hard disks as has been done in this matter to confirm the demands. The impugned order of the Adjudicating Authority cannot be sustained and is liable to be set aside on this count also.
76. We further notice that in this case the appellants have raised the plea of non-compliance with the requirements of Section 36B before the adjudicating authority itself and thus this is a case where an 97 objection relating to the mode or method of proof with respect to the electronic records was taken at the first instance itself before the adjudicating authority. It was definitely open to the adjudicating authority to have got the defect remedied instead of contending that Section 36B has been substantially complied with.
77. Had it been a matter where the adjudicating authority had omitted only to comply with the mandate of Section 9D (2) , particularly in the absence of any request for cross-examination of any of the deponents of the statements and such non-compliance has been agitated as a question of law for the first time at the appellate stage, and this were to be the only deficiency, we would have, remanded the matter for compliance with the said requirement of Section 9D (2), as we are of the view that the Tribunal would be justified in such a remand in the aforementioned situation.
78. However, given that the Adjudicating Authority, despite noticing the protestations of the appellants regarding noncompliance of Section 36B (4), and even after the law was laid down in P.V. Anvar's case, yet chose not to cure the same, we refrain from embarking on this course of remand as it would tantamount to affording a second opportunity that was undeserved, not to mention the prolongation of the litigation, which the appellants do not deserve. Moreso, since we are conscious that we have to balance the rights of the parties before us, and such conscious non-compliance by the adjudicating authority has to be considered adversely to the detriment of the Revenue and the benefit thereof should then enure to the appellants. 98
79. Over and above the aforesaid crucial deficiencies in the case of the Department, we also find that the investigations have been tardy and it appears that vital links that could have been brought on record, have not been done, for reasons beyond us. Some of the glaring gaps and lapses that we have noticed in the investigation are enumerated herein below:
a) A pend drive of 2GB of make Transcend is stated to have been seized from the office premises of GSPL on 28.09.2010. Strangely there is no mention about any investigation as to the contents of the pen drive and whether it was examined or what it contained.
b) Shri. C Natarajan, MD of GSPL in his first statement on 28.09.2010, the date of search, has stated that the former Director Mr. S. Vasudevan who had appointed Mr. P Kumar along with Mr.P.Kumar were the ones who were running the office and due to some mismanagement and disputes, both had left the company and that due to personal dispute, they had made up records to put him in trouble. Mr. P. Kumar in his first statement on 28.09.2010 has also provided the mobile number of Mr. S. Vasudevan. No enquiry seems to have been made with Mr. S. Vasudevan, who too was one of the Directors during the relevant period and the one who was in charge till May 10 according to Shri. C Natarajan. Nothing is forthcoming as why no enquiries were made with Mr.S Vasudevan.
c) Shri. C Natarajan, MD of GSPL in his first statement on 28.09.2010 on being asked about the shortage of finished goods stock, has stated that quality of stock which they had thought was okay was checked by technical person who rejected it and that the stock was again remelted during which operation the 99 furnace got punctured, the melting was failure and the melted ingots are kept separately as scrap. He had also given the name of the well experienced technical person as Mr. Venkatesh of Sankari who has done the quality check, and also provided Mr Venkatesh's phone number. Such being the statement, this ought to have been controverted by making necessary investigations with Mr Venkatesh and also by stating whether the statement of Mr. C Natarajan when queried about the shortage in closing stock of ingots, that it was again remelted due to rejection of their quality by technical person and was kept separately as scrap and thus there was no shortage, was further verified and whether it was found to be incorrect or not. It is seen that there is neither any mention of any enquiry with Mr. Venkatesh having been done nor the said statement of Mr. C. Natarajan that the stock found short as per RG 1 register was available as scrap, having been verified and categorically controverted.
d) The imaging of the two pen drives seized from Shri. P. Kumar was done on 11.10.2010 under a mahazar in the DGCEI Coimbatore Regional Office during which printout of documents in the said pen drives were taken and about which Shri. P. Kumar in his statement dated 11.10.2010 has deposed with regard to the printouts taken in his presence from the pen drive with inscription 'SanDisk' that they pertain to purchase of M.S. Scrap, sale of M.S. Ingots and cash transactions entered by him under the company name M/s. ABC India Limited etc. The Mahazar drawn on 11-10-2010 at the office premises of DGCEI, Coimbatore Regional Unit, contains narration such as: 100
"The seal on the cover was found intact. Then the officers opened the seal cover and took out 2 pen drives one with the inscription "Transcend" and the other with Inscription "SanDisk" which were identified by Shri. P. Kumar as the pendrives used by him for storing data relating to Geetham Steels Private limited and was seized by the officers under mahazar. The officers then connected the pen drive with the inscription 'SanDisk' to the office computer. The officers browsed through the contents of the pen drive....... The printouts containing sheets serially numbered from 1 to 371 were then filed in a file titled "Printouts taken from the pendrive ' SanDisk' seized from Shri. P. Kumar's residence."........ The officers then safely disconnected the pen drive with the inscription "SanDisk" from the office computer and then connected the pen drive with the inscription "Transcend" in the office computer. The officers browsed through the contents of the pen drive. The files and the data in the pen drive with the inscription "Transcend"
was similar to the files and data in the pendrive with the inscription "Sandisk". Hence no printout were taken from the data and files contained in the pendrive "Transcend". The officers then safely disconnected the pen drive with the inscription "Transcend" from the office computer. The officer then placed the pen drives with the inscription "transcend" and the other with Inscription "SanDisk" inside a cloth cover and sealed the cover with a paper seal." However, para 7.8 of the SCN states that from the forensic report pertaining to the pen drive with inscription 'SanDisk' generated during mahazar proceedings on 22.10.2013, it appears that the tally data files in the said pen drive were in Tally 9.214 version whereas the data in the computer printout taken on 11.10.2010 indicated that it has been taken from 'Tally' version and hence it appears that the computer printouts taken on 11.10.2010 were 101 actually from the pen drive with inscription 'Transcend' !!!. Such contradictions between the mahazar dated 11.10.2010 and that of 22.10.2013, has resulted in a fact situation that what was actually recorded on 11.10.2010 under mahazar proceedings and statement of shri. P. Kumar as details from the printouts taken from the pen drive 'SanDisk', was incorrect and such details pertained to printouts actually from the pendrive "Transcend". Even if we are to treat this as a mistake, such mistakes in contemporaneous recording of facts of investigations when they are conducted, hardly inspires confidence in the data retrieval process and much less in the recording of the mahazar proceedings.
e) Again, the Mahazar dated 22.10.2013 drawn to record the process of imaging done by Shri. M. Maharajan, Cyber Forensic Analyst from M/s. Ascent Technologies caught our attention. In the said mahazar it is recorded as under:
"Shri. Maharajan generated reports showing Hash properties for each digital material for which imaging had been done (CPUs, Hard disk and 2 pen drives) and we signed on them in today's date. As per specific query by the Officer regarding the date of entry of certain files in the pen drives, Shri. Maharajan generated reports in the name of 'KUMAR PENDRIVE SAN DISK' and ' KUMAR TRANSCEND PD'. We signed on the said reports also in today's date. Upon being requested to explain the entries in the above said reports regarding files in the pen drives, Shri. Maharajan stated that in KUMAR PEN DRIVE SAN DISK, Folder named Letters was created on 17th May 2010 at 2.56.52 PM (IS) and the file was last written on 17th May 2010 at 2.56.54 PM (IS) and the same was last accessed on 11th October 2010; that in the other report 102 regarding KUMAR PEN DRIVE SAN DISK, File name Proforma.xls file, file was created on pen drive on 23rd May 2010 at 12.32.00 PM(IS) and the same was last written on 2nd March 2010 at 03.27.36AM and the same file last accessed on 11.10.2010; that in the report regarding 'KUMAR TRANSCEND PD' the file name _esko.exe, file created on 28th September 2010 at 12.21.41 PM(IS) and the file last written on 26th July 2010 at 10.57.28 A.M(IS) and the same file last accessed on 08.10.2010. When Shri. Maharajan was asked how the date of last written was before the date of creation in the case of the file with name Proforma.xls in KUMAR PEN DRIVE SAN DISK, Shri. Maharajan stated that the date of creation of the file indicated the date and time of bringing the file into the pen drive, which means that the file would have been created at some other digital location prior to the date of last written time stamp. Shri. Maharajan also generated reports regarding certain specific files/folders in the image copy of the pen drive with inscription 'SanDisk' as well as some of the deleted files from the Hard Disk seized from the Office of GSPL. We signed on the said reports also on today's date. The working copy of the extracted files in the portable hard disks was pasted on the desktop of one of the Computers in the Office, for departmental use. The CPUs and Hard Disk were again sealed with paper seal bearing our signature as well as the signature of Shri. Natarajan. The Pen drives were put in an envelope and sealed with paper seal bearing our signature as well as the signature of Shri. Natarajan. We the witnesses and Shri. Maharajan have been present throughout the above proceedings."
What is of crucial importance is the explanation of Shri. Maharajan when asked how the date of last written was before the date of creation in the case of the file with name Proforma.xls in KUMAR PEN DRIVE SAN DISK. He has replied that the date of creation of the file indicated the 103 date and time of bringing the file into the pen drive, which means that the file would have been created at some other digital location prior to the date of last written time stamp. Now, if we give effect to this explanation with respect to what has been recorded in the mahazar as regards the report regarding 'KUMAR TRANSCEND PD', as reproduced above, it can be seen that in the report regarding 'KUMAR TRANSCEND PD', the file name _esko.exe, file created on 28th September 2010 at 12.21.41 PM (IS) and the file last written on 26th July 2010 at 10.57.28 A.M(IS) and the same file last accessed on 08.10.2010. Which according to the explanation of Mr. Maharajan would then mean that the file _esko.exe was brought into the pen drive with inscription "Transcend" on 28th September 2010 at 12.21.41 PM (IS) and the file was created at some other digital location prior to the date of last written time stamp, namely, 26 th July 2010. The said file is shown last accessed on 08.10.2010. At this juncture, it becomes necessary to indicate what is recorded in the mahazar dated 28.09.2010 which commenced at 11.45 hours at the residence of Shri. P. Kumar. It is recorded that during the course of search the officers found two pen drives one with the inscription "Transcend" and the other with inscription "SanDisk". It is further recorded that the search was completed at 12.15 hours and that as there was no facility in the above residential premises of Shri. P. Kumar, the officers along with the witnesses and Shri. P. Kumar proceeded to one browsing centre named "Archanaa Software Tech" located nearby where the officers inserted the two pen drives one by one in the computer available there, took printout of certain purchase and sale data entered 104 against the companies M/s. ABC India and M/s Geetham Steels Pvt Ltd from the above pen drives and filed them in a Box file containing sheets serially numbered from 1 to 91. It is further recorded that the officers then placed the two pen drives in a brown cover and sealed them with a paper seal and seized them. Thereafter, the imaging of the two pen drives seized from shri. P. Kumar was done on 11.10.2010 under a mahazar in the DGCEI Coimbatore Regional Office. As per the mahazar recorded for the said proceedings on 11.10.2010, which are also reproduced supra, the recitals state that the seals were found intact, prior to the commencement of the imaging proceedings. Therefore, as per the explanation of Shri. M. Maharajan, Cyber Forensic Analyst from M/s. Ascent Technologies, if the file _esko.exe was brought into the pen drive with inscription "Transcend" on 28th September 2010 at 12.21.41 PM (IS) and the file was created at some other digital location prior to the date of last written time stamp, namely, 26th July 2010, it appears to lend itself only to the explanation that it has occurred after the completion of search at Shri. P. Kumar's residence at 12.15 pm and before reaching the browsing centre Archanaa Software Tech, or at the browsing centre Archanaa Software Tech. Even more surprisingly, according to the explanation of Shri. Maharajan, the said file is shown last accessed on 08.10.2010, whereas as per the recitals of the mahazar, after the completion of proceedings at Archanaa Software Tech on 28-09-2010, the officers had placed the two pen drives in a brown cover and sealed them with a paper seal 105 and seized them and thereafter as per the recitals of the mahazar in the DGCEI Coimbatore Regional Office on 11.10.2010, it is again recorded that the seals are intact, when these pen drives were taken out for the imaging process that was to be performed by the aforementioned Cyber Forensic Analyst. The aforesaid analysis of the appeal records, inevitably leads only to the conclusion that the custody of the said pen drives during the intervening period from 28-09-2010 to 11-10-2010 was compromised and this breach of custody has resulted in the pen drive with inscription "Transcend" being accessed on 08.10.2010, at which point in time it was supposedly under seizure, sealed and in secure custody. This, to our mind, is extremely disconcerting to say the least.
f) Again, in para 8.4.8 of the SCN (and in para 34.6 of the OIO) it is stated that GSPL has received amounts in cash on various dates through the private bank accounts of individuals related to Shri. C. Natarajan, MD of GSPL and such cash flow corroborates to unaccounted clandestine clearances of MS Ingots by GSPL. These individuals, related to Shri. C Natarajan are none other than Shri. Kirubakar, son of Shri. Natarajan, MD of GSPL and one of the Directors of GSPL and Ms. Rani Deivanai N, wife of Shri Natarajan, into whose accounts the money is stated to have been deposited and subsequently transferred to GSPL. However, inexplicably, neither were these persons inquired with, nor was any statement recorded from them as to the nature of the transactions in their bank accounts. When it is elementary that it is for the holders of 106 the bank account to explain the source of the cash deposits into their account and the reasons why they transferred these amounts to the bank account of GSPL, for reasons beyond us and best known to the investigating officers, such a line of enquiry that may have provided clinching link to the consignees to whom the clandestine clearances were made, was never explored, despite there being no apparent difficulty for the investigating officers to do so !. In fact, para 8.4.7 of the SCN (and in para 34.5 of the OIO) also lists six companies to whom GSPL has alleged made clandestine clearances and from whom payments were received. No inquiry with respect to such payments allegedly made by them during February 2010 to June 2010 is seen made, again quite a glaring omission.
g) Shri. C Natarajan in his statement dated 28-09-2010 has stated that apart from the staff Mr. P. Kumar and Smt. A Kavitha, there was a person Mr. Manivel in charge of all jobs in the Factory. Subsequently, in his statement of 08-10-2010, Shri. P. Kumar has identified Shri Venkatesh as the person working as production in charge of GSPL, Shri. Madhan as incharge of cutting and Shri. Chithambaram as in charge of scrap. He also identified the names of persons who were drivers and contractors. Again, it is not known why no enquiry was made or statements taken of even the persons identified as production in charge, in charge of scrap etc., especially when it is an investigation into clandestine production and removal of finished goods.
107
h) It is also puzzling as to why the investigating officers who had conducted search of the premises of GSPL on 28-09-2010 to unearth evidences of clandestine production and removal of MS ingots, thereafter did not conduct any follow up searches or investigation immediately with the consignors to whom the MS ingots have allegedly been clandestinely cleared or from whom raw materials would have to be procured; the conventional wisdom in such matters, idiomatically expressed being, to strike the iron when it was hot. It is seen that the pen drives of seized from Shri. P. Kumar was verified at the first instance on 28-09- 2010 itself and printouts of the details of purchase and sale data entered in these pen drives of companies M/s. ABC India, which is stated to represent the transactions not reflected in the GSPL accounts, were taken on the same day. On 28-09-2010 itself, Shri. C. Natarajan, MD of GSPL too had given names of the customers of the company. Again, on 11-10-2010 printouts of purchase of M.S. Scrap, Sales of ingots and cash transactions of M/s. ABC India was taken and Shri. P. Kumar in his statement dated 11-10-2010 had provided from the printouts, names and locations of 28 suppliers of scrap, an unloading contractor and labour contractor along with most of their mobile numbers. Additionally, on 13.10.2010 after taking printouts from the computer of Geetham Steels and also the computer available at the residential premises of Shri. C. Nagarajan, he had provided names of parties who were suppliers of scrap to his company. Yet, for some strange and inexplicable reason, the follow up investigation was delayed by nearly one year and five months and it was only on 07.03.2012 follow up investigation was done 108 with the customers of GSPL, those who had already been identified way back in September 2010.
80. We now address the standard of proof that is required when it comes to matters of clandestine removal. The 'standard of proof' denotes the level of conviction or the 'decisional threshold' that enables the court to decide whether the party who shoulders the burden of proof has discharged the same. In customs and excise matters, where the assessee can be visited with financial penal consequences, Courts have always tried to apply a qualified preponderance of probabilities standard. They have attempted to draw a fine line by saying that the burden on the revenue is not as high as that of a criminal trial given that it is a Fiscal statute (and the customs/excise officers being not police officers). However, they have also stated that in such matters involving financial penal consequences, especially penalty under S.11AC, it cannot be imposed on a mere suspicion without adequate proof and positive evidence must be established of the person's intent to commit fraud or wilful suppression or misstatement of facts etc., with intent to evade payment of duty. In Uniworth Textiles v CCE, Nagpur, 2013 (288) ELT 161 (SC), while considering the ingredients required to invoke the extended period of limitation, the Supreme Court observed that it is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. The Apex Court referred to its decision in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 wherein it was held that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very 109 seriousness of such allegations demand proof of a high order of credibility." Thus, while the general standards of proof for civil cases are the preponderance of probability and the standards for criminal cases are beyond reasonable doubt, these standards have also been eschewed in favour of "clear and convincing evidence" when the allegations are of more serious nature and also attract heavy financial consequences. At the cost of repetition, we reiterate that the three steps in sequence involved in applying the principles of evidence law, as we had elucidated supra, would be to at first find out whether the fact, the evidence in respect of which it is sought to be adduced to prove it, is relevant, and the next step would be to see whether the evidence that is being sought to be adduced to prove such a relevant fact is admissible and lastly whether the fact or facts so proved are sufficient to determine the issue. Sufficiency is completely determined only by adjudicating authority and is thus the adjudicating authority's evaluation of the extent of the bearing the proven facts have in the matter as per the standards of evidence called for in the adjudication process, which in matters of clandestine removal would call for "clear and convincing evidence" .
81. We see that the standard of proof required in cases of clandestine removal including the aspects that need to be proved have been touched upon by High Courts and Tribunals in numerous decisions. In Continental Cement Company v UOI, 2014 (309) ELT 411 (All), the Honourable High Court of Allahabad has held as under:
"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 110 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.
(v)To find out finished product receipt details from regular dealers/buyers.
(vi)To find out the excess power consumptions.
13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department."'
82. In Commissioner of Central Excise v. Brim Products, 2011 (271) ELT 184 ( Pat.), the Honourable High Court of Patna has held as under:
9. In our opinion, since the charge was for clandestine manufacture and surreptitious removal of finished final product, the same is required to be proved beyond doubt by the Revenue. One has to keep in mind that, though being the main ingredient, betel-nut is not the only raw material which is used in manufacture of Pan Masala. That apart, since the investigation has been carried only at the transporters end, no presumption could be drawn with regard to manufacture and removal of the final product. Presumptions and assumptions cannot take place of 111 positive legal evidence, which are required for proving the charge. Even if, it is assumed that some raw materials were received at the factory of the respondent during the said period, the same cannot become conclusive proof of production and clandestine sale to different parties. Due to lack of positive evidence, benefit of doubt will always go in favour of the assessee.
10. Accordingly, we answer the reference against the Revenue and in favour of the assessee and it is held that the receipt of one of the raw materials, does not conclusively prove clandestine manufacture and surreptitious removal of finished final product. Further, since the charge is regarding clandestine manufacturer and removal of finished product for evading excise duty, the same cannot be held to be proved on the basis of principle of preponderance of probabilities and the Revenue has to prove the same beyond doubt. The reference is answered accordingly.
83. In Arya Fibres Pvt Ltd v. CCE, Ahmedabad II, 2014 (311) ELT 529 (Tri-Ahmd), a coordinate bench of this Tribunal after considering various Tribunal decisions formulated certain parameters to be established by Revenue in matters where clandestine removal are being alleged. The relevant paragraphs are as below:
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; 112
(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;
(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. Needless to say, a precise enumeration of all situations in which one could hold with activity that there have been clandestine manufacture and clearances, would not be possible. As held by this Tribunal and Superior Courts, it would depend on the facts of each case. What one could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons, 113 may even be responsible officials of the manufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present.
84. Having detailed some of the lacunae and shortcomings in the investigation supra as well as the standard of proof required to be adduced by Revenue in clandestine removal matters as aforementioned, we shall now deal with the evidence relied upon qua each of the demands confirmed in the impugned order and examine whether the evidence relied upon meet the standard of "clear and convincing evidence", to establish the case of clandestine removal and to establish the availment of cenvat credit without actual receipt of inputs.
85. The entire demand of Rs.1,70,97,731/- made on GSPL comprises of demand of (i) Rs.58,90,2251/- on clandestine removal made between February 2010 and June 2010 of 2194 MTs as per Computer Printouts pertaining to M/s. ABC ( ABC Data in short);(ii) Rs.32,50,479/- demanded based on the production reports for August, 2010 and Sep, 2010 recovered from the factory on 28.9.2010 on the allegation of clandestine removal of 1358.57 MTs; (iii) Rs.25,58,588/- demanded on the alleged shortage of 1001.8 MTs MS ingots on 28.9.2010; (iv) Rs.2,66,856/- demanded by alleging that MS ingots of.76.02 MTs were removed in Feb, 2012 as per Annexure-D2 of the SCN (v) Rs.51,31,557/- demanded on the grounds that it is ineligible cenvat credit on the MS scrap, which was not received, but credit 114 was taken during Feb, 2010 to May, 2010 as per data in GSPL computer.
(i) The demand of Rs.58,90,251/- is on clandestine removal made between February 2010 and June 2010 of 2194 MTs (2193.52 MTs as per annexure D(1)(a) to the SCN). The discussions in this regard by the Adjudicating Authority is in paras 34.1 to 34.8 and 34.17 to 34.19 of the OIO. The Adjudicating Authority has premised his findings on the computer printouts from the pen drives seized from Shri. P. Kumar as available at Annexure A-13(i) of the SCN as well as per the GSPL computer data at Annexure A- 15(i) of the SCN and the depositions of Shri. P. Kumar stating inter-alia that he made entries in the computer of GSPL as per the particulars given to him by MD of GSPL and that the details of sale of Ingots shown by GSPL in their ER1 returns tally with the entries for the corresponding months in the RG 1 register as well as that as per the computer data in the CPU of GSPL. However, the printouts from pen drive with inscription Transcend pertaining to ABC India Ltd consisted of data contained in the GSPL CPU as well as some other sales and therefore the data contained under the name ABC India Ltd is nothing but the data related to GSPL only as admitted by Shri. Kumar. That the computer printout from pen drive with inscription 'Transcend' had entries under the heading cash book in the account maintained under ABC India which shows cash received from various parties on different dates from February 2010 to June 2010 and when compared with the value of clearances to the said parties it is seen that these cash receipts were for clandestine clearances. That as regards receipt of the sale proceeds on account of such unaccounted sale of MS ingots, 115 it is seen that from the passbook of Shri Kirubakar, son of Shri Natarajan, MD of GSPL and the passbook of Ms. Rani Deivanai, Wife of Shri. Natarajan it is seen that cash in lakhs has been deposited in the account of Shri. Kirubakar and Ms. Rani Deivanai which is thereafter transferred to the account of Geetham Steels and that a summary of such transactions has been given in Annexure C to the SCN and thus it is seen that GSPL has received amounts in cash on various dates and these amounts have been brought into the official bank account of GSPL through private bank account of individuals related to Shri. C Natarajan and such cash flow corroborates to unaccounted clandestine clearances. The Adjudicating Authority also says that the clandestine manufacture and clearance is further corroborated by the unaccounted procurement of raw materials and tabulates the quantity of scrap purchased from Feb 2010 to May 2010 as per GSPL Computer data, as per ER 6 filed by GSPL and as per data in computer printout from pen drive and concludes that GSPL had sufficient unaccounted quantity of inputs during the month of February 2010 to May 2010 to enable production and clearances during the same period as found in the data in the pen drive. The adjudicating authority also refers to the statement of three scrap dealers who have admitted that they have cleared scrap to GSPL without bills and without accounting the same and this corroborates the authenticity of the entries recorded in the computer data available in the pen drive with inscription "Transcend". We are unable to uphold the aforementioned findings of the Adjudicating authority for the following reasons: 116
(A) Based on our observations supra as to the mistakes and breaches, in our view, the credibility of the entire investigative procedure in so far as data retrieval from the pen drives, CPU and hard disk in this case has been irrevocably tarnished and no credence in any manner can be attached to the electronic evidence being relied upon by the Department to bring home its allegations against the appellants.
(B) In the Mahazar dated 28.9.2010 drawn at the premises of Shri P. Kumar, the version of Mr. Kumar recorded is that he used to enter the data in the office computers available in M/s.GSPL as per the particulars given by the MD Shri. C. Natarajan in small paper slips and stored it in the two pen drives. Other than the two pen drives, no computer was seized or available at the premises of Shri. P. Kumar. Again, nothing is shown as evidenced from the records that upon examination of the CPU seized from GSPL pages 1 to 473, it contained any data other than pertaining to GSPL, and this data of GSPL was also found in the pen drives of Mr. Kumar.
Mr. Kumar in his statement of 28-09-2010 also confirms that the data contained in the pen drive under the name Geetham Steels Private limited was copied from the system available in the office of GSPL. It is also pertinent that Kumar in the said statement dated 28-09-2010 states that initially one computer was purchased by GSPL and subsequently in June 10 a new Samsung computer was purchased. There is no evidence of any data being retrieved or the said Samsung Computer which is the latest computer 117 since June 10 according to Mr. P. Kumar, having been found or examined by the investigators. When the ABC data found in the pen drive of Mr. Kumar is not shown as found in the computer or hard disk recovered from the premises of GSPL, it is not forthcoming as which computer is the source computer with respect to the entering of ABC data in Mr. Kumar's pen drive.
(C) The Adjudicating Authority has relied on the depositions of Shri. P. Kumar stating inter-alia that he made entries in the computer of GSPL as per the particulars given to him by MD of GSPL. Shri. P Kumar in his statement dated 08.10.2010 states that the documents seized under sl.no.10 of the annexure to the mahazar mentioned above (mahazar of 28- 09-2010) titled made up file, contains various details like production, scrap receipt and classification with the rate and value, payments made to scrap suppliers, dispatch of ingots etc. and that he is verifying the details of the known handwriting and proceeds to state that it is Shri Natarajan's handwriting in the documents of the made up file. However, what is stated at internal page '9'of his statement then comes to the fore. He states "it was based on similar slips of scrap receipt and dispatch of ingots that I used to make entries in the pen drive in the name of ABC India ltd as per the directions of the above MD i.e. Shri. C Natarajan." Thus, it appears that there has been no recovery of any slip pertaining to scrap receipt and dispatch of ingots which had been written by Shri. C Natarajan and pertains to the data entered in ABC India Ltd, ABC India being the company 118 where the clandestine clearances details were included. In his statement of 08.10.2010 Shri. P Kumar then only identifies slips handed over by Shri. Natarajan to be entered in the cash ledger under the name of ABC India, but they pertain only to payments made to Shri Venkatesh, Shri Madhan, Shri Raja, Shri Chitambaram, Shri Manivel who were employees and Shri Ranjit and Shri litu who were contractors. Thus, there appears to be no evidence of any slips pertaining to cash paid for receipt of unaccounted raw materials or slips accounting receipt of cash otherwise than banking channels as sales proceeds of clandestinely cleared goods.
(D) The cash flow into GSPL relied upon by the Adjudicating Authority in this regard from the accounts of the son and wife of Shri C. Natarajan, into whose account payments are seen made which are being assumed as payments received for clandestine clearances, and such a presumptive conclusion does not merit acceptance in the absence of any enquiry with Shri. Kirubakar and Ms. Rani Deivanai. The cash deposits in the accounts of Kirubakar and Rani Deivanai detailed in Annexure C of the SCN relied on to establish that these are the sale proceeds of clandestine removals as discussed in Para 34.6 of OIO reflect amount of only Rs.18,15,000/- whereas the alleged sale proceeds of such clandestine removals as per para 34.5 of the OIO is Rs.6.23 crores Other alleged buyers as mentioned in para 34.5 of OIO have also not been inquired with on this aspect. No enquiry appears to have been done to identify the remitters 119 or to conduct inquiries with them which, had it been done, would have provided clinching evidence as to the person who remitted as well as corroborated the purpose of remittance, eschewing the very necessity of making assumptions.
(E) Even if one peruses the unaccounted procurement of raw materials tabulated in para 8.4.9 of the OIO, as per the quantity of scrap purchased from Feb 2010 to May 2010 as per GSPL Computer data, as per ER 6 filed by GSPL and as per data in computer printout from pen drive, which according to the adjudicating authority is sufficient unaccounted quantity of inputs during the month of February 2010 to May 2010 to enable production and clearances during the same period as found in the data in the pen drive, it can be seen that the total quantity of scrap purchased from Feb 2010 to May 2010 as per GSPL computer data is 3911.42 MTs (annexure A-15(i) to SCN), as per ER 6 filed by GSPL (annexure A-19(ii) to SCN) is 3942.707 MTs and as per data in computer printout from pen drive is 4273.020. In other words, the excess raw material that was unaccounted in ER 6, even if one were to assume the computer printout data was tenable, is 330.313 MTs which is the quantum of raw material that the Adjudicating Authority has found to be sufficient to manufacture 2194 MTs of clandestinely removed MS Ingots during Feb 2010 to June 2010. Thus, there is no evidence, to support the alleged production of clandestinely removed MS ingots during Feb 2010 to June 2010 and not even a 120 presumptive arithmetical calculation substantiating the quantum of alleged production of 2194 MTs clandestinely removed during the said period, from the said quantum of raw material.
(ii) The demand of Rs.32,50,479/- on the allegation of clandestine removal of 1358.57 MTs during August 2010 and September 2010 (Annexure D1 of SCN) is based on the production reports for August, 2010 and Sep, 2010 prepared by Mr. Pinto the Lab Chemist, recovered from the factory on 28.9.2010 and his statement of the same date, unaccounted scrap purchases of 801 tons during July to September 2010 (Annexure B of SCN), determined on the basis of slips recovered from GSPL and Senthil Steels as well as deposition of scrap dealers. The discussions in this regard by the Adjudicating Authority is in paras 32 and 35.5 to 35.8 of the OIO. The Adjudicating Authority has found that pinto has stated that he prepared the daily production report and this is admitted by Shri. Natarajan, that 46 numbers of such production reports were seized from the office premises and he premised his finding of suppression of production on the conclusion that the figures shown in the seized daily production numbers do not tally with the production figures in the RG1. The appellant's contention that for some dates the production in the daily stock account is more than the production recorded in the daily production report is brushed aside stating that it only shows that their entry in the Daily production register is to suit their needs. The appellant's contention that the daily production report is 121 only tentative and only the goods that qualify the quality control parameters are entered in the daily stock account register is disbelieved as their daily production report indicated that the quantity of MS ingots manufactured and failed is nearly twice the quantity of MS Ingots actually accounted for the month of September 2010 and that they have not placed any evidence to show that these inferior quality ingots were duly accounted for by them and used captively for remelting. The Adjudicating Authority also relies on the statements given by Shri. Raja of M/s. Viyapuri Chettiar &Co dated 10.01.2013, Shri. Shivalingam of M/s. Vasantham Steels dated 15.01.2013 and statement of Shri. K Murugesan@Murugan, proprietor of M/s. Bakyalakshmi Metal Mart in this regard. In para 34.7 of OIO, the Adjudicating Authority records that these persons have admitted during the personal hearing that they have supplied scrap to GSPL without any bills and considers this as corroboration of the authenticity of the entries recorded in the computer data available in the pen drive with inscription Transcend and further that the said data represents the actual purchase of scrap by GSPL. We do not concur with the aforesaid conclusions for the following reasons:
A) It is seen recorded in Pinto's statement dated 28-09-
2010 as his explanation of the contents of the five numbers of daily production report seized from him that it contains details like Lot No., carbon %, sulphur %, manganese %, no. of ingots, length and weight in tonnes 122 and that after counting the number of ingots he prepares the daily production report and sends it to Mr.Natarajan MD and that it is the actual production report with respect to the dates mentioned in the report. Yet, from the daily production reports of 27-08-2010 and 28-08- 2010 seized from him, (para 8.1.1 of the SCN), the length and weight column are blank. While the daily production report dated 30.08.2010 in the said para indicates the production in tons totalled as 68.646 T for the said date, however, it is at variance with that indicated as recorded in the production report for the said date seized from the factory and is indicated as 70.036 T in the tabulation in paragraph 8.1.3 of the SCN. Therefore, if what was available as reports for the period pertaining to the same dates as filed in pages 1 to 46 of the made-up file and seized from office of GSPL are the daily production reports, then what was seized from Mr. Pinto are not the daily production reports as recorded in his statement, but only drafts of the same as it clearly did not contain the length and Ton/weight of the ingots as evidenced from the daily production reports of 27-08- 2010 and 28-08-2010 seized from Pinto. Even if Mr. Natarajan's disowning of the slips seized from the factory is discounted, still his explanations in his statement that he was new to the industry having started the manufacture of M.S. Ingots in February 2010 and that they have not arrived the good quality in all heats and that from the daily production, only good quality is 123 entered in stock as if there is piping/raising and cup formation in the ingots they will be remelted, remain uncontroverted, especially when neither the technical person whom Natarajan had identified as the person undertaking quality check of the MS ingots produced was not inquired with despite Mr. Natarajan providing the person's mobile number, nor was any inquiry made with the persons whom Mr. P. Kumar has identified in his statement of 08.10.2010 as production in charge, as in charge of cutting and as in charge of scrap.
B) Except for the statements of the dealers, no other evidence such as statements from the drivers of the vehicles in which the raw materials were clandestinely supplied have been recorded which would have been concrete evidence of their actual receipt at the premises of GSPL. In fact, though Mr. Murugesan @ Murugan, proprietor of M/s. Bakya Lakshmi Metal Mart stated in his statement dated 28.09.2010 that scrap used to be sent in a vehicle TN 28 L 1176 that belonged to them, yet strangely no effort is seen made by the authorities to enquire with the driver of the said vehicle regarding the actual transportation of the scrap.
C) While the Adjudicating Authority has stated that these scrap dealers have confirmed that they have sold scrap to M/s. GSPL without bill during personal hearing, given that they were implicating GSPL, it was incumbent upon the Authority to have offered them for cross examination by the appellants and post testing of their statement on 124 the touchstone of cross-examination, placed reliance on them if thereafter the statements remain unshaken. D) Shri. P. Kumar in his statement dated 11-10-2010 had provided from the printouts, names and locations of 28 suppliers of scrap, an unloading contractor and labour contractor along with most of their mobile numbers. Yet, apart from the statements of the aforementioned 3 scrap dealers, no enquiry was conducted with the remaining suppliers of scrap.
(iii) The demand of Rs.25,58,588/- on the alleged shortage of 1001.8 MTs of MS ingots on 28.9.2010 (Annexure D1 of the SCN) is for the reason that on 28-09-2010 when the officers visited GSPL nil physical stock was found, RG-1 was not updated for September 2010 and upon updating the closing book stock arrived at as 1008.801 MTs was not available. The Adjudicating Authority discusses this aspect in para 33 of the OIO and on an assertion that Mr. Natarajan in his statement dated 28.09.2010 even when asked specifically about the shortage did not mention about the stock lying in the factory has proceeded on presumptive calculations to conclude that the appellant has not explained the shortage and their plea of captive consumption is an attempt to cover up the shortage and is not a genuine case of transfer of defective MS ingots for captive use. This finding of the Adjudicating Authority is erroneous for the following reasons:
125
A) The very premise of the Adjudicating Authority that Mr.Natarajan has not mentioned about the stock lying in the factory is incorrect and contrary to the statement given by Mr.Natarajan on 28-09-2010. It is seen from the statement dated 28-09-2010 of Mr.Natarajan that on being asked about the shortage of finished goods stock, he has stated that quality of stock which they had thought was okay was checked by technical person who rejected it and that the stock was again remelted during which operation the furnace got punctured, the melting was failure and the melted ingots are kept separately as scrap. He had also given the name of the well experienced technical person as Mr. Venkatesh of Sankari who has done the quality check, and also provided Mr Venkatesh's phone number. This say of Mr. Natarajan ought to have been controverted, all the more for the reason that as early as on 09-12-2010, the appellant had replied to a notice in terms of para 4 of the notification 32/2006-CE(NT) proposing to withdraw the facility of monthly payment of duty and to restrict the payment of duty through cenvat credit as per the provisions of the notice ibid by categorically asserting that the only evidence adduced is the mahazar dated 28-
09-2010 wherein it has been observed that there was no stock of finished goods in the production area of the factory, from which observation it is evident that the officers had verified only the production area of the factory and they have not verified the other places of the 126 factory to find out whether any MS ingots are available and that as pointed out earlier the MS ingots were removed to the scrap yard for re-melting purposes. The Appellant had also submitted the letter received from DGCEI dated 02.12.2010 along with their aforesaid reply to the Commissioner of Central Excise, Salem vide their letter dated 15.12.2014. There is no averment in the SCN or in the impugned OIO, either as to whether the said assertion of the appellant was verified, found untrue and the restrictions proposed imposed, or why if for any other reason, the restriction proposed in the notice was not carried into effect. Not rebutting these assertions by making necessary investigations with Mr Venkatesh and also by not stating whether the statement of Mr. C Natarajan that the stock was kept separately as scrap and thus there was no shortage, was further verified and whether it was found to be incorrect or not, weighs heavily against the Revenue.
B) The Adjudicating Authority or the investigating authority has also not stated as to why the report by the Deputy Commissioner of Headquarters Preventive Unit, Salem, vide letter dated 03.01.2011 submitted after causing verification at GSPL and stating that the benefit of notification No.67/95 is available as there appears to be no bar on the appellant for removing the goods manufactured for captive consumption and using the same for the manufacture of final products which are cleared on payment of appropriate duty; is unacceptable, 127 more so when the Departmental officers have said so after physical verification conducted at the appellant's premises on 18.12.2010 and 29.12.2010 and when the appellant's contention that they have subsequently removed the said goods so manufactured on payment of duty, has not been rebutted.
(iv) The demand of Rs.2,66,856/- is on the allegation that MS ingots of76.02 MTs were removed in Feb, 2012 as per Annexure-D2 of the SCN determined on the basis of slips recovered from M/s. SKSRM and M/s. Balaji Steel Industry, who had accepted and paid duty on the TMT Rods manufactured from such MS Ingots and cleared by them. The Adjudicating Authority's finding in this regard is in para 35.1 to 35.5 of the OIO, wherein with respect to transactions with M/s. Balaji Steel Industry reliance is placed on the notepad seized from the premises of M/s. BSI and the statement of Shri. S Gnanasekharan, Factory in charge of M/s. BSI. The notebook has four entries with the name Geetham under the heading purchase, of which two entries with the name Geetham on 15.02.2012 and 19.02.2012 has no invoice numbers mentioned, while the other two entries has invoice numbers 36 and 37 which tally with invoices of GSPL and therefore the entries against the name without any invoice mentioned indicates receipt of ingots by M/s BSI without bills. That Shri. Gnanashekharan admitted to such receipts and M/s. BSI debited an amount of Rs.2,14,885/- in their CENVAT account towards the duty on the TMT bars manufactured and cleared without payment of duty out of the ingots obtained by them from GSPL without payment of duty. It is also stated that Mr. Natarajan has in his statement 128 dated 21.6.2012 denied sending any MS ingots without invoices. As regards the transaction with M/s. SKSRM, Shri. Damodharan, Manager of M/s. SKSRM has in his statement dated 07.03.2012 admitted receipt of 26.45 MT Ingots on 16.02.2012, without payment of duty from GSPL and the weighment slips recovered from the premises of M/s. SKSRM also corroborate receipt of 26.45 MT ingots in vehicle No. KA 51 4824. It is stated that Shri. Damodharan and Shri. Thirugnanasambantham of M/s. SKSRM have both in their statements on 07.03.2012 admitted that M/s. SKSRM received MS Ingots from GSPL without payment of duty and TMT bar manufactured out of that has been cleared without payment of duty and they intimated vide their letter dated 07.03.2012 of payment of Rs.4,60,967/- towards duty involved on TMT bars manufactured and cleared by them without payment of duty. The Adjudicating Authority concludes from the above that GSPL has cleared MS Ingots in the month of February 2012 without payment of duty and the duty to the tune of Rs.2,66,856/- is to be paid by GSPL. It is also stated by the Adjudicating Authority that in their reply SKSRM has admitted to the charges made in the SCN while M/s. BSI contested that computer printouts are not admissible as evidence as they do not satisfy the conditions stipulated under Section 36 B and that the charge is not substantiated. M/s. SKSRM too in the additional submissions raised similar objections. We are not persuaded by the finding for the reason that the demand is premised on inferences without any actual proof. While the lack of corroborative evidence generic to the aforementioned findings of clandestine clearances are further elaborated infra, the complete absence of any evidence of actual 129 transportation of these clandestine clearances to the buyers cannot be overlooked, particularly given the staunch denial of Shri. Natarajan. Even when a specific lorry number KA 51 4824 has been mentioned as the alleged vehicle of transportation of the MS ingots cleared to M/s. SKSRM, no evidence of any statement from the transporter as to the actual transportation has been gathered. Given the quantum of duty liability paid by the buyers who have initially accepted the allegation, in the absence of any other corroborative evidence of production, transportation etc., coupled with the deponents resiling from their stated position in their written submissions in response to the SCN as well as the exculpatory statement of Mr. Natarajan, in the absence of the deponents of the admission statements being subjected to the test of cross examination, such statements and couple of entries in a private notebook and weighment slips sans indication of material weighed, cannot be the basis for visiting GSPL with a duty liability in this regard. It is also pertinent that in the statement of Mr. Natarajan dated 21.06.2012, he is shown ten vehicle numbers at page no.2 of computer printouts from computers from M/s. SKSRM and enquired whether he has engaged the said vehicles. Yet no enquiry is seen made with the drivers of the said ten vehicles whose registration numbers have been confronted with Mr. Natarajan.
(v) The demand of Rs.51,31,557/- (Annexure D3 (a) and D3(b) of the SCN) is made on the grounds that it is ineligible cenvat credit taken by M/s. GSPL during Feb 2010 to May 2010, without actual receipt of the input MS scrap. Of the aforementioned amount of 130 ineligible cenvat credit, a credit of Rs.11,72,909/- is stated to have been availed indicating receipt of 619.72 MTs of scrap valued at Rs.1,07 Crores from Salem Alloys as indicated in Annexure D3(a) and a credit of Rs.39,58,648/- is stated to have been availed indicating receipt of 2430.517 MTs valued at Rs.4.24 Crores from many other suppliers as per Annexure D3(b). The reason for such denial of cenvat credit of Rs.51,31,557/- as discussed by the Adjudicating Authority in para 34.9 of the OIO is that on a comparison of the computer printout from pen drive with inscription Transcend with the computer printout taken from the CPU of GSPL, it is seen that in the account entered in the name of M/s. ABC India Ltd in the computer printout from the pen drive with inscription Transcend, receipt of scrap is shown only in respect of certain invoices on which CENVAT credit has been taken by GSPL. In respect of many invoices from various suppliers on which cenvat credit has been availed by GSPL for which entries are available in the data in the CPU seized from GSPL/raw material register of GSPL, no receipt of such scrap is found in the computer printout from pen drive with inscription transcend and since M/s.ABC Data is taken to be the actual account of transactions of M/s. GSPL as per statement of Mr. P. Kumar dated 11.10.2010, absence of entry for receipt of scrap in M/s. ABC Data is treated as absence of actual receipt of scrap. In para 34.11 to 34.13 it is shown that as per M/s. ABC Data certain amounts were paid back to GSPL by Mr. Sidesh Kumar of Salem Alloys and though Mr. Sidesh Kumar has accepted payment in respect of four dates to Mr. Natarajan, since GSPL has received payments from M/s. Salem Alloys on seven days for a total amount of Rs.1,11,21,421/- 131 and since it is a running account being maintained for this purpose, there is a meagre difference between the cheque issued by GSPL and the cash received by them from Shri. Sidesh Kumar and thus it was seen that the invoices were issued only to enable ineligible cenvat credit by GSPL even without actual receipt of scrap. That though Shri. Sidesh Kumar has denied these transactions during personal hearing and stated that the withdrawals were for personal business considerations the explanation is not convincing and the modus operandi as charged by the Department remains unchallenged by the parties and the total amount of ineligible cenvat credit so taken is Rs.11,72,909/. Likewise in respect of the other cenvat invoices shown in the raw material register/statutory register of GSPL upon verification with the lorry owners it is revealed from their statements that they have not transported scrap to GSPL and therefore the invoices issued bearing the vehicle numbers of the vehicles in respect of which statements were taken from the vehicle owners, were not genuine invoices and no goods were actually received by GSPL under the said invoices. We are unable to subscribe to the Adjudicating Authority's findings for the following reasons:
(A) The reliance on electronic evidence with respect to M/s.ABC Data is untenable due to the detailed discussions elucidated supra.
(B) Apart from the fact that Mr. Sidesh Kumar has accepted payment in respect of four dates to Mr. Natarajan only amounting to Rs.59.50 lakhs, whereas GSPL has received payments from M/s. Salem Alloys on seven days for a total amount of Rs.1,11,21,421/-, even a cursory glance at the 132 table in 34.11 would indicate that there is substantial variance in the amount shown as transferred from Ms/.Salem Alloys account to Shri. Sidesh Kumar's account and the amount correspondingly shown as received from M/s. Salem Alloys in the computer printout from pen drive including a payment of 15 lakhs on 11.03.2010 on which date no transfer of amount from M/s. Salem Alloys Account to Shri. Sidesh Kumar's account is shown thereby hardly lending credence to the modus operandi propounded by the Department.
(C) It is not alleged that the invoices on which cenvat credit has been taken by GSPL have not been accounted by the respective suppliers or that they have not received payment in respect of the invoices issued. On the contrary M/s. Sakthi Ferro Alloys (p) Ltd in their reply stated that there is no evidence against them relied upon in the notice and that they have actually supplied scrap covered under the invoices and made payment to transporters as well as received payment from GSPL and there is no allegation against them that they have returned money to GSPL.
During adjudication proceedings they also stated that they filed a written submission alongwith worksheet showing invoice wise details with lorry nos. Likewise M/s Akshara Industries contested the allegation and named their regular transporter stating that the Department could have ascertained the bonafide nature of their transactions if enquiry had been made with their transporter, during adjudication proceedings have denied returning any money 133 to GSPL and have stated that they have accounted the cenvat invoices issued in their returns. These contentions of the aforementioned suppliers are not cogently controverted by the Adjudicating Authority. While there is allegation against Mr. Sidesh Kumar that he was returning the money to GSPL, no evidence of such returning of money to GSPL in respect of the other suppliers have been brought on record. This is relevant since the amount returned to GSPL in so far as Salem Alloys is concerned is stated to be Rs.
1,11,21,421/- to secure a cenvat credit benefit of Rs.11,72,909/-, which in itself to our mind is an unlikely proposition. Likewise the balance amount of credit sought to be denied is of Rs.39,58,648/- which would involve a value of Rs.4.24 crores as per Annexure D3(b) and yet there is no allegation or evidence of the said amount having been returned to GSPL who is alleged to have paid such amount without receiving goods in order to secure the benefit of cenvat credit of Rs.39,58,648/-.
(D) Yet another factor that bears consideration is that the contentions of the Department doesn't appear to add up when tested against the figures cited by the Department in the SCN itself. As per the SCN, the quantum of inputs covered under these invoices which have been stated to have been issued without actual supply of inputs, is amounting to 3050.237 MTs (as per Annexure D3(a) and D3(b) of the SCN) during February 2010 to May 2010. It is also stated that this quantity has been accounted by M/s. GSPL in its raw material register and statutory records, 134 albeit without actual receipt of the inputs. Now, it is seen that for the period February 2010 to May 2010, para 34.7 of the SCN states that quantity of scrap accounted as purchased as per GSPL computer Data is 3911.192. If the said amount of scrap of 3050.237 MTs stated to have been not received but only invoices issued, is deducted from the quantity of scrap accounted as purchased, it would then reflect the scrap actually purchased and available during Feb 2010 to May 2010 as 860.955 MTs. Again, as per para 34.4 of the SCN, the quantity of MS Ingots sold as per GSPL data for the period Feb 2010 to June 2010 is 992.50 MTs. From this quantity, if the quantity of MS ingots sold in June 2010 of 57.780MTs is deducted, it would indicate the quantity of MS Ingots sold as per GSPL computer data for Feb 2010 to May 2010 as 934.72 MTs. Since GSPL has started manufacturing MS Ingots from Feb 2010 as per the statement of Mr. Nagarajan, then effectively if the contention of the Department regarding the non-receipt of inputs on the aforementioned invoices issued during Feb2010 to May 2010 is considered true, it would mean that GSPL purchased only 860.955 MTs of scrap during Feb 2010 to May 2010 from which they have manufactured and cleared 934.72 MTs, an impossible feat by any means.
86. We have discussed the questions of law and analysed the failure of the Department to adhere to the statutory mandates of Section 9D and Section 36B (4) as elucidated supra. We have detailed the lacunae and shortcomings in the investigation noticed by us supra. 135 We have given our reasons for our disagreement with respect to the evidence relied upon qua each of the demands confirmed in the impugned order indicating how the evidence relied upon has failed to meet the standard of "clear and convincing evidence", to establish the case of clandestine removal and to establish the availment of cenvat credit without actual receipt of inputs, in accordance with the standard of proof required to be adduced by Revenue in clandestine removal matters based on decisions of the High Courts and Tribunal as aforementioned. We also now state certain crucial aspects that have not been brought out by the Department to substantiate the allegations of clandestine procurement of raw materials, production of MS ingots without accounting and clandestine clearance of the same as made against the appellants. The Department has not let in any evidence in the form of unaccounted procurement of the other raw materials required for manufacture of MS Ingots, evidence of their procurement, evidence of the quantum of fuel/ electricity, labour etc., used, the examination or test evaluation of the production capability and capacity of the Appellant's factory etc. The case laws relied upon by the learned authorised representatives are distinguishable as the facts and circumstances stated therein are different from the facts and circumstances of this case. We hold that the reliance placed on paragraph 150 of the decision in Navjot Sandhu case to contend that, dehors the requirement of the certificate mandated under Section 65B(4), the conditions specified in Section 65B(2) appears to have been fulfilled, is unacceptable and not appreciated, given that Navjot Sandhu decision stood overruled in the decision of P.V. Anvar. We have no quarrel with the proposition of the Authorised representative in his contention that as per Section 136 61 of the erstwhile Evidence Act, 1872 it is necessary that the contents of a document has to be proved either by primary or secondary evidence and that the evidence of the contents contained in a document is hearsay evidence unless the writer thereof is examined before the court and further that as per section 67 of the erstwhile Evidence Act, 1872, the signature or handwriting of the person alleged to have signed the whole or part of the documents has to be proved. These contentions are precisely in tandem with our findings supra on the manner in which the adjudicating authority has to evaluate the statement under Section 14 for its relevance as per the mandate of Section 9D(2). However, the reliance placed by the authorised representative on Section 36A (1) and 36A(2) are misplaced in that these presumptions would apply only in a proceedings before the Court, being rebuttable presumptions. However, unlike Section 9D (2) or Section 36B which deems a document to be admissible in any proceedings under the Act when accompanied with the certificate mandated under Section36B(4), Section 36A does not permit the presumption to be drawn in adjudicatory proceedings under the Act and is confined only to Court proceedings. The reason is not far to seek as such rebuttable presumption also equally casts a responsibility on the person intending to disprove the same in the Court by leading clear and convincing evidence to rebut the same. In this regard, the decision of the Honourable Supreme Court in Heinz India Pvt Ltd and Ors v. State of U.P. and Ors, 2012 INSC 147: [2012] 3 SCR 898 is apposite as it also specifies the standard of proof required to rebut a statutory presumption in a Fiscal Statute. In the said Heinz Case, while considering Sections 17 and 32 of Uttar Pradesh Krishi Utpadan 137 Mandi Adhiniyam, 1964, and the rebuttal presumption in Section 17 of the Adhiniyam supra, the Apex Court held as under:
"39. Mr. Chandra, however, laid considerable emphasis on the words "tending to show that the real fact is not as presumed", to argue that the test applied by this Court in rebuttable presumptions had been the test of 'preponderance of probability'. We do not think so. It is well- settled that a decision is an authority for the point it decides. It is equally well-settled that the text of the decision cannot be read as if it were a statute. That apart the expression used by this Court is "evidence fairly and reasonably tending to show", which signifies that it is not just any evidence, howsoever shaky and nebulous that would satisfy the test of preponderance of probability to rebut the statutory presumption but evidence that can by proper and judicial application of mind be said to be fairly and reasonably showing that the real fact is not as presumed. In other words the evidence required to rebut a statutory presumption ought to be clear and convincing, no matter the degree of proof may not be as high as proving the fact to the contrary beyond a reasonable doubt. The heightened standard of proof required to rebut a presumption raised under the statute at hand is in our view applicable for two distinct reasons. The first and foremost is that the presumption is raised in relation to a fiscal statute. While the amount payable is not a tax it is nevertheless a statutory levy which is attracted the moment the transaction of sale takes place within the market area. Goods, admittedly produced within the market area and not consumed within such area are presumed to be leaving pursuant to a transaction of sale unless the contrary is proved. That the goods are produced within the market area is not in dispute in the instant case. That they left the market area is also admitted. In the ordinary course, therefore, the presumption would be that the goods left pursuant to a sale unless the Appellants are in a position to prove the contrary. (emphasis supplied)
87. In these fact circumstances and in the light of our discussions above, we are constrained to draw an adverse inference against the investigation in all the aforesaid appeals as the best possible evidence that was contemporaneously easily available and 138 accessible that would have lead the investigators to conclusive results, appear to have been either not examined or, if examined, the results of such examination have not been pursued to their logical end. The evidences relied upon in the notice, at best, create a lot of suspicion against the conduct of the appellant. The payment that have been made by M/s.SKSRM by reversal in their cenvat account, on the day of visit by the officers to their premises, at best are to be viewed as mere attempts to buy peace and the reliance placed on the untested statements of the employees in these matters are of no consequence. Further, crucial electronic evidence were not only recovered only from third party's premises, but also such evidence along with those recovered from the factory premises were handled in a cavalier manner rendering them inadmissible. There is no justification available, either in the show cause notice, or in the impugned order, to explain the absence of statements of most relevant persons or the reasons for delay in conducting follow up searches. The transporters, who actually transported the goods, have also not been questioned. In short, the investigation has failed to establish the allegations raised in the show cause notice and the findings of the adjudicating authority are also decidedly untenable in the light of our discussions regarding the lack of demonstrable, reliable and corroborative evidence as elaborated above.
88. Thus, we hold that the finding of the adjudicating authority that the main appellant has indulged in clandestine manufacture and clearances of MS ingots during period February 2010 to February 2012 and the consequent demand of duty made is untenable; the demand of cenvat credit availed for the period February 2010 to May 139 2010 by the main appellant terming it ineligible, is incorrect; the demand made on M/s. SKSRM for clearances of TMT Rods alleged to have been cleared without payment of duty and allegedly made out of MS ingots procured from the main appellant without payment of duty, as confirmed in the impugned Order in Original, is untenable and consequently the penalties imposed on the appellants are unsustainable.
89. Therefore, we are of the view that the demands confirmed in the impugned order in original cannot sustain and are liable to be set aside. We find in view of the foregoing that, since the demands themselves are not sustainable, the question of interest or penalties on any of these appellants do not arise.
In view of the foregoing the impugned order in original is set aside. All the appeals are allowed with consequential relief if any, as per law.
90. Before parting with this order, we are constrained to observe that the decision of the Honourable Supreme Court in the case of Anvar P.V. mandating that secondary evidence of electronic records have to be accompanied by the certificate as specified in Section 65B(4) of Indian Evidence Act is dated 18th September 2014 i.e. more than a decade ago. The same has been reiterated over the past decade as observed hereinabove. Likewise the decisions of the Honourable High Courts mandating the need for adjudicating authorities to adhere to Section 9D (2) of the Central Excise Act, 1944 also have been holding the field for 140 quite some years. We are constrained to observe that many a investigation may be found wanting for failure of the field formations to adhere to the mandate of law as laid down by the Higher Judicial Forums on the aforementioned aspects and it would be advisable to have a detailed procedure laid down for adherence by the field formations. No guidelines issued by the CBIC on the above aspects have been brought to our notice. Registry is directed to send a copy of this order to Chairman, CBIC for appropriate action.
(Order pronounced in the open court on 21.02.2025) (AJAYAN T.V.) (VASA SESHAGIRI RAO) Member (Judicial) Member (Technical) psd