Custom, Excise & Service Tax Tribunal
Makers Castings(P) Ltd vs Jamshedpur Commissionerate on 12 May, 2022
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL,
EAST REGIONAL BENCH : KOLKATA
Excise Appeal No.75409 of 2020
(Arising out of Order-in-Original No.26/Commr/2018 dated 21.12.2018
passed by Commissioner of CGST & CX, Jamshedpur Commissionerate.)
M/s. Makers Castings Private Ltd.
(Plot No.B-22, Industrial Area, Adityapur, Phase No.-3, District-
SaraikelaKharsawan, Jharkhand-831013.)
...Appellant
VERSUS
Commissioner of CGST & CX, Jamshedpur Commissionerate
.....Respondent
(Outer Circle Road, Bistupur, Jamshedpur, Jharkhand-831001.)
WITH
Excise Appeal No.75410 of 2020
(Arising out of Order-in-Original No.26/Commr/2018 dated 21.12.2018
passed by Commissioner of CGST & CX, Jamshedpur Commissionerate.)
Shri Raj Jaiswal
Director of M/s. Makers Castings Private Limited,
(Plot No.B-22, Industrial Area, Adityapur, Phase No.-3, District-
SaraikelaKharsawan, Jharkhand-831013.)
...Appellant
VERSUS
Commissioner of CGST & CX, Jamshedpur Commissionerate
.....Respondent
(Outer Circle Road, Bistupur, Jamshedpur, Jharkhand-831001.)
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Excise Appeal Nos.75409-75411/2020
AND
Excise Appeal No.75411 of 2020
(Arising out of Order-in-Original No.26/Commr/2018 dated 21.12.2018
passed by Commissioner of CGST & CX, Jamshedpur Commissionerate.)
Shri Gyan Chand Jaiswal
Director of M/s. Makers Castings Private Limited,
Plot No.B-22, Industrial Area, Adityapur, Phase No.-3, District-
SaraikelaKharsawan, Jharkhand-831013.)
...Appellant
VERSUS
Commissioner of CGST & CX, Jamshedpur Commissionerate
.....Respondent
(Outer Circle Road, Bistupur, Jamshedpur, Jharkhand-831001.)
Appearance:
S/ShriHari Om Tewari & Amit Awasthi, both Advocates for the Appellant
ShriT.Mondal, Authorised Representative for the Respondent
CORAM:
HON'BLE SHRI P. K. CHOUDHARY, JUDICIAL MEMBER
HON'BLE SHRI P. ANJANI KUMAR, TECHNICAL MEMBER
FINAL ORDER NO. 75279-75281/2022
DATE OF HEARING: 08.12.2021
DATE OF PRONOUNCEMENT: 12 May 2022
Order Per: P.ANJANI KUMAR:
M/s Makers Casting Private Limited (MCPL) are engaged in the
manufacture of M.S. Ingot using raw materials such as Sponge Iron, Pig
Iron, scrap, coal etc. The officers of DGCEI conducted searches on
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Excise Appeal Nos.75409-75411/2020
various premises such as office and factory of the resident of Director
and also a premises referred to as secret office of the appellant. The
statements of various persons were recorded and the documents were
scrutinized. On completion of investigation, a show cause notice dated
21.04.2016 was issued demanding duty on the alleged clandestine
removal during the period 01.04.2011 to 30.11.2015 along with penalty
and interest; penalty was also proposed to be imposed on the Directors.
The show cause notice was adjudicated by the Commissioner of Service
Tax and Central Excise, Jamshedpur vide Order-in-Original
No.26/Commr./2018 dated 21.12.2018. Learned Commissioner passed
the following order:
(i) Confirmed the demand on the Central Excise duty amounting
to Rs.11,44,27,725/- in terms of Section 11A(10) of Central
Excise Act, 1944 and appropriated amount of Rs.37,50,000/-
deposited during the course of investigation.
(ii) Imposed penalty equivalent to the duty demanded in terms of
Section 11AC (1)(C) of Central Excise Act, 1944 read with Rule
25 of Central Excise Rules, 2002.
(iii)Imposed penalty of Rs.2 crore and Rs.1 crore respectively on
Shri Gyanchand Jaiswal and Sh. Raj Jaiswal, Directors of M/s
MCPL under Rule 26 of Central Excise Rules, 2002.
Hence, the appeals preferred by the Company as well as Directors.
2. Shri Hari Om Tewari & Shri Amit Awasthi, counsels appearing for the
appellants at the outset submits that the whole case made out against
the Appellant No. 1 is entirely based on unwarranted and
unsubstantiated assumptions and inferences drawn from the printouts,
which were taken by the investigating officers themselves from one
External Hard Disc (R Transcend Store Jet 500GB 34822-1030 Black
Colour with Orange Strip), recovered from the possession of one Vicky
Kumar alleged to be a Data Entry Staff of MCPL; there exists absolutely
no tangible evidence of suppression of production, clandestine purchase,
receipt and use of raw materials, and removal of finished goods or
undervaluation; the whole case made out against the Appellants is
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Excise Appeal Nos.75409-75411/2020
entirely and exclusively based on unwarranted and factually
unsubstantiated, presumptive inferences drawn from data obtained from
just one source i.e. printouts of sale data retrieved from the external
hard disc recovered from one Mr. Vicky Kumar; evidence relied upon in
the case to support the allegations as levelled is not only inadmissible
but also utterly uncorroborated from other independent, reliable,
affirmative and tangible evidences; the authenticity and genuineness of
all such private documents has not been properly ascertained and
verified as the authors of these documents have either not been
identified; even where identified, none of them have been questioned
and no statement has been recorded from them to ascertain the nature,
accuracy and truth of the entries contained therein; it was not
ascertained to under whose direction and control these documents were
created and for what purpose.
2.1. Learned Counsels for the appellants submit thatthese printouts
taken by the officers from the seized External Hard Disc have been made
the sole foundational basis and the primary Relied Upon Document; the
printouts obtained from said Hard Disc allegedly contain the details of
sales of M.S. Ingots made by MCPL during the period 01.04.2011 to
30.11.2015; the sale details contained in the aforesaid printouts taken
by the officers are sought to be compared with loose private documents
such as loose handwritten sheets of paper, loose private documents
(slips), private handwritten notebooks (diary), KachchaBahi-Khata,
ledger in diary and cash book etc., the aforesaid documents were
recovered under four separate Panchnamas dated 04.12.2015 drawn at
the respective premises searched on 04.12.2015; quantification of duty
short paid by MCPL during the period 01.04.2011 to 30.11.2015, was
done on the by deducting the quantum of clearances made as per ER-1
Returns from the quantum of clearances allegedly found the seized
documents i.e. Printout (assessable value however, was taken as
reflected in the ER-1 Returns).
2.2. Learned Counsels submit that the inferences drawn from the above-
mentioned computer printouts and loose private documents are sought
to be corroborated firstly, by pointing out mutual corroboration and
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Excise Appeal Nos.75409-75411/2020
matching of entries between and amongst the said seized private
documents themselves and the retrieved computer printouts, and,
secondly, by relying upon the oral statements of persons of M/s MCPL.
2.3. Learned Counsels submit thatthough the department attempted to
draw inferences drawn from the said printouts from the seized external
hard disc, for the period 01.04.2011to 30.11.2015, only sporadic details
are matching and inferences were further drawn relying on statements
of one employee viz. Dharmendra Kumar (who was admittedly not the
author of the relied upon private documents) and Mr. Vicky Kumar, who
was not even a regular employee but only a part-time trainee; neither
the said external hard disc nor the so called 'Computer Print-outs' fulfil
mandatory conditions for their admissibility as enshrined under Section
36B(2) and 36B(4) of the Central Excise Act, 1944; seized external hard
disc did neither qualify to be considered as 'Computer', nor the seized
printouts from the same be called 'computer printouts'; in the absence of
the requisite certificate in terms of sub-section 4 of Section 36B of the
Central Excise Act, 1944, the said hard disc and the said printouts
retrieved cannot be admitted as evidence.
3. Learned Counsels submit thatthe Search and the seizure proceeding
conducted at the referred four places on 04.12.2014 under the four
Panchnamas dated 04.12.2015 as drawn at the respective places were all
conducted in flagrant violation of Central Excise Act read with Section
100(4) of the Cr PC; the Panch witnesses, Shri Vir Karmarkar and Shri
Bhima Lohar are interested Panch witnesses as they have been routinely
used as witnesses by the Investigating Authorities in multiple
proceedings; the so called "secret office" is a third-party premises, being
actually a godown owned by Cadbury / Bournvita; at the time of the
search of this premises no one from the side of the Appellant was
present; Panchnama drawn at the premises fails to highlight the basis of
the entry of the officers into the premises presuming it to be a secret
office; No person of were questioned; Panchnama proceedings at
residence do not reveal the exact location from which the document no.
04/DGCEI/JRU/MCPL/R/15 was resumed; loose sheets were resumed in
front of interested witnesses; Examination and Cross-examination of Shri
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Excise Appeal Nos.75409-75411/2020
Vicky Kumar and Shri priyaranjan Das (on 18.01.2017), S/Shri Giyan
Chand Khullar, Rahat HussainAbhayUpadhayon 15.02.2017 clearly shows
that the Panchnama proceedings at all places were carried out in
contravention of Section 100 (3) of Cr. PC; the Panchnamas were pre-
typed and witnesses were made to sign; panchwitness present at all the
locations were actually not the independent; panch witnesses but
individuals who had been coerced and influenced by the investigating
authority. Shri Beer Karmarkar and Shri BhimaLohar, the panch
witnesses routinely used by DGCEI Jamshedpur in multiple searches in
Bihar, Jharkhand and West Bengal. They submit that such proceedings
cannot be sufficient evidence to establish clandestine removal. They rely
upon.
(i) Pan Parag India Ltd2013 (291) E.L.T. 81 (Tri. - Del.)
(ii) Kuber Tobacco Products 2013 (290) ELT 545 (Tri.),
(iii) RaghuveerIspat (P) Ltd. - Appeal No. E/70481-70482/2017 -
EX (SM)
3.1. Learned Counsels submit that the allegation of clandestine removal
of 26799.732 MT of M.S. Ingots valued at Rs. 97,13,49,575/- during the
period from01.04.2011 to 30.11.2015 has been levelled merely on the
basis of comparison of figures of quantity sold and assessable value
appearing in monthly ER-1 Returns for the period Apr, 2011 to Nov, 2015
with corresponding figures appearing in coded form in decimal points, in
the printouts of the sale ledger obtained from the seized hard disc; such
comparison is legally impermissible and invalid; since the figures
appearing in coded form in the printouts of sale ledger cannot be
considered and treated as true and authentic figures more so, because
they are totally unsubstantiated with any independent, tangible and
positive corroborative evidence; there is no mention of the name of the
Appellant Company anywhere in the printouts of the sale ledgers;
printouts merely show the name of the selling firms as 'Rajesh' and 'Om
Namah; Daily Production and Dispatch Reports are not the authentic
documents of the Appellant Company; the said reports do not anywhere
contain or make a mention of the name of the Appellant Company;
method and manner of preparing these reports is not known; neither the
persons who actually prepared these reports are identified nor any
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Excise Appeal Nos.75409-75411/2020
statement recorded of them, The counsels submit that, even if admitted
as evidence, theseprintouts do not constitute requisite and sufficient
evidence of production and removal of huge quantity of 26799.732 MTof
M.S. Ingots valued at Rs. 97,13,49,575; no corroborative and
substantiating evidence to prove purchase and receipt of required
quantity of raw materials, consumption of the said raw materials for
manufacture of finished goods, transportation of such huge quantity of
finished goods has been alleged or proved;
3.2. Learned Counsels submit thatsimilarly, the seized private diaries,
private pocket note books allegedly containing party wise and date wise
transaction details recovered from the office/ residential premises cannot
be relied upon for corroborating the entries appearing in the printouts
obtained from the hard disc as no author is identified and documents
have not been examined and tested; seized Documents like note books /
note pads (allegedly containing details like buyers name, date, amount
received and expenditure incurred in cash) have details for the period
June, 2015 and July, 2015 whereas diary seized from the residence (
allegedly contains details like parties name, date, amount received, and
other transactions) pertain to the period from Apr, 2015 to July, 2015;
entries appearing in the printouts of the sale ledger (Document No. 01 &
05) cannot be compared with above unauthentic private records
i.e.(Document No. 3,7 and 8) which contain entries for a limited period
from Apr, 2015 to July, 2015.
3.3. Learned Counsels submit that the adjudicating authority erred in
comparing the weighment slip dated 17.11.2015 appearing in daily
production and dispatch report (Document No. 04) with printouts
obtained from the hard disc (Document No. 01) and further with entries
appearing private purchase ledger of M/s Chanduka Hi-Tech Pvt. Ltd in
(Document No. 09); the weighment slip dated 17.11.2015 is just a
single weighment slip seized and by itself it has no corroborative value to
establish actual removal and sale of quantity of M.S. Ingots mentioned
therein to CHPL; there is no mention of value of the goods in any of the
documents and no enquiries have been conducted from officers from
CHPL to verify and confirm whether CHPL actually received the quantity;
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Excise Appeal Nos.75409-75411/2020
just four entries finding appearance of ledger of CHPL were compared
with entries appearing in the printouts from the seized hard disc; one
entry relates to Nov, 2011 and the other three entries to Jan, 2012; daily
production and dispatch report for the said four dates does not exist to
corroborate actual quantity removed; purchase ledger of CHPL is a third
party private document, whose authenticity, genuineness and reliability
is not free from doubt; inferences drawn on the basis of a single
weighment slip and the four entries in the ledger of a third party to
conclude clandestine removal for the entire period i.e. Apr, 2011 to Nov,
2015, is not maintainable.
3.4. Learned Counsels submit thatthe impugned SCN had placed reliance
on the oral statements of a few employees and the Directors of the
Appellant Company, namely Shri Dharmendra Kumar, Accountant, Shri
Vicky Kumar, Data Entry Staff (Trainee), Shri Gian Chand Jaiswal,
Director, Shri Raj Jaiswal, Director and Shri Amit Jaiswal, Nephew of Shri
Gyan Chand Jaiswal; detailed submissions made and averments during
cross examination, to demonstrate and that none of the statements
were voluntary and therefore, cannot be admitted, have been ignored;
allegation of clandestine removal of any quantity cannot be upheld unless
it is established through tangible and affirmative evidence showing raw
materials consumption, transportation, sale to various buyers and sale
proceeds realised; appellants rely upon the ratio of the judgment of the
Hon'ble Tribunal in the case of M/s. Kuber Tobacco Products Ltd2013
(290) ELT 545 (Tri. - Del.).
4. Learned Counsels submit further that learned commissioner erred in
holding that the appellants filed to refute such fact based allegations with
fact based replies and instead raised general objections, procedural
infirmities, investigation deficiencies, infirmities in Panchnama
proceedings seizure etc; the observations and the findings of the
Commissioner are erroneous and misleading and proceeds further on the
principle of preponderance of probability. They submit that the
submissions put forth by the Appellant were substantially based on
factual aspects and covered the related legal aspects; Panch witnesses
were interested and they were either tutored or otherwise influenced;
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Excise Appeal Nos.75409-75411/2020
panchas did not appear for cross examination; evidencesnot resumed in
justified manner and without following the due procedure of law become
questionable and cannot be accepted; it is established that the Panch
witnesses like BirKarmarkar were interested and routinely used;
probability is destroyed when the very evidence is rendered inadmissible;
though evidence cannot be correct to arithmetic precision, it nowhere
empowers authorities to violate law for resumption of the evidence.
Commissioner's reliance on a case of 'smuggling' under Customs Act is
incorrect to substantiate the allegation of 'clandestine activity' under
Excise Act.
4.1. Learned Counsels submit further that learned commissioner erred in
relying on Radhakrishnan v/s State of UP AIR 1963 SC 823 and Khet
Singh v/s Union of India reported in 2002(142) ELT 13; observations and
the findings by the Commissioner are not only misinterpretation but a
perverse interpretation of the law; the very case of
Radhakrishnan(supra)puts a rider that evidence resumed illegally
requires to be examined carefully; in the case of Khet Singh (Supra) it
was held that liberty with following a procedure is allowed only if
collection of evidence was not possible (Para 16); findings of the
Commissioner is patently erroneous and make procedure laid down
under Section 100(3) Cr. P.C. irrelevant; while relying on such findings,
learned commissioner has in fact conceded lapses in the conduct of the
searches; Commissioner has nowhere denied or rebutted the allegation
regarding routine or multiple use of Panch witnesses; commissioner
simply observes that even if it is assumed that the Panch witness Shri
BirKarmarkar was an interested witness, the same does not negate
search proceedings; Commissioner cannot disregard and digress from
the settled legal position which mandates independent Panch
witnesses;examination/cross examination conducted revealed that the
Panchnama proceedings at all the impugned premises were carried out in
contravention of of the provisions of Section 100(3) Cr.PC; Panchnamas
were pre-typed and were made to be signed by the witnesses;
submission that Panch witnesses are used in routine manner across
various investigations at various places was not rebutted and the same
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Excise Appeal Nos.75409-75411/2020
cannot be brushed aside; reliance is placed on Jagroop Singh @ CEETA
v/s DRI -2016(344) ELT 847(Del.), wherein it was held that joining of
independent witness is not an empty formality.
4.2. Learned Counsels submit further thatCommissioner held that the
condition required under Section 36B(2) of the CEX Act are not required
to be fulfilled since the hard disc was seized from the office of MCPL in
presence of witnesses and each page of the document was signed;
justification given by Commissioner is not only patently erroneous but
also misleading; the hard disc was given to Shri Vicky Kumar by one
Shri Shekher as deposed by Shri Vicky Kumar during his cross
examination; this fact has not been disputed by the DGCEI officers in
their comments cited by the Commissioner; moreover, the hard disc was
taken out from the bag of Shri Vicky Kumar for the first time by the
DGCEI officers after he had just entered the office; Neither the
investigating officers ever tried to issue summons to Shri Shekher nor
commissioner called him to give evidence; the contents of the seized
external hard disc i.e. the printouts of the sale details taken from the
said external hard disc by the DGCEI Officers, Jamshedpur are not
admissible since they were never resumed in the manner required,
fulfilling the conditions stipulated under Section 36B(2) & (4) of Central
Excise Act,1944; purpose of sealing of seized external hard disc,
reopening of the seal of seized hard disc in the presence of panchas and
taking of the printouts from the seized hard disc was not recorded in any
Panchnama; No enquiries were conducted by the investigating DGCEI
Officers to ascertain and verify whether the said seized hard disc
constituted an integral part of a Computer, which was being used
regularly to store and process information pertaining to business
activities of Appellant by a person having exclusive lawful control over
the use of said computer; such an enquiry was absolutely essential in
view of the mandatory provisions stipulated under Section 36B of the
Central Excise Act, 1944; Commissioner harped and heavily relied upon
the fact that the said external hard disc was recovered from the
possession of Shri Vicky Kumar who was a member of the staff of MCPL
and hence there could be no doubt over the fact that the data contained
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Excise Appeal Nos.75409-75411/2020
in said external hard disc pertained only to MCPL; Commissioner has
committed a grave error by disregarding provisions of Section 36B(2) &
(4) of the Act; there appears no mention, whatsoever, of existence of
any computer or computers in the office, factory or any other places
searched by the investigating officers; it's not the case of SCN that the
said internal hard was of any computer installed or being used in any
computer operated by MCPL at any of their premises.
4.3. Learned Counsels submit further thatCommissionerthough
dismissed the retracting deposition made by Shri Vicky Kumar during his
cross examination as an afterthought or tutored; Shri Vicky Kumar
stated on 04.12.2015 that entry of sales and purchase of M/s Makers
Castings Pvt. Ltd was made on daily basis in the computer and data of
sale and purchase are also stored in a hard disc (Transcend Storejet
500GB348228 1030) given by the Company M/s Makers Castings Pvt.
Ltd.); itwould be obvious that there existed at least one computer in
MCPL in which the data entry was originally made by him and the data so
stored in the said computer was transferred and stored by him in another
hard disc which is described by him as (Transcend Storejet
500GB348228 1030.); aforesaid hard disc recovered was an external
hard disc and not a hard disc, internal or integral to any computer which
could be said to be installed and being used regularly for their activities
by MCPL; printouts taken from the seized external hard disc do not even
qualify to be described as 'Computer printout' within the meaning of the
term 'computer printout' as used in Section 36B of the Act as the seized
hard disc cannot by any reasoning or logic be equated be a 'computer' or
treated as 'computer per se', as per Section 36B(2); therefore, the
evidence cannot be 'Computer printouts'nor can be admitted in evidence
as 'documents'; the investigating officers ought to have taken steps to
obtain a certificate duly signed by a person owning the hard disc and
occupying a responsible official position in relation as stipulated under
Section 36B(4), ibid; when the condition is not fulfilled none of the
printouts taken from the said hard disc have any evidentiary value to
substantiate any of the allegations made in the SCN; commissioners
reliance on Copier Force India Ltd2008(231)ELT 224(Tri- Chennai);Shri
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Excise Appeal Nos.75409-75411/2020
UlaganayagiAmmal Steels 2009(241) ELT 537 ( CESTAT) and 2008(231)
ELT 434 (Tri. - Chennai), is misplaced as the facts are distinguishable
and as it stands over-ruled by the subsequent decisions of the Apex
Court and High Courts; Hon'ble Supreme Court in the case of Anvar PV
v/s P.K. Basheer reported in 2017 (352) ELT 416 (SC) has laid down law
in this regard and is followed by Tribunal in the case of S.N.
Agrotech2018 (361) ELT 761 (Tri. - Del.); Appellant would further like to
place reliance on Super Smelters Ltd. 2020 (371) ELT 751(Tri.- Kol.)
4.4. Learned Counsels submit further thatCommissioner finds that the
deposition made by both Shri Gian Chand Khullar ( Panch-witness) and
Shri Vicky Kumar (Data Entry Staff) during cross examination are not
reliable since they contradict the contents of the Panchnama; it is
incorrect reasoning, as Panchnama proceedings themselves suffered
from procedural irregularity; Commissioner has wrongly held that the
panch witnesses i.e. Gian Chand Khullar, was actually influenced and was
known to Appellant No. 2; this question was also never raised by the
Respondent Commissioner with Shri Khullar; Shri Khullar deposed that
he knew about cross-examination proceedings, the same was telephoned
by the Superintendent from the Department to appear for cross-
examination.Learned Counsels submit further thatCommissioner held
that Shri Vicky Kumar was an employee of MCPL and notwithstanding the
false and fabricated deposition made by him during his cross-
examination, the statement dated 04.12.2015 is found to be a voluntary
statement and hence the same is held to be an admissible evidence in
the instant case; this finding is erroneous and legally untenable;
Commissioner has only relied upon the printouts of the sale details
retrieved from the seized hard disc to conclude that the same matched
with the contents of the hand written private documents thereby
affirming the statement of Shri Vicky Kumar that the printouts contained
the details of actual sale and purchase made by MCPL.
4.5. Learned Counsels submit thatconclusions, drawn by Commissioner
on Shri Vicky Kumar statement that it has evidentiary value, suffer from
following infirmities.
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the authors of the private handwritten note books and diaries had
neither been identified nor questioned to confirm the handwriting and
meaning of the contents therein.
Shri Vicky Kumar stated during his cross-examination that the
seized external hard disc was actually given to Shri Vicky Kumar by
one Shri Shekher; the claim is also not been disputed; the ownership
and authorship of the hard disc and its contents cannot be imposed
upon MCPL.
Shri Vicky Kumar was not questioned on being influenced by the
Appellant No. 2 or MCPL;
Shri Vicky Kumar stated on 04.12.2015 that he had not made the
entries appearing at 'Pages 87 to 62'and '88 to 102' of the document
No. 05; he denied having made the entries appearing at pages 103-
104 pertaining to monthly production and consumption report of
MCPL; he had been working as data entry staff of MCPL for the last
six months only;
Veracityof voluntary nature of the statement was not examined;
on the one hand clearly stated that he started making entries from
Sep, 2015, and on the other hand commented on the entries
appearing on several pages of printouts from the seized hard disc
which cover nearly five-year period from Apr, 2011 to Nov, 2015; it
could be either his guess work or he was tutored;
Deposition made by Shri Vicky Kumar during his cross-examination
cannot be dismissed merely as an afterthought and as fabricated
evidence;
Shri Raj Jaiswal stated on 31.12.2015 that he did not agree with
the replies given by Shri Vicky Kumar on 04.12.2015.
4.5. Learned Counsels submit that Commissioner erred in holding that
some of the contents of the Diary resumed from the residence of the
Appellant No. 2 tallied with the details contained in the printouts of the
sale ledger extracted from the seized hard disc. They would submit that
the diary (referred to as Document No. 03), alleged to contain
transaction details of MCPL for the period Apr, 2015 to Nov, 2015 has
actually not been made a 'relied Upon Document' and as such nothing
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Excise Appeal Nos.75409-75411/2020
can be inferred from the same. Commissioner also erred in holding that
Document No. 04which has entries for the few months, tallied with the
Document No. 01-02 and Document No. 01; the finding is erroneous and
the evidence is not reliable for the following reasons:
The said 'Go down/ third party premises' was not owned by the
Appellants and has not been proved to be owned by the Appellants;
printouts obtained from the seized hard disc are not proven to be
belonging to MCPL; Shri Shekher who was claimed to have given the
hard disc has not been identified; no enquiries as to the ownership of
the hard disc and about the contents therein were made;
owners of transport vehicles (JHO 5L-9303 & JHO 5AJ-3346) were not
questioned on the alleged clandestine removal to Chanduka Hi-Tech;
Panchnama at the residence of Director of MCPL does not reveal as to
from where the diary (Document No. 04) was recovered; therefore,
this evidence is not admissible as per Kuber Tobacco - 2013 (290)
ELT 545 (Tri. - Del.);
Though commissioner relies upon the evidence resumed during
investigation at M/s Chanduka Hi-Tech Pvt Ltd and the SCN dated
17.03.2015 issued to M/s M/s Chanduka Hi-Tech Pvt Ltd, copies of
alleged evidence or SCN were not served upon the appellants; they
were not even made 'Relied Upon Document';
Commissioner finds that MCPL has resorted to undervaluation in the
said invoices and but had also hidden the actual data, in the
printouts taken from the seized hard disc, by deliberately placing the
decimal point two digits from the right side and thus they can be
corroborated with details in other documents;
the hard disc was resumed from the bag of Shri Vicky Kumar who
had been given the same by Shri Shekher outside the premises of
MCPL; it is not established that the said hard disc was a property of
MCPL and was actually being used in the office of MCPL; no enquiries
have been conducted by the investigating authority from the buyers
under the Central Excise Invoices issued by MCPL to ascertain and
confirm the actual sale proceeds realized so as to establish
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undervaluation of the goods sold under properly issued excise
invoices;
allegations have been confirmed without considering that the
clandestine removal is required to be proved by the whole chain of
activities i.e. from procurement of raw materials, utilization of same
with related different overhead expenses viz. payment of wages and
salaries, consumption of electricity, transportation of the goods,
payment to the transporter, receipt of the goods by recipient and
recovery from the same and not by simply interpreting the coded
entries.
4.6. Learned Counsels submit that Commissioner was wrong in in holding
that the defence of MCPL does not have any legal or technical ground to
stand; the record of cross-examination supports the case of the
Department; contention of the Appellants that corroboration of sale
details entered in the seized hard disc and printouts taken therefrom
with other seized private documents is for a very limited period in as
much as while the sale details contained in the seized computer printouts
pertain to nearly five-year period from Apr, 2011 to Nov, 2015, the other
seized private document pertain to a very short period from Apr, 2015 to
Nov, 2015, and therefore these do not provide requisite corroborative
evidence is baseless; statement Shri Vicky Kumar on 04.12.2015clearly
affirmed that the sale details contained in the printouts taken from the
seized hard disc pertain to MCPL for the period from 1stApr, 2011 to 30th
Nov, 2015 and that the said entries have been made in the name of
'Rajesh' and 'Om Namaha', which are fake names to hide the name of
the Company MCPL; in case of clandestine activities involving a long
period, of say five-years, though the details of clandestine activities may
be found stored in an electronic device for the entire period, the
corresponding hard documents may be found and recovered for a limited
period only; entire facts and circumstances of the case have to be looked
into and a decision has to be taken on the yardstick of 'preponderance of
probability' and not on the yardstick of 'beyond reasonable doubt'.
Appellants submit that the adjudicating authority is wrong for the
following reasons:
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Excise Appeal Nos.75409-75411/2020
Commissioner ignored the fact that the department had itself
committed procedural irregularities in resumption of evidences; he
ignored the fact of routine use of BirKarmarkar as panch witness;
under no provision of Jurisprudence, the Adjudicating Authority can
justify to accuse the Appellant for failure to lead the positive evidence;
onus to prove is on the department; appellant submitted evidence that
witnesses were interested and data/ documents were resumed from
third party;
Commissioner relies on 'undated comments' forwarded by DGCEI
Office;
Shri Vicky Kumar clearly retracted his statement dated 04.12.2015
during the course of his cross-examination; he confessed that he had
clearly told the officers that he did not know what the entries in the
printouts were about and that he was compelled to write the replies as
per the dictation given by the officers; no reliance can be placed on
the statement dated 04.12.2015;
no reliance can be placed on the seized private documents such as
diaries, loose sheets etc since the entries appearing in the seized
unauthentic private documents are not only for a short duration (at the
most period from Apr, 2015 to Nov, 2015); authors of all these private
unauthentic records have not been identified; where identified, have
not been examined to ascertain and verify the truth and contents;
Commissioner wrongly holds that the allegation of clandestine
evasion is not required to be proved on the principle of 'proof beyond
reasonable doubt' but on the basis of 'preponderance of probability'.
But the entire documentary evidence in the case, whether it be the
printouts from the seized external hard disc or the seized private
handwritten diaries, note book, loose sheets etc., were all recovered
and resumed through irregular search and seizure proceedings in
violation of the provisions of Section 100 of Cr.P.C. and Section 36B of
the Central Excise Act, 1944; this is borne out from the depositions
made by the witnesses / panchas during cross examination;
while creating and maintaining the said unauthentic private diaries/
loose sheets, no proper and reliable accounting methods have been
followed; the said loose sheets and the documents pertain to several
17
Excise Appeal Nos.75409-75411/2020
parties and are not maintained in a systematic manner so as to
facilitate segregation with reference to any specific party;
the pocket diary, note book and loose sheets do not contain any
details to link the entries appearing therein with the Appellant
Company; the name of the Appellants has nowhere been mentioned;
though the department asserts that pocket diaries actually contain
party-wise detail of sale and purchase, department did not conduct
any enquiries or made any efforts to contact the concerned parties to
corroborate the details contained therein;
Commissioner's reliance on the criterion of preponderance of
probability is misplaced in the facts and circumstances of the present
case and well established legal principles enunciated in plethora of
judicial pronouncements; it was held that clandestine removal is a
serios charge against the manufacturer, which is required to be
discharged by the Revenue by production of sufficient and tangible
evidence in regard to the excess production details, production
capacity, raw materials purchased and consumed, dispatch particulars
from the regular transporters, realization of sale proceeds, details of
the receipt of finished product from the regular dealer or buyers,
excess power consumption etc.
4.6. Learned Counsels submit that there are major flaws and legal
infirmities and as such impugned order is not sustainable for the
following reason that it is well settled position of that the charge of
suppression of production and clandestine removal is a serious charge
which is required to be established by production of sufficient tangible
and positive corroborative evidence of clandestine manufacture and
clearance and not merely on the basis of inferences or unwarranted
assumptions; in the instant case the entire demand of duty has been
raised on the basis of legally inadmissible computer printouts retrieved
from external hard disc, private unauthentic diaries, loose sheets or
third party private documents recovered through illegal Panchnama
proceedings; no adequate corroborative and independently reliable
evidence in regard to installed capacity of production,
procurement/purchase and utilization of various raw-materials; labour
18
Excise Appeal Nos.75409-75411/2020
employed; power consumed; transportation; Sale & Receipt of finished
goods sold to buyers; accounting of goods sold in the books of account
of the buyers and realisation of sale proceeds from the buyers, etc has
been collected or adduced. They rely on the ratio of the following cases.
Continental Cement Co. Vs Union of India 2014 (309) ELT 411 (ALL).
Pan Parag India Ltd. Vs Commissioner2013 (291) ELT 81 (Tri.)
Kuber Tobacco Products Pvt. Ltd. Vs Commissioner2015 (317) ELT A 159 (SC).
Superior Steel Products Vs CCE1999 (109) ELT 712
CCE VsLaxmi Engineering Works2001 (134) ELT 811
Flevel International (P) Ltd. Vs CCE2016 (332) ELT 416 (Paras 51 to 55)
CCE Vs Saakeen Alloys (P) Ltd 2014 (308) ELT 655 (Guj)
Arya Fibres Pvt. Ltd. Vs CCE, Ahmedabad - II2014 (311) ELT 529 (Tri. - Ahmd.)
4.6. Learned Counsels submit that there is no evidence of procurement
and consumption of excess raw-material; even if the allegations of
production and clandestine removal of 26799.732 MT of finished
excisable goodsis accepted for the sake of argument, it is obvious that
for manufacture of aforesaid quantity of finished excisable goods the
appellant would have required to procure and consume commensurate
quantity of raw-materials likeSponge Iron,Pig Iron, Scrap, Coal etc;
Revenue has nowhere made any attempt to calculate the raw material
required to manufacture such a huge quantum of finished goods, leave
alone adduce evidence of procurement of the same;there exists no
positive, factual and legally sustainable evidence of clandestine receipt
and consumption of various raw-materials; there is not even any
evidence of stock of raw materials being found to be in excess of that
recorded in the statutory records; no enquiries whatsoever, have been
conducted with any of the suppliers of the raw-materials; no evidence of
payments made by the appellants to raw material suppliers or any
receipts by such suppliers is placed on record; no inquiries were
conducted as regards the engagement of sufficient number of labourers
and other employeesto manufacture of such huge quantityalleged to
have been clandestinely produced and removed. They submit that it has
been held in several cases that no demand of duty can be sustained
unless the charge of clandestine manufacture and clearance is sufficiently
substantiated with the evidence of purchase and utilization of requisite
19
Excise Appeal Nos.75409-75411/2020
quantity of raw-materials and further with duly supporting testimony of
the labourers working in the factory; they place reliance on
Mohan Steel Vs CCE, Kanpur2004 (177) ELT 668 (Tri. - Del.)
Auto Gallan Industries (P) Ltd. Vs CCE, Rohtak2015 (317) ELT 139 (Tri. - Del.)
Amba Cement & Chemicals Vs Collector2000 (115) ELT 502 (Tri.)
Balashri Metals Pvt. Ltd. Vs UOI2017 (345) ELT 147 (Jhar H.C.)
Triveni Rubber & Plastics Vs CCE1994 (73) ELT 7 (SC)
Galaxy Indo Fab Vs CCE, Lucknow2010 (258) ELT 254 (Tri. - Del.)
CCE, Chandigarh Vs Dashmesh Castings (P) Ltd.2010 (257) ELT 225 (P & H)
4.7. Learned Counsels submit that there is no evidence whatsoever to
surplus production or stock of finished goods in excess of that recorded
in the statutory records to support the allegation of suppression of
production with intent to remove the same clandestinely; there is no
corroborative evidence to prove even a single instance of actual removal
of unaccounted M.S. Ingots & waste from the factory without payment of
duty and without issuing the central excise invoice; there is no instance
of interception of any of the aforesaid finished goods removed from the
factory; also there is no evidence of any such finished excisable goods
having been found and seized at any premises; no enquiries were
conducted with alleged buyers; there is not even an iota of evidence of
realization of sale proceedsin respect of any such alleged clandestine
removal of finished goods; in view of complete absence of tangible
evidence in regard to any of the several aspects mentioned above, the
demand of duty raised in the impugned SCN has no legal tenability and it
is therefore, unsustainable in law. They rely on following cases.
Ruby Chlorates (P) Ltd. v/s. CCE, Trichy 2006 (204) ELT 60
JagatpalPrem Chand Ltd. v/s. CCE, Delhi-II 2004 (178) ELT 792 (Tri.-Del.)
Ghodavat Pan Masala Products Ltd.v/s. CCE, Pune2004 (175) ELT 182
Durga Trading Co. v/s. CCE2002 (148) ELT 967 (Tri.) upheld by SC in 2003 (157)
ELT A315 (SC)
Sharadha Forge Pvt. Ltd. v/s. CCE, Rajkot 2005 (179) ELT 336
Hyderabad Electrodes v/s. CCE, Hyderabad 2005 (191) ELT 1164
VigiromChem Pvt. Ltd. v/s. CCE, Bangalore2010 (251) ELT 544 (Tri.)
Atlas Conductors v/s. CCE, Mumbai2008 (221) ELT 231 (Tri. - Mum.)
Ramji Dayawala v/s. Invest Import AIR 1981 (SC) 2085
Bareilly Electricity Supply v/s. The Workmen AIR 1972 (SC) 3030
Laxmi Engineering Works v/s. Commissioner2010 (254) ELT 205 (P & H)
UOI v/s. MSS Foods Products2011 (264) ELT 165 (M.P.)
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Excise Appeal Nos.75409-75411/2020
5. Learned Authorised Representative for the department reiterates the
findings in the Order-in-Original and further submits vide written
submissions that:
During the search of office of M/s. MCPL, a hard disc was
recovered from the possession of Mr. Vicky Kumar Jha, Data
Entry Operator of the company; the hard disc contained
details of actual sale of ingots for the period 1.4.2011 to
30.11.2015 and all copies were taken in the presence of Mr.
Vicky Kumar Jha and panch witnesses; diary recovered from
the residence of Mr. Ghanchand Jaiswal contained date-wise
transaction details for the period April 2015 to July 2015;
During the search of secret office, date-wise production
and dispatch records, prepared manually by Shri Chitharanjan
Sharma, Plant Supervisor of M/s. MCPL were recovered; seized
diary contained details of deposit and withdrawal of cash in the
name of sellers and buyers of M/s. MCPL during 2.4.2013 to
1.4.2015;
On the appellant's claim of non-adherence to the
provisions of Section 36B (2) of Central Excise Act, 1944 that
computer print-outs are not the only document relied upon; as
the details are matching with the documents recovered from
the residence of the Director, requirements of Section 36B (2)
are covered; It's true that the documents are matching for a
short period. It is to submit in this regard that, in any type of
clandestine activities, the persons indulging in it take sufficient
precautions to hide/destroy the evidences and it cannot be
expected of him to faithfully put the details of all such
clearance/transactions in some register/records/electronic
devices for any agency to come and lay hands on it.
The assessees involved in clandestine activities normally
prefer to store data of clandestine activities in some electronic
devices in some fake names in a coded manner and to destroy
hard documents after periodic intervals. The investigating
officers are thus able to lay hands on only those evidences
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Excise Appeal Nos.75409-75411/2020
that are left in spite of the best care and precautions taken by
the persons involved in such clandestine activities.
Handwritten note books seized from the office of M/s.
MCPL and the documents seized from the residence of Director
are matching; correlation of various documents recovered is
discussed in para 3.7.4 of Order-in-Original.
Print-out of the hard disc corroborated by the purchase
ledger of one of the main buyers of M/s. MCPL i.e., M/s.
Chanduka Hi-tech Pvt. Ltd.; excise invoices issued by M/s.
MCPL during relevant period also figure in the print-out from
the seized hard disc;
During the physical verification of stock, shortage was
found and the Director voluntarily deposited Rs.31,00,000/- in
cash and Rs.6,50,000/- through debit in CENVAT Account.
Learned counsel for the appellants though raised the
question of proprietary of panch witnesses did not provide any
proof to support the same;
As held by the Constitutional Bench in the case of Poonam
mal: 1974 (1) SCC (345), relevant evidences cannot be
ignored on the ground that it is obtained by illegal search
seizure.
6. Heard both sides and perused the records of the case. Brief issues
concerning this case are as follows:-
(i). whether in the facts and circumstances of the case, the Panchnama
proceedings are vitiated for violation of procedure laid down under
Section 100(3) Cr PC.
(ii). whether prints out taken from the Hard Disk recovered in the
premises of the alleged secret office (claimed to be a third party
premises or godown) are acceptable as evidence?Whether the electronic
and other evidence relied upon in the instant case is correctly obtained
so as to have evidentiary value and stand judicial scrutiny?
(iii). whether the statements relied upon in the impugned order are
sufficient to prove the clandestine removal as alleged;
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Excise Appeal Nos.75409-75411/2020
(iv). whether the Learned commissioner has correctly analysed and
appreciated the available evidence, electronic or documentary, to
conclude that the appellants have indulged in clandestine Removal? If so,
whether the quantification of duty evaded is correct in the light of
available evidence;
(v). whether the penalties imposed are justified?
7. As per the show cause Notice and as found by the Learned
Commissioner, the allegations made in the SCN are based on the seized
documents, both soft and hard, as well as statements of the concerned
persons. Documents mainly consist of
(i). Hard Disk (R Transcend Store jet 500GB, 348228 1030 Black
Colour with Orange Strip-) recovered and seized from the possession
of Vicky Kumar @ Vicky Kumar Jha, and numbered
05/DGCEI/JRU/MCPL/O/15. This is said to contain details of actual sale
of M.S. Ingot by MCPL during 01.04.2011 to 30.11.2015; printouts
were taken in presence of Vicky Kumar and two independent witnesses
and were seized;
(ii). Dairies alleged to contain party-wise transaction details and a
date-wise transaction details of MCPL for the period April, 2015 to July,
2015,numbered 04/DGCEI/JRU/MCPL/R/15 and
03/DGCEI/JRU/MCPL/R/15, recovered from the residence of Mr.Gyan
Chand Jaiswal;
(iii). Documents No. 01, 02, 03, 04 & 05/DOCEI/JRU/MCPL/0/15,
recovered search of secret office of MCPL and alleged o contain daily
dispatch reports and date-wise production reports, during February,
2015 to November, 2015; these were said to be prepared manually by
Mr.Chitranjan Sharma, plant supervisor of MCPL;
(iv). Document No. 07 & 08/DOCEI/JRU/MCPL/0/15, seized from the
office of MCPL, alleged to contain details of payment and receipt of
MCPL;
(v). Document No. 02/DGCEI/JRU/MCPL/R/15, alleged to contain day-
to-day details of deposit and withdrawal of cash in the name of sellers
and buyers of MCPL during 02.04.2013 to 01.04.2015;
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Excise Appeal Nos.75409-75411/2020
(vi). Documents, No. 04/DOCEI/JRU/MCPL/0/15, alleged to contain
mobile bills of staff/Director of MCPL;
(vii). Documents, No. 01/DGCEI/JRU/MCPL/F/15-alleged to contain
this document contains Weighment slips and a few loose papers.
(viii).statements of S/Shri Dharmendra Kumar, Accountant (on
04.12.2015 and 15.12.2015); Vicky Kumar, Data Entry
Staff/Accountant (on 04.12.2015); Gyan Chand Jaiswal, Director (on
04.12.2015 and 12/13.01.2016); Raj Jaiswal, Director (on
31.12.2015); Amit Jaiswal, nephew of Gyan Chand Jaiswal
(on04.12.2015).
8. The appellants submit that Panchnama proceedings are vitiated
inasmuch as the Panch witnesses and particularly Mr. BeerKarmakar has
been repeatedly used by the investigating agency all over the places
during their searches; the Panch witnesses are either interested parties
or suitably tutored by the investigative agency. He submits that during
the proceedings at the so-called secret office of the appellants which is
basically a Cadbury / bournvita godown, none of the management or
staff of Cadbury / bournvita was present; the mandatory search warrant
was not shown or served to the holder of the premises; none of the
representatives of appellants also were present during the search
proceedings; Panch witnesses were made to sign the typed papers; Mr.
BirKarmakar and Mr. BheemaLohar did not appear for cross-examination
also; this shows to prove that the Panch witnesses were not
independent; under the provisions of Section 100 (3) of CRPC and the
case law enunciated by judicial pronouncements, the Panch witnesses
should be known people from the locality of search; it was not the case
in the impugned proceedings. They rely on the ratio of Pan Parag India
Ltd. (supra) and M/s. Kuber Tobacco Products Pvt. Ltd. (supra). Per
contra, the learned Authorised Representative submits that even if there
are some procedural infractions during the Panchnama proceedings, the
records seized during such Panchnama do not lose the evidentiary value
in so far as the taxation law is concerned. We find that Learned
Commissioner also finds that
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Excise Appeal Nos.75409-75411/2020
it is settled by the Hon'ble Apex Court that the probative value of the
evidence, gathered during the search is not effected, even if the search is
irregular or illegal. It will not affect the validity of seizure and further
investigation by the departmental authorities or the validity of the trial. The
Hon'ble Supreme Court, relying on the judgement of the Radhakishan V State of
UP case reported in AIR 1963 SC 823, held that due to illegality of search, the
court may be inclined to examine carefully the evidence regarding the seizure.
Beyond this, no other consequence ensured. The Constitutional Bench in the
Pooran Mal case, reported in (1974) 1 SCC 345, held that Courts in India even
in England have consistently refused to exclude relevant evidence merely on the
ground that it is obtained by illegal search or seizure. It was further held that in
India, as in England, where the test of admissibility of evidence lies in relevancy,
unless there is express or necessarily implied prohibition in the Constitution or
other law, evidence obtained as a result of illegal search or seizure is not liable
to be shut out.
9. We find that there were some procedural irregularities in the conduct
of the Panchnama proceedings. The investigating agency was required to
use panchas whose credentials cannot be questioned. Repeated use of
the same Panch witnesses all around different places by the same
agency, give scope for avoidable allegations while casting doubts on the
proceedings initiated by using them. The Panchnama drawn at the
premises of Cadbury / bournvita also suffers from the infirmities that
none of the responsible persons of the said owners of the godown were
present during the proceedings and it is not clear as to on whom search
warrant was served. We find that the Panchnama dated 4-12-2015,
drawn on the appellants' office at E-1, BS Tower, Opp; Saint Merry
Church School, N Road, Bistpur, Jamshedpur, it is mentioned that after
knocking the door of the office one Shri Vicky Kumar, Staff of M/s MCPL
opened the door; it is not made clear as to how panchas knew it was Shri
Vicky Kumar. Similarly, the Panchnama drawn at the godown of
Cadbury/Bourn vita in the third para reveals that ' there second room at
the right side was used as secret office by M/s MCPL; it is surprising as to
how the Panch witnesses were aware of the fact; narration does not
specify the same. In view of the above, it can be held that the
proceedings are in contravention of the provisions of CRPC, we are in
agreement with the Authorised Representative that in matters involving
evasion of taxes, it would be sufficient if the documents recovered during
the search do otherwise constitute reliable evidence. However, under the
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Excise Appeal Nos.75409-75411/2020
circumstances, the evidence put forth requires to be weighed in the facts
and circumstances of the case and in juxtaposition with the corroborative
evidence. A harmonious construction of the ratio of various judicial
pronouncements cited by the learned adjudicating authority would mean
to say that the evidence collected cannot be held invalid per se despite
the procedural infractions. However, courts need to weigh such evidence
in the facts and circumstances of the case. In other words, if other
evidence available corroborates the facts of such evidence, the same can
be used.
10. Coming to the second issue of whether or not the recovery of
printouts from the hard disc found in alleged secret office of the
appellants from the possession of Shri Vicky Kumar, an employee of the
appellants, the appellants have vehemently submitted that the hard disc
in question was not established to belong to them or established to be
used with a computer which was in use by the staff of the appellants in
course of regular business; the printouts taken from the said hard disc
and recovery of documents thereof is in clear violation of the provisions
of Section 36B of Central Excise Act, 1944. They further submit that the
hard disc does not belong to the company and was handed over to Shri
Vicky Kumar by one Mr. Shekar just before the proceedings started.
Neither the investigating agency nor the Learned Commissioner have
bothered to enquire the veracity of the statement of Mr. Vicky Kumar
and no efforts were made to find the whereabouts of Shri Shekar. The
appellant submits that to this extent the printouts taken from the hard
disc seized from the possession of Mr. Vicky Kumar loses the evidentiary
value. We find that learned Commissioner has relied upon the cases of
Copier Force India Ltd. Vs. Commissioner of Central Excise, Chennai:
2008 (231) ELT 224 (Tri.-Chennai); Ammal Steels vs. Commissioner:
2009 (241) ELT 537 (CESTAT) and Shri UlaganayagiAmmal Steels vs.
Commissioner: 2008 (231) ELT 434 (Tri.-Chennai) and observed that the
hard disc was seized from the office of MCPL in the presence of staff of
MCPL and independent witnesses; printout of relevant data contained
therein was taken in presence of the said staff and independent
witnesses and each page thereof was signed by the said staff and
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Excise Appeal Nos.75409-75411/2020
therefore, the provisions of Section 36(B) of Central Excise Act, 1944
need not be followed. For ease of reference, it is beneficial to extract the
relevant Section 36(B).
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 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 thereunder, 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
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 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
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Excise Appeal Nos.75409-75411/2020
(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.
(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.]
11. From a reading of the above provisions and on-going through the
facts of the case, we find that the appellants claim that the impugned
order has failed to appreciate and ensure due compliance to the
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Excise Appeal Nos.75409-75411/2020
procedures and the requirements stipulated under the said Section;
during the course of Panchnama proceedings in the so-called secret
office, none of the representatives of the owners of the premises i.e.,
Cadbury / Bournvita were present and they were not even questioned as
to how the premises were permitted to be used or permitted to be used
by the appellants; moreover, it was not identified as to which computer
the said hard disc belonged to and as to what kind of data is being stored
in the hard disc in the day-to-day conduct of business of the appellant.
No certificate whatsoever by the person who has extracted the data, in
terms of Section 36(B)(4) was issued; even if it is assumed that it was
an afterthought, the claim of Mr. Vicky Kumar that the hard disc was
handed over to him by one Mr. Shekar was not controverted by the
officers of the investigating agency nor Shri Vicky Kumar was questioned
by the Commissioner during the examination in this regard; Shri Shekar
was not examined either by the agency or by the Commissioner.
12. We find that there is considerable force in the arguments of the
appellants that there appears no mention, whatsoever, of existence of
any computer or computers in the office, factory or any other places
searched by the investigating officers, wherein the said hard disc is used.
The said hard disc was an external hard disc admittedly recovered from
the bag of Shri Vicky Kumar when he entered the office of MCPL and not
a hard disc, internal or integral to any computer which could be said to
be installed and being used regularly for their activities by MCPL. Initially
he stated that he was keeping the data in the hard disc as per the
directions of the management. Later he claimed that the hard disc was
given by one Shri Shekhar; it could well be an afterthought but the
investigation or the adjudicating authority did not conduct any counter
check; it was simply held that the deposition in the course of cross
examination was tutored; this allegation can stick to the initial
statements also. Only the tutors could be different. We find that the
appellants claim that the external hard disc recovered from the personal
possession of Shri Vicky Kumar does not even qualify to be described as
'Computer printout' within the meaning of the term 'computer printout'
as used in Section 36B of the Act. But the fact remains that is electronic
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Excise Appeal Nos.75409-75411/2020
media and the printouts taken from the hard disc, though in the
presence of Shri Vicky Kumar and panchas. We are of the considered
opinion that the rigours of section 36(B)ibid are also applicable to
evidence contained in the Hard Disc as the data in Hard Disc is evidence
stored in electronic form. The spirit of Section 36(B) is violated. Nothing
would have stopped the agency to seal the Hard Disc, take a certificate
from the owner and to send it for aforensic examination. Procedural
infirmities in taking the printout have added to the violations of the
provisions of Section 100 of CrPC. We find that Tribunal in the case of
S.N. Agrotech 2018 (361) ELT 761 (Tri. - Del.), following the judgment
of Hon'ble Supreme Court in the case of Anvar PV (supra), held as
follows : -
"8. On close reading of Section 138C of the Act, 1962, it is seen that the
Legislature had prescribed the detailed procedure to accept the computer printouts
and other electronic devices as evidences. It has been stated that any proceedings
under the Act, 1962, where it is desired to give a statement in evidence of electronic
devices, shall be evidences of any matter stated in the certificate. In the present case,
we find that the provisions of Section 138C of the Act were not complied with to use
the computer printouts as evidence. The Ld. Counsel for the appellants submitted
that there is a gross illegality committed during the retrieval of the electronic
documents. It appears from the Panchnama and record of proceedings that the
alleged date recovered from electronic documents, so seized, was copied in a hard
disk in presence of one person and, thereafter, it was opened in front of other
persons. It is noted that the certificate was not prepared during the seizure of the
electronic devices, as required under the law.
9. The investigation is normally started after collecting the intelligence/information
from various sources. The investigating officers are procuring the evidences in the
nature of documents, statements, etc., to establish the truth. During the evolution of
technology, the electronic devices were used as evidence. In this context, the law is
framed to follow the procedure, while using the electronic devices as evidence for
authenticity of the documents, which would be examined by the adjudicating
authority during adjudication proceeding. In the instant case, it is found that the
entire case proceeded on the basis of the electronic documents as evidence. But the
investigating officers had not taken pain to comply with the provisions of the law to
establish the truthfulness of the documents and merely proceeded on the basis of the
statements. Hence, the evidence of electronic devices, as relied upon by the
adjudicating authority cannot be accepted.
30
Excise Appeal Nos.75409-75411/2020
10. 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 138C 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;
(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.
31
Excise Appeal Nos.75409-75411/2020
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.
13. Even assuming that that the assertions of learned commissioner that
in the instant case the printouts from the disputed hard disc were taken
in the presence of Shri Vicky Kumar & independent witnesses and Shri
kumar has signed each of the pages and thus there was no need to
follow the procedure under 36(B); and that the procedural violations in
collecting electronic evidence would not in any way cast clouds of doubt
over the evidentiary value of the printouts taken from the said hard disc,
we find that the reliability of printouts would largely depend on the
corroborative evidence that the investigating agency could bring forth.
Just as in the case of procedural infractions in the case of drawl of
Panchnamas, the same may not vitiate the evidence per say provided the
evidence collected is corroborated by other evidence.
14. We proceed to examine the same. The impugned order relies heavily
on the computer printouts and the diaries resumed from the residence of
the Director and office premises and the statements of different
personnel of the appellants. The appellants submit that the statement of
Mr. Vicky Kumar is sketchy and does not reflect the true picture; Mr.
Vicky Kumar on the one hand says that he has been working with the
company for last 3-4 months but confirms the data recovered from the
hard disc covering a period of more than 4 - 5 years for which he does
not have any authority or competence or locus standi; he himself stated
categorically that he attended the data entry work from September 2015
only; his claim of receipt of hard disc from one Shri sheker was not
questioned or claimed either by the investigating agency or by the
Commissioner; the retraction of the statement dated 4.12.2015, by Mr.
Vicky Kumar, during the cross-examination was not rebutted by the
learned Commissioner. Regarding the other documentary evidence, the
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Excise Appeal Nos.75409-75411/2020
appellants submit that the diary from the residence of the Director was
seized without mentioning the place from where it is seized; the nature
of the contents were not examined; nobody was questioned on the code
words alleged to have been used in the diaries; it was presumed that
decimal points were moved two places to left while recording figures;
similarly, in respect of other documents also, the ownership of the
documents is not established and the authenticity of the same becomes
suspect. The appellants contend further that the learned Commissioner
has relied upon a show-cause notice issued to M/s. Chanduka -Hitech;
however, the copy of such show-cause notice was not given to the
appellants; the owners of the trucks JHO 5L 1303 and JHO 5AG 3346
were not even questioned.
15. The appellants argued that the learned Commissioner has
sweepingly generalised and extrapolated the duty demand for the period
1.4.2011 to 30.11.2015 whereas the so-called corroboration from other
documents, however, unreliable was only for the period April 2015 to
November 2015. Learned Commissioner relies upon the statement of Mr.
Vicky Kumar that the printout contains sale details of MS ingots for the
period 1.4.2011 to 30.11.2015 made in the fake names of 'Rajesh' and
'Om Namaha'; the seized hard disc was recovered from his possession
and the same was to be handed over to Shri Gyanchand Jaiswal;
printouts contained data entry; no place for tampering and interpolation.
Commissioner also relies on the quantification put forth by the MCPL in
course of reply submitted to the show-cause notice wherein the
appellants have deducted the clearances shown in ER-1 returns and
concludes that the appellants have no objection so far as the quantity of
clearances of MS ingots reflected in the computer printouts.
Commissioner also finds that clandestine activities in any type of
clandestine activity, the person indulging in clandestine activity takes
sufficient precaution to hide/destroy the evidences and it cannot be
expected of him to faithfully put the details of all such
clearances/transactions in some register/records/electronic devices for
any agency to come and lay hands on it. The assesses involved in
clandestine activities normally prefer to store data of clandestine
33
Excise Appeal Nos.75409-75411/2020
activities in some electronic devices in some fake names in a coded
manner and to destroy hard documents after periodic interval in order to
avoid even per chance detection of their clandestine activities. As such,
in case of clandestine activities involving a longer period, say for five
years, though the details of clandestine activities may be found stored in
any electronic device for the entire period, the corresponding hard
documents may be found and recovered for a limited. period only. As
such, the investigating officers would be able to lay hands on only those
evidences that shall be left in spite of the best care taken by the person
involved in such clandestine activity.
16. We find that the argument of the learned Commissioner is not
correct. It is not for the appellant-noticees to disprove the clandestine
removal and evasion. It is for the investigating agency to gather
evidence and it is for the adjudicating authority to appreciate the
evidence and confirm the demand of tax. We find that as submitted by
the appellants, charge of suppression of production and clandestine
removal is a serious charge which is required to be established by
production of sufficient tangible and positive corroborative evidence of
clandestine manufacture and clearance and not merely on the basis of
inferences and assumptions. In the instant case of the appellant the
entire demand of duty has been raised on the basis of legally
inadmissible computer printouts retrieved from external hard disc,
private unauthenticated diaries, loose sheets or third-party private
documents recovered through illegal Panchnama proceedings.The
appellants relied upon heavily on the ratio of the judgements in Kuber
Tobacco and Pan Parag (Supra). We find that it was held in Kuber
Tobacco, with regards to seizure, documentary evidence and statements
that
12. The credibility of the documentary evidence which is relied upon
to hold that the appellants were involved in clandestine removal of the
products is sought to be disputed on various grounds. Firstly, the seizure
proceedings are themselves contended to be illegal, secondly, the author of
those documents has not been identified and has neither been examined nor
produced for cross-examination, thirdly, the documents are merely
duplicate copies, fourthly, the contents of those documents are not proved to
34
Excise Appeal Nos.75409-75411/2020
be true and in any case, the said documents were not seized from the factory
premises of the appellants, or from the premises in possession of the
appellants.
13. It is well settled law that the seizure of documents from any
premises in support of any serious charge must be established to have been
done by following the procedure known to law, minor lapses being
condonable. However, the mandatory rules of procedure to ensure the
authenticity of such seizure and of the seized materials must be established
to have been complied with. It requires to take proper care to ensure that
the documents seized in the course of such proceedings are properly kept in
an envelop or cover and duly sealed and due care is taken to protect the
same from any third party interference. Panchnama should disclose the
steps taken by the seizing authority to ensure the absence of any opportunity
to any stranger to interfere with such documents. The panchnama should
also disclose proper description of the documents. When such document is
very vital in nature, it should refer to the important aspects of the
documents so that there can be no room to doubt about the genuineness of
the document or about the genuineness of the contents of such document,
and of course, the seizure thereof.
.......
"45. Any statement before being accepted as admission of a fact has to be examined to ascertain what is its imports and then to determine what weight it should be attached to the same. The Apex Court in NagubaiAmmal and Others v. B. Shama Rao & Others reported in AIR 1956 SC 593 had ruled that "an admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which matters depend on the circumstances under which it is made". It was further held that it must be shown that there is a clear and unambiguous statement such as will be conclusive, unless explained."
........
"52. Even assuming that the documents disclosed certain entries that by itself is not sufficient to contend that the same necessarily relate to the clandestine removal of the goods. As rightly pointed out by the Senior Advocate for the appellants that Hisaba Book makes reference to various firms and persons as the buyers of the quantity mentioned therein. However, there was no attempt to record any statement of any such person at all. Contention was sought to be raised that the names were fictitious and attempt to locate did not yield fruitful result. In fact, there is no material to support this contention. Besides, the statement recorded of the appellants' Director discloses the disclosure of the names of their suppliers and buyers and yet there is no recording of statement of those persons. It is pertinent to note that the statement on behalf of the appellants not only disclose the names but even the telephone numbers. It was, therefore, necessary to collect proper evidence to establish the said fact by collecting cogent evidence regarding the actual production in the appellants' factory.
17. We find that the Panchnama proceedings were clouded by procedural infractions as discussed above. In gathering of electronic evidence also 35 Excise Appeal Nos.75409-75411/2020 due care was not taken. Other than the documents the evidence is mostly oral in the form of statements. The adjudicating authority has relied mostly on the statements of Shri Vicky Kumar and Shri Dharmendra Kumar. On-going through the statements we find that the statement of Shri Vicky Kumar as sketchy to the extent that on the one hand he says he as working from the last 5-6 moths and at the same time he confirms the details from 2011 onwards; his claim of the hard disc being given by somebody else is not controverted; the said Shri Shekhar was not identified and questioned. The statement of Shri Vicky Kumar recorded on 4-12-2015 is full of cuttings and corrections and no signatures accepting the corrections were taken. Shri Dharmendra kumar did not reveal any incriminating facts but simply identified that Shri Chittaranjan Sharma recorded raw material and finished products details and that any details would be informed by Shri Jaiswal. The statement of Dharmendra cannot by any manner help the investigation. Regarding the shortages he simply stated that they were marginal and acceptable for the industry. We also find that the statements of Shri Gyan Chand Jaiswal/Amit Jaiswal/Raj Jaiswal throw any significant light on the modus operandi. There were in fact no specific and incisive questions asked during the statements of management except that whether they have perused the statements of others. We also find that the writers of the diary were not identified and questioned; the copy of the Show Cause Notice issued to M/s Chanduka Tech was not supplied to the appellants though relied upon. So also some relied upon documents were not given. On the Top of it the Learned adjudicating authority writes a letter to the investigation Agency on the submissions and remarks made during the cross examination and relies entirely on the same instead of giving his own findings and comments on appreciating the facts. The copy of the same was also not given. Under these circumstances we need to evaluate the evidence, by the available corroborative evidence.
18. Further the appellants submit that the allegation of clandestine removal is a serious charge and it needs to be proved with adequate corroborative and independently reliable evidence in regard to installed capacity of production, procurement/purchase and utilization of various 36 Excise Appeal Nos.75409-75411/2020 raw-materials required for the manufacture of the finished excisable goods, labour employed, power consumed, transportation, sale and receipt of finished goods sold to buyers, accounting of sold goods in the books of account of the buyers; and, realisation of sale proceeds from the buyers etc.; no evidence of procurement and consumption of excess raw material, excess consumption of electricity and excess deployment of labour have been placed on record; no evidence to show surplus production and stock of finished products has been put on record and no single removal without payment of duty has been established and therefore, the charge of clandestine removal cannot be fastened to the appellants. We find that Learned Commissioner finds that in the calculation put forward by MCPL in their defence reply, they have deducted the quantity shown in the ER-1 returns from the quantity shown in the print-outs to arrive at the difference quantity. Thus, they have no objection so far as the quantity of clearances of M.S. Ingots as shown in the seized hard disk and print-outs taken there from is concerned. Moreover, MCPL have also lost sight of the fact that when they were storing relevant sale details in the seized hard disk, there was no need for them to keep hard documents for such a long period. It is relevant here to reiterate (refer para 3.4 above) that, in any type of clandestine activity, the person indulging in clandestine activity takes sufficient precaution to hide/destroy the evidences and it cannot be expected of him to faithfully put the details of all such clearances/transactions in some register/records/electronic devices for any agency to come and lay hands on it.
19. We find that the coordinate Bench of the Tribunal, in the matter of Nova Petrochemicals v. CCE, Ahmedabad-II, in its Final Order Nos. A/11207-11219/2013, dated 26-9-2013, held as under (in Para 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 Revenues which mainly are the following;
(i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions;
(ii) Evidence in support thereof should be of:37
Excise Appeal Nos.75409-75411/2020
(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 sales of such goods to identified parties.
(e) Receipt of sale proceeds, whether by cheque o by cash, of such goods by the manufacturers or persons authorized by him;
(f) Use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity 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.
20. We agree, prima facie, with the proposition of the learned Commissioner that the department is not required to prove clandestine removal by mathematical precision. However, the instant case, we find that not even single evidence has been brought on record to show clandestine removal, conclusively establishing at least by way of sample transaction. We also find that no commensurate discrepancy in the finished stocks and raw material was found. The discrepancies found, adopting a method of averaging, were nominal and explainable. The allegation is about clandestine removal of a huge quantity of 26799.732 MT valued at Rs 97.13 Cr. To prove evasion of such magnitude, the department should have established the purchase of raw material, consumption of electricity, deployment of labour, arrangement of transportation, receipt at the customers' end and financial transactions.
Receipt of money in respect of not even a single transaction in the hands of the appellants has been proved with evidence. We find, in fact, that the department has not at all attempted to investigate in that direction to prove the alleged clandestine removal. The show cause notice and the impugned order rely upon recovery of documents from the so called secret office and the alleged committal statement of Shri Vicky Kumar. We find that this is not just enough.We find that leaving alone proof with a mathematical precision, in the instant case, evidence made available is 38 Excise Appeal Nos.75409-75411/2020 not even enough even for a Gross approximation. The appellant has relied upon a number of cases wherein it was settled that in order to prove the allegations of clandestine removal the department must bring on record cogent, positive and concrete evidence to prove the said allegation, the said allegation cannot be sustained on the basis of assumptions and conjectures. We find, in view of the above, that the investigation and consequentially the allegation of clandestine removal, suffers from infirmities, the demand needs to be seen on the basis of corroborated evidence alone as per the discussions below.
21. Understandably, we are dealing with a case of tax-evasion and not a criminal case wherein the degree and standard of evidence is much higher and more precise. As far as the tax-evasion cases are concerned, we find that the principle of preponderance of probability has precedence over proof beyond doubt. It is widely accepted that 'Preponderance of probability' is met when a proposition is more likely to be understood by people of reasonable intelligence to be true than to be not true. Effectively, the standard is satisfied if at least there is 50% or more chance that the given proposition is believable by a reasonably prudent to be true. In this regard, Hon'ble Supreme Court in the case of Maharashtra State Board of Secondary and Higher Education v K. S. Gandhi & Others (1991) 2 SCC 716 1 held that "It is thus well settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal. It is open to the authorities to receive and place on record all the necessary facts though not proved strictly in conformity with the Evidence Act. The evidence must be germane and relevant to the facts in issue. In grave cases like forgery, fraud, conspiracy, misappropriation, etc. seldom direct evidence would be available. Only the circumstantial evidence would furnish the proof. There must be evidence direct or circumstantial to deduce necessary inferences in proof of the facts in issue. There can be no inferences unless thereare objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish. The standard of proof is not proof beyond reasonable doubt 'but' the preponderance of probabilities tending to draw an inference that the fact must be more probable. Standard of proof cannot be put in a strait jacket formula. No mathematical formula could be laid on degree of proof. The probative value could be gauged from facts anti circumstances in a given case. The standard of proof is the same both in civil cases and domestic enquiries."
39Excise Appeal Nos.75409-75411/2020
22. As per our discussion above, we find that the standard of proof in taxation cases is different from criminal offences. It is now settled principle that cases of this nature need not be proved with mathematical precision. At the same time, a single piece of evidence cannot be accepted to encompass the whole gamut of transactions. A word of caution must be added here that while the principle of preponderance probability demands us to believe that under the given facts and circumstances, the alleged tax evasion must have occurred. However, the principle ends here. Issues like quantification of duty evaded, requires concrete reliable dependable data. Reliance on principle of preponderance of probability, no way confers a License to demand duty on the basis of assumptions/presumptions/ vague imputations. The actual quantum of duty requires to be arrived on the basis of the documentary evidence made available by the investigation. Inability to investigate and establish evasion cannot be covered up by mere citing of the principle of preponderance of probability. A fine line of distinction requires to be drawn. Therefore, while accepting the fact that there are reasons to believe that there was evasion of duty on the part of the appellants, we find that the quantification of such duty evaded should be sustainable on the evidence available and needs to be arrived in a logical, rational and legally appropriate manner.
23. Coming to the brass-tacks of quantification, there are 2 sets of data. One data available from the hard disc from the alleged secret office and the data recovered from office premises. Learned Commissioner gives a finding that one who has indulged in clandestine removal of goods and consequent evasion of duty can hardly be expected to keep the evidence intact. This could true theoretically. But for practical purposes of quantification of duty evaded we cannot rely on assumptions, theories and guess work. It becomes very relevant in view of the fact that no corresponding enquiry, to establish relevant facts like procurement of raw material, use of the same in the factory of production, manufacture of excisable goods, sale of excisable goods, transportation of the same and realisation of sale proceeds, has been conducted and no evidence is placed on record. Even where certain leads on the numbers of vehicles 40 Excise Appeal Nos.75409-75411/2020 alleged to be used in the transportation of goods to M/s Chanduka, no further enquiries were done. Even the shortage alleged to have been found on physical stock taking was minimal and would not lead to any conclusions.
24. Though we find that learned Commissioner has sweepingly generalised and extrapolated the duty demand for the period 1.4.2011 to 30.11.2015, the so-called corroboration from other documents/ evidences, is not however, forthcoming. As per the records of the case, seized Documents like note books / note pads (allegedly contain details like buyers name, date, amount received and expenditure incurred in cash) have details for the period June, 2015 and July, 2015; diary seized from the residence (allegedly containing details like parties name, date, amount received, and other transactions) pertain to the period from Apr, 2015 to July, 2015 and the data available from the hard disc from the alleged secret office and the data recovered from office premises contains data for the period 1.4.2011 to 30.11.2015. However, in addition to the disputable manner of collection of evidence, the concerned persons who have been alleged to have been maintaining such records have not been questioned. The handwritings thereof have not been identified/ established. Procurement of raw materials, consumption of labour, manufacture, removal and realisation of sale proceeds in a clandestine manner has not been established even by a sample case. Sad part is that, the investigation did not deem it fit to enquire from either the alleged buyers or transporters, even in the case of sale to M/s Chanduka Hitech, whose name came in to light though for a miniscule portion. The submissions during cross examination were not countered. A Show cause Notice, issued in some other proceedings, was relied upon and a copy of the same was not provided to the appellants. We find that Learned adjudicating authority has largely relied upon the clarifications given by the investigative agency. Learned Commissioner instead of appreciating the evidence vis-a-vis the allegations and drawing inferences and conclusions on his own, relied on the submissions of the agency. The appellants were not even supplied copies of the same. Under such circumstances, it is very difficult to uphold the allegations 41 Excise Appeal Nos.75409-75411/2020 and confirm the duty demand and penalties, even going by the principles of preponderance of probability.
25. We are of the considered opinion that in the absence of any corroborative evidence, it would be difficult to uphold the charges levelled on assumption and presumption. Hon'ble Supreme Court held in Oudh Sugar Mills vs. Union of India -1978 (2) ELT 517 findings based on such assumption and presumption without any tangible evidence, is vitiated by error of law. We find that this Bench also held in the cases of Bihar Foundry and Casting Ltd. Vide final order 75994-75995 dated 09- 08-2019 and in the case of Super Smelters & ors 2020 (371) ELT 751 ( Kol) that evidence of such nature cannot be relied upon for upholding the charges of clandestine removal. Even when the objections of the appellants regarding the conduct of Panchnama proceedings, recording of statements, collection of electronic evidence, as per our discussion above, we find that not even an iota of evidence has been placed by the Revenue to substantiate the allegation of clandestine removal. Therefore, we find that the impugned order does not survive the scrutiny of law and therefore, needs to be set aside.
26. In the result, we set aside the impugned order allow all the appeals, with consequential relief, if any, as per law.
(Order pronounced in the open court on 12 May 2022.) Sd/ (P.K.CHOUDHARY) MEMBER (JUDICIAL) Sd/ (P.ANJANI KUMAR) MEMBER (TECHNICAL)