Custom, Excise & Service Tax Tribunal
Global Extrusion Private Limited vs Rajkot on 15 January, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH - COURT NO. 3
EXCISE Appeal No. 11963 OF 2016-DB
[Arising out of Order-in-Original/Appeal No RAJ-EXCUS-000-PR-COM-24-16-17 dated
11.08.2016 passed by Principle Commissioner Customs, Excise and Service Tax-RAJKOT]
Global Extrusion Private Limited .... Appellant
Plot No. 238, GIDC, Phase-ii,
Dared, JAMNAGAR, GUJARAT-361004
VERSUS
Commissioner of Central Excise & ST, Rajkot .... Respondent
Central Excise Bhavan, Race Course Ring Road,
Income Tax Office, Rajkot, Gujarat-360001
WITH
(i) Excise Appeal No. 11953 of 2016 (Shri Vijay Madhusudanbhai Dave)
(ii) Excise Appeal No. 11954 of 2016 (Shri Deepak Kumar Babulal Nagar)
(iii) Excise Appeal No. 11955 of 2016 (Shri Manoj Vijaykumar Gupta)
(iv) Excise Appeal No. 11956 of 2016 (Shri Manhar Amarshibhai Chavda)
(v) Excise Appeal No. 11957 of 2016 (Shri Nimeshkumar Jayantibhai
Vaghela)
(vi) Excise Appeal No. 11958 of 2016 (Shri Jignesh Bhimjibhai Patel)
(vii) Excise Appeal No. 11959 of 2016 (Shri Vipul Damjibhai Sanghani)
(viii) Excise Appeal No. 11960 of 2016 (Shri Babulal Jethabhai Sabhaya)
(ix) Excise Appeal No. 11961 of 2016 (Shri Sharad Kumar Kalayanji
Vasant)
(x)Excise Appeal No. 11962 of 2016 (Shri Sharad Kumar Kalayanji Vasant)
(xi) Excise Appeal No. 11964 of 2016 (Shri Bhageshbhai Jayantibhai
Chanderia)
(xii) Excise Appeal No. 11965 of 2016 (Shri Manojbhai Dayabhai Akbari
Patel)
APPEARANCE :
Shri Paresh Sheth Advocate for the Appellant
Shri Prabhat K. Rameshwaram, Addl. Commissioner for the Respondent
CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)
HON'BLE MR. RAJU, MEMBER (TECHNICAL)
DATE OF HEARING : 14.09.2023
DATE OF DECISION: 15.01.2024
FINAL ORDER NO. 10145-10157/2024
RAMESH NAIR :
The above stated appeals are arising out of Order-in-Original No. RAJ-
EXCUS-000-PR. COM-24-16-17 dated 11-08-2016 passed by Principal
Commissioner of Central Excise & Service Tax, Rajkot. Since all the above
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stated appeals are arising out of a common order-in-original, they are taken
together for decision.
2. The brief facts of the case are that M/s. Global Extrusion Pvt. Ltd. (M/s
Global) are engaged in the manufacture of the Brass Products viz., Billets,
Rods, Wires, Profiles, Sections, etc. On the basis of intelligence, the factory
premises of M/s Global were searched by the officers of Anti-evasion team,
Rajkot Commissionerate and various incriminating documents were seized
under Panchanama dated 19/20.03.2013. A simultaneous search was also
carried out at the residential premises of Shri Dhirubhai Chhaganbhai
Bhanderi (Patel), Accountant of M/s Global and other office premises of M/s.
Global where certain incriminating documents including computer devices i.e
one laptop & one removable hard disc were seized. During the search
proceedings, print-outs of data containing details regarding sale & purchase
by M/s Global during the period from 01.10.2010 to 16.03.2013 was taken
from the computers of M/s Global and from removable hard disk with the
help of laptop and the same were also placed under seizure. During the
investigation statements of Directors, accountant and other persons were
recorded under Section 14 of the Act. The investigation revealed that M/s
Global was indulged in clearances of finished goods i.e. various brass
products clandestinely on the strength of "Mal Javak" Chit without payment
of central excise duty. Further, M/s Global with the help of Shri Bhageshbhai
Jayntibhai Chanderai and Shri Manojbhai Dayabhai Akbari had developed a
modus operandi of large scale evasion of Central Excise Duty by resorting to
illicit manufacture and clearance of their finished goods without recording
manufacture of the same in their Daily Stock Account and by clandestinely
clearing such finished goods without preparing Central Excise Invoices and
without payment of central excise duty. The sales proceeds of such
transactions were received by M/s Global in cash in person or through
angadia. The payment for transportation of such goods was also made in
cash. It further appeared that appellant deliberately did not prepare and
issue invoices or job-work invoices/challans in respect of various brass
products manufactured and cleared by them with intent to suppress the
manufacture & clearance figure with sole intention to evade payment of
central excise duty. On conclusion of investigation a Show cause notice
dated 06-11-2015 was issued to demand Central Excise duty of Rs.
13,06,55,760/- along with proposal to impose penalty on appellant and
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other co-noticee. The SCN was adjudicated and resulted in impugned order
by demanding duty from appellant along with interest and penalty and
penalties on all the co-appellants were also imposed. Aggrieved with the said
order, the appellants are before us.
3. Shri Paresh Sheth, Learned Advocate appearing on behalf of the
Appellants submits that the Appellant is engaged mainly in manufacturing
and trading activity of brass products as also in trading of Charakali, cop
rod, cop sec, cop sheet etc. The allegation of the department is that the
appellant has clandestinely cleared its final products to the tune of Rs.
1,16,62,35,922/- involving 34,64,318.820 Kgs. of various brass products.
This allegation is made without producing any corroborative evidences like
transport documents, financial flow back, financial transactions etc.
Admittedly no difference was noticed in the stock of raw materials or final
product in the factory premises during such visit except so called difference
of 550 Kg. of billets in comparison of stocks recorded in statutory records.
The officers concerned had not physically verified stock or weighed the stock
of billets but had decided the difference on their own estimates.
4. He also submits that admittedly on 19/20.03.2013 preventive officers
from Central Excise Department visited factory premises and showed Search
Warrant for the said premises and during the course of search proceedings
recovered one piece of paper marked as "New " and one „Javak Chithi‟ in
favour of M/s Jyoti Cutting and on inquiry as stated in the panchnama,
director informed the other chithis were with accountant Shri Dhirubhai who
also writes accounts of other parties. And during such search proceedings
concerned officers visited the premises of the said accountant and
surprisingly, immediately handed over some Javak Chithis, though name of
the main Appellant is not written on the said documents and accompanied
along with officers in factory premises. During such proceedings on inquiry
Shri Bhageshbhai informed that records as narrated in Print Out marked as
„New‟ were available in another computer lying in the premises situated in
Flat No. 102, Prince Palace, Shankar Tekri, Jamnagar and immediately said
officers along with the same Punch witnesses visited the said premises and
recovered one laptop and removable hard disk. Admittedly said computer
and removable hard disck were brought in the factory premises and from
such computer and removable hard disk printout of the data available in the
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said removable hard disk was taken. Appellant contended before the Ld.
Commissioner that the said premises belongs to some other person.
Admittedly department has not produced any evidence to prove that the said
premises belongs to the appellant. It is admitted fact by the department that
computer print outs were taken from removable Hard Disk with the help of
Laptop recovered from the premises other then the factory premises and it is
not proved by the department that the said computer or the hard disk were
in regular use by the appellant.
5. He further submits that admittedly concerned officers recorded
confessionary statement of directors and the employees during such search
proceedings as can be seen from the date of first confessionary statements.
Admittedly the officers started Panchnama at 4.00PM on 19.03.2013 and
completed at 3.15AM of 20.03.2013. In such circumstances it cannot be said
that the statements recorded were not under pressure or under influence of
the officers and hence it cannot be considered as binding statement and
consequently any subsequent statements also cannot be said to be in cordial
manner and hence none of the statements of directors or employees can be
considered binding in nature. Appellant has also contended before the
adjudicating authority that the statements recorded, of the so called supplier
or the buyer, by the department does not seem to be in cordial manner in as
much as the statement recorded are stereo typed and are not supported by
any documentary evidences.
6. He also argued that admittedly the department has not produced any
corroborative evidences to prove that the appellant has manufactured such
huge quantity of final product and clandestinely cleared the same.
Department has not produced any evidence of procurement of material and
manufacturing of final products as per law laid down by various courts.
7. He further submits that appellant had raised various grounds before
the Ld. Adjudicating authority including the ground of reliability and
admissibility of computer print out as an evidence in terms of Section 36B of
Central Excise Act as also various case laws but the Ld. Commissioner has
not properly considered the submission and relevant case laws referred.
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8. He also submits that in the present matter Ld. Commissioner ignored
the provisions of Section 9D of the Act. Unless the statement are tested by
way of examination as required under Section 9D, it cannot be relied upon.
He placed reliance on the decisions in the case of M/s Jai Balaji Industries
Ltd. - 2023-8-TMI-989.
9. He further submits that department has relied upon the statement of
Shri Manharbhai Prop. Of M/s Chamunda Metals industries that he has
admitted purchase of finished goods worth Rs. 1,10,41,312/-. However
Balance sheet supplied by Shri Manherbhai for the F.Y. 2010-11 & 11-12
clearly shows that they are not capable of purchasing goods worth of Rs.
1,10,41,312 and hence merely on the statement of the said witnesses it
cannot be concluded that the company has cleared goods clandestinely.
Since no corroborative evidences are produced by the department and since
the requirement of Section 36B are not complied with the allegations of
clandestine removal, consequently the proceedings initiated against the
appellant and co-noticee is not sustainable.
10. He relied upon the following judgments in support of his submission
and arguments.
(i) M/s. Kelvin Industries - 2022-3-TMI-915(CESTAT-Ahd.)
(ii) M/s. Makers Castings Pvt. Ltd. & Others - 2022-5-TMI-1164
(CESTAT- Kol)
(iii) M/s. Jayshree Vyaper Ltd. - 2015-327-ELT 380(Tri. Ahd.)
(iv) M/s. Ambica Organics - 2016-334-ELT -97(Tri.-Ahd)
(v) M/s. Jindal Nickel & Alloys Ltd. - 2020-371-ELT 661(Del-HC)
(vi) M/s. Ashutosh Metal Industries - 2018-15-GSTL -384(Tri.Del)
(vii) M/s. Commissioner of GST Vs. Ashutosh Metal Industries - 2019-
366-ELT -1019 (Del-HC)
(viii) M/s J.P. Iscon Pvt. Ltd. - 2022-63-GSTL-64(Tri. Ahd)
(ix) M/s. Vishwa Traders P. Ltd. - 2013-287-ELT-243(Guj -HC)
(x) M/s. Gupta Synthetics Ltd. 2014-312-ELT-225(Tri.-Ahmd)
(xi) M/s. Shree Sidhbali Ispat Ltd.- 2017-357-ELT-724(Tri.-Mum)
(xii) M/s. Chhajusingh S. Kanwal - 2011-272-ELT-202(Guj-HC)
(xiii) M/s. Flevel International -2016-332-ELT-416(Del.-HC)
(xiv) M/s Higora Industries Ltd. - 2015-325-ELT-116(Tri.Ahmd)
(xv) M/s. Mittal Pigment Pvt. Ltd. - 2018-16-GSTL 41 (Raj-HC)
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Appeal Nos. E/11953-11965/2016-DB
(xvi) M/s. Aum Aluminum Pvt. Ltd. - 2014-311-ELT-354 (Tri. Ahmd)
(xvii) M/s. Paras Laminates Pvt. Ltd. -2005-180-ELT-73 (Tri.-Del)
(xviii) M/s. S.K. Sarawagi & Co. Pvt. Ltd. -2018-12-GSTL-42
11. Per contra, Shri P.K. Rameshwaram learned Commissioner (AR) for the
Revenue justified the findings of the Learned adjudicating authority and
submits that the demand has rightly been made and that the appeals be
rejected being devoid of any merit.
12. He also submits that the seized documents i.e Chit Books, Printout
taken from seized removable hard disk etc. contained details of such sale.
On scrutiny of these documents, it has been worked out that during the
period from 2010-11 to 2012-13, appellant have cleared finished goods
without payment of duty amounting to Rs. 13,06,55,760/-. The directors of
the Appellant firm have admitted and confessed that the details mentioned
in documentary evidence are with regard to clandestine removal of finished
goods. The clandestine removal was further corroborated by the buyer and
supplier of raw materials.
13. He further submits that the investigation conducted, have revealed
without any doubt, that Appellant had manufactured their finished goods out
of raw materials purchased without invoices/bills and subsequently, the
same were cleared to various buyers. After accepting their liability of central
excise duty in respect of such clandestinely cleared finished goods appellant
had paid central excise duty of Rs. 89,50,000/-
14. He also submits that during the investigation of the case, Shri
Bhageshbhai Jayantibhai Chanderia, Director in his statement has admitted
that wherever „JOB‟ is written against entry under heading „Name of Buyer‟,
it means that entry pertains to job works done by them. However, after
confronting with such entries and asked to prove that they were genuine
entries for job work, he has admitted that these entries do not match with
any job-work invoice/ challans nor tallying with Central Excise Invoices
issued by them therefore, clearances against these entries are their
unaccounted sales.
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15. He also argued that conditions mentioned in Section 36B(2) of the Act
have been duly fulfilled and the print-outs were taken from the seized hard
disk / laptop and computer being used in the factory in normal course of
their functioning.
16. He further submits that statement of various persons/ co-noticee have
been correctly recorded under Section 14 ibid and hence the same are
binding and therefore the contention of the appellant is not acceptable and
liable to be rejected.
17. He placed reliance on the following decisions in support of his
submission and arguments.
(i) Vinod Solanki Vs. Union of India -2009(233)ELT 157 SC.
(ii) Em Pee Bee International Vs. CCE, -2008 (229) ELT 704 (Tri.
Chennai)
(iii) Sharad Ramdas Sangle Vs. CCE, Aurangabad -2017(347)ETL 413
(Bom)
(iv) CCE, Madras Vs. Systems & Components P Ltd. - 2004(165)ELT
136(SC)
(v) Gulabchand Silk Mills P Ltd. Vs. CCE, Hyderabad -II- 2005(184)ELT
263 (Tri.-Bang)
(vi) CCE, Chandigarh Vs. Vinay Traders - 2016(340)ELT 521 (Tri.-Del)
(vii) Ramchandra Rexins Pvt .Ltd. Vs. CCE, Bangalore -I-
2013(295)ELT 116(Tri-Bang.)
(viii) Haryana Steel & Alloys Ltd. Vs. CCE, New Delhi - 2017(355)ELT
451 (Tri. Del)
(ix) Lawn Textiles Mills P Ltd .Vs. CCE, Salem - 2013(297)ELT 561
(Tri.- Chennai)
(x) CCE, Mumbai Vs. Kalvert Foods India P Ltd.- 2011(270)ELT 643
(SC)
(xi) Telestar Travels P Ltd Vs. Special Director of Enforcement -
2013(289)ELT 3(SC)
(xii) P B Nair C & F P Ltd. Vs. CCE (General) Mumbai - 2015(318)ELT
437 (Tri.-Mum)
(xiii) Rajesh Kumar Vs. CESTAT - 2016(333)ELT 256(Del)
(xiv) Montex Dyg & Ptg Works Vs. CCE, Surat-I- 2007(208) ELT 536
(Tri-Ahmd)
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Appeal Nos. E/11953-11965/2016-DB
(xv) CCE, Madras Vs. D Bhoormull- 1983(13)ELT 1546(SC)
(xvi) Agrawal Overseas Corporation Vs. CC (EP), Mumbai -
2009(248)ELT 242 (Tri- Mumbai)
(xvii) Kanungo & Co Vs. CC, Calcutta & Others - 1983 (13) ELT
1486(SC)
(xviii) Ahmednagar Rolling Mills Pvt. Ltd - 2014(300)ELT 119(Tri.
Mum)
(xix) Shalini Steel Pvt. Ltd. Vs. CCE, Hyderabad -2011(269)ELT
485(AP)
18. Heard both the sides and perused the records. We have carefully gone
through the records, grounds of appeals and submissions of parties and
finding of the impugned order and various case laws cited by both the
parties. We find that the whole case is made out by the revenue on the
basis of computer printouts and this is evident from the Panchanama dated
19/20.03.2013. The computer printouts were taken from the electronics
devices viz. „external hard disk‟ and Laptop which were recovered from the
Flat No. 102, Prince Palace Apartment, Jamnagar. Further on 11.06.2015
under panchanam the department has opened the „Laptop HP Compaq nc
6000 (Sr. No. CNU5201M3G) and hard disc Store Jet Transcend -250GB (red
Colour) which were seized under Panchanama dated 19/20.03.2013 and
derived computer print outs. The adjudicating authority observed that the
said evidence was retrieved from the computer and hard disk and the
authenticity of all the printouts was admitted by directors of the appellant in
their statements. The appellant disputed the veracity and authenticity of the
evidences, collected through electronic devices. With regard to reliance on
the computerized print out appellants here has objected the mode of
reliance for which they argued that as per Section36B of the Central Excise
Act, without following the prescribed procedure the said computer document
cannot be relied upon. We have also find force in argument of Appellant. In
this context we find that the Section 36B of the Act, provides admissibility of
micro films, facsimile copies of documents and computer printouts as
documents and as evidence. For the proper appreciation of the case, Section
36B of the Act, is reproduced below :
Section36B. Admissibility of micro films, facsimile copies of documents and computer
printouts as documents and as evidence. - (1) Notwithstanding anything contained in
any other law for the time being in force, -
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(a) a micro film of a document or the reproduction of the image or images embodied in
such micro film (whether enlarged or not); or
(b) a facsimile copy of a document; 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"), if the conditions
mentioned in sub-section (2) and the other provisions contained in this Section are
satisfied in relation to the statement and the computer in question,
shall be deemed to be also a document for the purposes of this Act and the rules made
thereunder and shall be admissible in any proceedings there-under, without further
proof or production of the original, as evidence of any contents of the original or of any
fact stated therein of which direct evidence would be admissible.
(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;
(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
property 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 reproduced 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
(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 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.
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(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 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;
(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.
19. Ongoing through the aforesaid provisions, we find that Section 36B(2)
provides the conditions in respect of computer printouts. In the present
matter the computer was not shown to have been used regularly to store or
process information for the purposes of any activities regularly carried on by
the appellants. It was also not shown that information of the kind contained
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in the computer printout was regularly supplied by the appellant to the
computer in the ordinary course of activities. Again, it was not shown that,
during the relevant period, the computer was operating in the above manner
properly. The above provision also casts a burden on that party, who wants
to rely on the computer printout, to show that the information contained in
the printout had been supplied to the computer in the ordinary course of
business of the company. We find that none of these conditions was satisfied
by the Revenue in this case. In the present case, the data was not stored in
the computer but the officers had taken the printout from the Hard Disk
drive by connecting to the computer. The officers had not obtained any
certificate as required under Section36B of the said Act. It is also noted that
none of the conditions under Section 36B(2) of the Act, 1944 was observed.
In such situation, it is difficult to accept the printout as an evidence to
support the allegations of the revenue. It is noted that the requirement of
certificate under Section36B(4) is also to substantiate the veracity of truth in
the operation of electronic media. We also agree with the contention of the
appellants that at the time of sealing and de-sealing of the external data
storage device as well as the time of obtaining printouts therefrom, a
certificate should have been obtained as per the provision of Section36B of
the Act. No such certificate has been brought on record without which the
evidentiary value of these printout get vitiated. As no certificate from the
responsible person of the Appellants was obtained by the department, the
credibility of the computer printout gets vitiated.
20. We also find that the Hon‟ble Supreme Court in the case of Anvar P.V.
(supra), while dealing with Section 65B of the Evidence Act, 1872 (Pari
materia to Section 36B of the Act, 1962), observed as under :
"14. Any documentary evidence by way of an electronic record under the Evidence
Act; in view of Sections 59 and 65A, can be proved only in accordance with the
procedure prescribed under Section 65B. - Section 65B deals with the admissibility of the
electronic record. The purpose of these provisions is to sanctify secondary evidence in
electronic form, generated by a computer. It may be noted that the section starts with a
non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any
information contained in an electronic record which is printed on a paper, stored,
recorded or copied in optical or magnetic media produced by a computer shall be
deemed to be a document only if the conditions mentioned under sub-section (2) are
satisfied, without further proof or production of the original.
15. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any
proceedings pertaining to an electronic record, it is permissible provided the following
conditions are satisfied :
(a) There must be a certificate which identifies the electronic record containing the
statement;
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(b) The certificate must describe the manner in which the electronic record was
produced;
(c) The certificate must furnish the particulars of the device involved in the
production of that record;
(d) The certificate must deal with the applicable conditions mentioned under Section
65B(2) of the Evidence Act; and
(e) The certificate must be signed by a person occupying a responsible official
position in relation to the operation of the relevant device.
16. It is further clarified that the person need only to state in the certificate that the
same is to the best of his knowledge and belief. Most importantly, such a certificate
must accompany the electronic record like computer printout, compact disc (CD), video
compact disc (VCD), pen drive, etc., pertaining to which a statement is sought to be
given in evidence, when the same is produced in evidence. All these safeguards are taken
to ensure the source and authenticity, which are the two hallmarks pertaining to
electronic record sought to be used as evidence. Electronic records being more
susceptible to tampering, alteration, transposition, excision, etc., without such
safeguards, the whole trial based on proof of electronic records can lead to travesty of
justice.
17. Only if the electronic record, is duly produced in terms of Section 65B of the
Evidence Act, would the question arise as to the genuineness thereof and in that
situation, resort can be made to Section 45A - opinion of Examiner of Electronic
Evidence.
18. The Evidence Act does not contemplate or permit the proof of an electronic record
by oral evidence if requirements under Section 65B of the Evidence Act are not complied
with, as the law now stands in India.
...........................................
...........................................
"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 65A 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 Sections 65A and 65B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this Court in Navjot Sandhu case, 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 65B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible."
In view of above Hon‟ble Apex Court decisions it is clear that the computer printout can be admitted as evidence only if the same are produced in accordance with the provisions of Section 65B(2) of the Evidence Act. A certificate is also required to accompany the computer printouts as prescribed under Section 65B(4) of Evidence Act, 1972. It has been clearly laid down in Para 15 of this judgment that all the safeguards, as prescribed in Section 65B(2) & (4), of the Act, is required to be met so as to ensure the 13 Appeal Nos. E/11953-11965/2016-DB source and authenticity, pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tempering, alteration, transposition, excision etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. The provisions of Section 65B of Indian Evidence Act and Section36B of Central Excise Act, 1944 of the Act are pari-materia. It is evident from the panchanama, and the appeals records that the investigating officer had failed to follow the safeguard as mandated under Section36B of the Act. We have also considered the judgment of M/s. Popular Paints & Chemicals v. C.C.Ex. & Cus., Raipur, wherein Tribunal vide Final Order Nos. 52716-52718/2018, dated 6-8-2018 under similar facts and circumstances has set aside the demand based on such unauthenticated data and judgment of Ambica Organics vs. Commissioner of C.Ex. & Cus., Surat -2016(334) ELT 97 (Tri. Ahmd), affirmed by Hon‟ble Gujarat High Court in 2016(334)ELT A67 (Gujarat High Court).
21. We also find that in the present matter appellants disputed the finding of the Ld. Commissioner on the ground that Ld. Commissioner has relied upon the statements of persons, but these statements are not admissible as evidence because the statement of various persons that the same were recorded on computer on already prepared proforma which is stereo typed. In case of raw materials suppliers and buyers‟ statements, in most of case the questions are same and even the answers also same. At the some place only name, value and quantity were changed. We also find that Ld. Counsel for the appellant strongly argued that the adjudicating authority had not examined the witnesses as per the the mandatory procedure laid down under Section 9D of the Central Excise Act. We agree with the arguments of the appellant and observed that in the whole matter Revenue and Ld. Commissioner relied upon the statements of persons and said statements disputed by the appellants and their directors and also co-noticees. Therefore in this circumstances, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross- examined. We find that in the present matter Ld. Adjudicating Authority failed to do such exercise. The provision of Section 9D is reproduced as under:
14Appeal Nos. E/11953-11965/2016-DB "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 provision of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court."
The above Section deals expressly with the circumstances in which a statement recorded before a gazetted officer of Central Excise (under Section 14 of the Act) can be treated as relevant for the purposes of proving the truth of the contents thereof. Reliance is placed on the ruling of the Hon‟ble Punjab & Haryana High Court in the case of Jindal Drugs (Infra),2016 (340) E.L.T. 67 (P & H) wherein the Hon‟ble High Court laid down the detailed procedure, inter alia, providing for cross-examination of the witness of the Revenue by the Adjudicating Authority and thereafter, if the Adjudicating Authority is satisfied that the statement of the witness is admissible in evidence than the Adjudicating Authority is obligated to offer such witnesses for cross-examination by the other side/assessee. Such view has also been affirmed by the Hon‟ble Supreme Court in the case of Andaman Timber (Infra) - 2015 (324) E.L.T. 641 (S.C.) = 2017 (50) S.T.R. 93 (S.C.).
22. We further find that Hon‟ble Punjab & Haryana High Court in the case of Sukhwant Singh - (1995) 3 SCC 367 has observed as under:-
"8. It will be pertinent at this stage to refer to Section 138 of the Evidence Act which provides :
"138. Order of examinations. - Witnesses shall be first examined-in-chief then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re- examined. The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief.
Direction for re-examination. - The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the 15 Appeal Nos. E/11953-11965/2016-DB Court, introduced in re-examination, the adverse party may further cross-examine upon that matter."
9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by prosecution. There is, in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross-examination, as a matter of fact, amounts to giving up of the witness by prosecution as it does not choose to examine him in chief. However, the practice of tendering witness for cross-examination in session trials had been frequently resorted to since the enactment of the Code of Criminal Procedure, 1898.
23. In view of above it is clear that in the present matter it is admitted facts that Statements recorded during investigation, whose makers are not examination-in-chief before the adjudicating authority, would have to be eschewed from evidence, and it will not be permissible for Ld. Adjudicating Authority to rely on the said evidences. Therefore, we hold that none of the said statements were admissible evidence in the present case. We are also in agreement with the Appellant that the statements of witnesses cannot be relied upon as Ld. Adjudicating authority not conducted cross-examination. Hence, on this ground also demand of duty cannot be sustained.
24. Without prejudice, we also find that in the present matter learned Commissioner also confirmed the duty demand on the basis of Chit Books „Mal Javak‟ and „Mal Aavak‟ seized under Panchanama dated 19/20.03.2013. These alleged chit books „contain the details of sale of the goods as well as the goods which are sent back to the manufacturer after doing job-work by appellant. However we find that the entries made in the aforesaid chits may create doubt but it cannot take place of evidences. It is observed that the allegation of suppression of production and clandestine removal is a serious allegation and it has to be established by the investigation by affirmative and cogent evidence. CESTAT in the case of Sober Plastic Pvt. Ltd. v. CCE [2002 (139) E.L.T. 562 (T)] has held that demand based on weighment slips, slips recovered from Dharamkanta etc. relied upon for raising demand not verified with reference to transactions is not sustainable. Further, it is settled position of law that proof and evidence of purchase of raw materials and sell of final product clandestinely is necessary to establish the allegation of suppression of production and clandestine removal of goods and that the allegation are to be proved with affirmative evidences. CEGAT in case of Emmtex Synthetics Ltd. v. CCE [2003 (151) E.L.T. 170 (Tri.) has held that the charge of clandestine removal has to be established by the revenue by adducing tangible, convincing and cogent evidences, CESTAT in the case of 16 Appeal Nos. E/11953-11965/2016-DB Esvee Polymers (P) Ltd. v. CCE [2004 (165) E.L.T. 291 (Tri.)] dealt with a case of alleged clandestine production and clandestine removal. The case was based on some private slips. The CESTAT observed that the mere slips or statement are not sufficient for confirmation of demand and allegation of clandestine removal. Evidence in the form of receipt of raw material, shortages thereof, excess use of electricity excess/shortage of inputs in stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods etc. is necessary. CESTAT in the case of CCE v. Supreme Fire Works factory [2004 (163) E.L.T. 510 (Tri.) dealt with the allegation of clandestine manufacture and removal and observed that mere suspicion can not take place of proof. Proof and evidences of purchase of raw materials, sale of final goods clandestinely is necessary. The allegations are not sustainable in absence of evidences. CESTAT in case of CCE v. Shree Narottam Udyog (P) Ltd. [2004 (158) E.L.T. 40 (Tri.)] has dealt with the allegation of clandestine manufacture and removal of goods and held that settled law is that the charge of clandestine removal being a serious charge required to be proved beyond doubt on the basis of affirmative evidences. CESTAT in case of Jagatpal Premchand Ltd. v. CCE [2004 (178) E.L.T. 792 (Tri.) held that it is settled law whenever charge of clandestine removal made revenue has to prove assessee procured all raw materials necessary for manufacture of final product. The allegations are not sustainable if no investigation conducted by the revenue in respect of raw material essential for production of final goods and no evidence regarding removal of such final product brought on record by revenue. Similar view has been taken by the CEGAT in several other cases such as Jangra Engg. Works v. CCE [2004 (177) E.L.T. 364 (Tri.)], Premium Moulding & Pressing Pvt. Ltd. v. CCE [2004 (177) E.L.T. 904 (Tri.)], Vakharia Traders v. CCE [2004 (173) E.L.T. 287 (Tri.)], Nutech Polymers Ltd. v. CCE, Jaipur [2004 (173) E.L.T. 385 (Tri.)], CCE v. Sumangla Steels [2004 (175) E.L.T. 634 (Tri.)], CCE v. Sangamitra Cotton Mills [2004 (163) E.L.T. 472 (Tri.)], CCE v. Velavan Spinning Mills [2004 (167) E.L.T. 91 (Tri.)]. The ratio of these decisions is applicable in the instant case. Since the investigation has failed to adduce evidences to establish suppression of production and clandestine removal of the goods as discussed above and failed to discharge the onus to prove the allegations, the allegations are not sustainable. In view of the above discussions, the allegation of clandestine removal goods is not established.
17Appeal Nos. E/11953-11965/2016-DB Hence, the demand confirmed by the Ld. Commissioner is also liable to be dropped for lack of evidences.
25. We notice that in the present matter there is no supportive evidence found by the revenue with regard to receipt of inputs, place from where inputs are purchased, nor there is shortage of inputs as per raw material accounts, electricity consumption have not been challenged to show that there was excess consumption. Further production capacity of the appellant not challenged by the revenue. It became apparent that the department has not led any corroborative evidence to support the allegations of clandestine clearance. There is no evidence regarding procurement of raw material, transportation of raw material, payment for unaccounted raw material and its transportation to sustain the allegation of clandestine manufacture and removal by the appellant. No evidence has been led by the Department to show that the appellant had sufficient production capacity to produce the quantity of goods alleged to have been produced clandestinely. There is no allegation that the appellant has shown excess production of goods. There is no evidence regarding excess consumption of electricity. No unaccounted cash has been recovered from the unit of the appellant during the search. No evidence has been found regarding receipt of money consideration for the alleged unaccounted clearance of finished goods. In the absence of these corroborative evidences, in our considered view, the demand of duty is not sustainable. The Tribunal in large number of judgments have held that for confirmation of demands there has to be purchase of inputs, excess utilisation of power consumption, shortage of raw materials in terms of entries made in register, sale of final product clandestinely, evidence of transport, etc., to establish the production and sale of final goods. In the present case no such evidence has been placed on record. It is now a settled position of law that mere slips/chits are not sufficient for the purpose of confirming the allegation of clandestine manufacture and removal of goods. In an identical matter the Tribunal in the case of K. Rajagopal v. CCE, Madurai as reported in 2002 (142) E.L.T. 128 also held that the entries made in the private note books or chits is not a conclusive piece of evidence to prove clandestine removal unless the scribe of note book are examined and other corroborative evidence processed in the matter.
18Appeal Nos. E/11953-11965/2016-DB
26. We also find that in the present matter department alleged that there was shortage of 550Kgs. of Billets as per the Daily Stock account and as per the actual stock during Panchanama. However on going through the said panchnama we noticed that nowhere it has shown in the panchanama whether any stock taking has been taken place. There is no any weighment slip. Moreover, inasmuch as there is no evidence that said shortages are on account of any clandestine removal. We find that Hon‟ble Allahabad High Court in the case of CCE, Kanpur v. Minakshi Castings [2011 (274) E.L.T. 180 (All.)] has upheld the Tribunals‟ decision and has opined that mere shortages of the finished stock without evidence of clandestine removal does not lead to inference of evasion of duty. We are of the view that the Learned Commissioner made a fundamental error by making assumptions only just to confirm the demand on the allegation of clandestine clearance. It is a well settled position of law that serious allegation cannot be made merely on assumptions and presumptions and in the absence of detailed supporting evidence, the charge of clandestine removal cannot be upheld.
27. In view of the above discussions, the impugned order cannot be sustained and accordingly the same is set aside. The appeals are allowed with consequential relief as per law.
(Pronounced in the open court on 15.01.2024) (Ramesh Nair) Member (Judicial) (Raju) Member (Technical) KL