2008 (4) TMI 255 - AT - Central Excise

Evidence computer printouts - As the seizure proceedings were not in accordance with the statutory provisions, printouts of other files retrieved from floppies are not admissible in evidence without adequate corroboration. If a computer printout can be accepted as evidence only if all the data in the printout has corroboration, printout itself doesn t serve any particular evidentiary purpose. All the data in a printout found to be reliable evidence are acceptable without further corroboration

Issues Involved:
1. Admissibility of computer printouts as evidence.
2. Procedural flaws in search and seizure.
3. Corroboration of evidence.
4. Specific objections to the Commissioner's findings.
5. Quantum of power consumption and production.
6. Reliability of statements and documents.
7. Compliance with statutory requirements.

Detailed Analysis:

1. Admissibility of Computer Printouts as Evidence:
The appellants challenged the use of computer printouts as evidence, arguing that the conditions under Section 36B of the Central Excise Act, 1944, were not met. They contended that the retrieval of data was not done using authenticated software tools and that the original floppies should have been imaged and verified for hash values. The Tribunal noted that the printouts relied upon were not from the CPU belonging to the assessee but were taken in the presence of the person who maintained them, using the password provided by him. The Tribunal found that such data is beyond suspicion of tampering and is corroborated by other evidence. Therefore, the printouts were deemed admissible, provided they were taken under the conditions specified.

2. Procedural Flaws in Search and Seizure:
The appellants claimed that the search and seizure were conducted in defiance of statutory requirements, with independent witnesses not present throughout, and the seized floppies not sealed. The Tribunal found these procedural lapses to be fundamental flaws, substantially eroding the acceptability of the floppies as evidence. However, the Tribunal noted that the files opened in the presence of the person who provided the password and those modified before the date of seizure were reliable.

3. Corroboration of Evidence:
The appellants argued that the computer printouts were not corroborated by other evidence. The Tribunal found that the Commissioner had corroborated the printouts with other records, such as raw material purchases, power consumption, transporters' records, and receipts of consideration for goods clandestinely cleared. The Tribunal held that the printouts, along with other evidence, were sufficient to establish clandestine removals.

4. Specific Objections to the Commissioner's Findings:
The appellants raised several objections, including that the Commissioner had traversed beyond the scope of the Show Cause Notice, relied on documents not furnished to the noticees, and used unauthenticated software for data retrieval. The Tribunal found that the Commissioner should have furnished all relied-upon material to the noticees and that the findings were based on evidence. However, the Tribunal remanded the orders for fresh adjudication after furnishing all relied-upon material to the assessees.

5. Quantum of Power Consumption and Production:
SUAS argued that the power consumption figures used by the Commissioner were incorrect and that their furnace's inefficiency and the use of low-yielding scrap led to higher power consumption. The Tribunal found that the technical study group's findings on power consumption were valid and that the Commissioner's computation of production based on actual power consumption was reliable.

6. Reliability of Statements and Documents:
The Tribunal noted that the statements of the Managing Partner of SASAI and other witnesses, along with the P&L Account seized from Ms. Usha, contained several true items of transactions corroborated by other records. The Tribunal found these statements and documents to be reliable evidence of clandestine clearances and unaccounted transactions.

7. Compliance with Statutory Requirements:
The Tribunal emphasized the importance of following statutory requirements in search and seizure operations. The failure to seal the floppies and the lack of independent witnesses throughout the search were significant procedural flaws. The Tribunal remanded the orders for fresh adjudication, instructing the Commissioner to treat computer printouts as evidence that requires no further corroboration, provided they meet the reliability criteria discussed.

Conclusion:
The Tribunal found that the computer printouts, corroborated by other evidence, were admissible and reliable. However, due to procedural flaws in the search and seizure and the Commissioner's reliance on documents not furnished to the noticees, the Tribunal remanded the orders for fresh adjudication. The Commissioner was instructed to furnish all relied-upon material to the assessees and to treat the specified computer printouts as evidence without requiring further corroboration.

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