2018 (11) TMI 1033 - AT - Central Excise

Clandestine removal - shortages of raw material and finished goods - demand based on printouts of data retrieved from CPU - statement of various persons - admissible evidence or not - allegation that CPU contained software enabling generation of same number of invoice repeatedly - admissible in respect of expert opinion or not. Held that - Hon ble Allahabad High Court has ruled in the case of Commissioner of Central Excise Meerut-I vs. Parmarth Iron Pvt. Ltd. 2010 (11) TMI 109 - ALLAHABAD HIGH COURT held that if Revenue chooses to rely on the statements then in that event the persons whose statements are relied upon have to be made available for cross examination for the evidence or statements to be considered - further Hon ble Supreme Court in the case Bareilly Electricity Supply Co. Ltd. 1971 (8) TMI 221 - SUPREME COURT has ruled that if a letter or other document is produced to establish some evidence which is relevant to the enquiry the writer must be produced or his affidavit in respect thereof be filed and opportunity accorded to the Opposite Party who challenges this fact and that the same is in accordance with the principle of natural justice as also in accordance with the procedure under order 19 of the Civil Procedure Code and the Evidence Act. Section 45A of Evidence Act 1872 requires opinion of examiner of electronic evidence in respect of any matter relating to any information stored in any computer resource - Shri Vinod Kumar Mishra and the other transporters were not produced for cross examination by the appellant and that it was responsibility of Revenue to produce them for cross examination since same were prosecution witnesses. In the present case therefore the statements given by Shri Vinod Kumar Mishra and other transporters cannot be relied for arriving at any decision against the appellant. Further the allegations were that the computer printouts were perused and signed by Shri Vinod Kumar Mishra and the contention of appellant was that Shri Vinod Kumar Mishra was not produced for cross examination. Therefore the printouts are doubtful as evidence. Further in the absence of expert opinion by examiner of electronic evidence the allegations that the computer was capable of repeatedly generating invoices with the same number is not established beyond doubt. The allegations made against the appellant are not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Admissibility of printouts of data retrieved from the CPU as evidence.
2. Allegation of the CPU containing software enabling generation of the same number of invoices repeatedly.
3. Admissibility of statements by Shri Vinod Kumar Mishra and other individuals.
4. Alleged shortage of finished goods and inputs.
5. Alleged clandestine removal of goods.
6. Imposition of penalties on the Managing Director and Director.

Detailed Analysis:

1. Admissibility of Printouts of Data Retrieved from the CPU as Evidence:
The appellant argued that the printouts from the CPU were not admissible under Section 36B of the Central Excise Act, which requires a certificate under sub-section (4). The Tribunal noted that the conditions of Section 36B were not fulfilled, as the necessary certificate was not produced. The Tribunal referenced the Supreme Court’s ruling in Anvar P.V vs. P.K Basheer, emphasizing the importance of such a certificate to ensure authenticity. The Tribunal concluded that the printouts could not be relied upon as evidence.

2. Allegation of the CPU Containing Software Enabling Generation of the Same Number of Invoices Repeatedly:
The appellant contended that there was no expert opinion to support the claim that the CPU contained software capable of generating the same invoice number repeatedly. The Tribunal agreed, noting that no expert opinion under Section 45A of the Evidence Act was obtained. The Tribunal found the conclusion reached by the adjudicating authority regarding the software to be without basis and erroneous.

3. Admissibility of Statements by Shri Vinod Kumar Mishra and Other Individuals:
The appellant argued that the statements of Shri Vinod Kumar Mishra and others were not admissible as they were not produced for cross-examination. The Tribunal cited rulings from the Allahabad High Court and the Supreme Court, stating that if the Revenue relies on statements, the individuals must be made available for cross-examination. Since this was not done, the Tribunal held that the statements could not be relied upon as evidence.

4. Alleged Shortage of Finished Goods and Inputs:
The appellant claimed that the alleged shortage was based on eye estimation and not actual weighment. The Tribunal noted that the Revenue did not rebut this claim and held that there was no shortage of raw materials or finished goods.

5. Alleged Clandestine Removal of Goods:
The Tribunal referred to the Allahabad High Court’s ruling in Continental Cement Company, which requires clinching evidence of excess production, purchase of raw materials, electricity consumption, and flow of funds to prove clandestine removal. The Tribunal found that the Revenue failed to provide such evidence and concluded that the allegations of clandestine removal were not established.

6. Imposition of Penalties on the Managing Director and Director:
The Tribunal noted that penalties under Rule 26 of the Central Excise Rules require evidence of involvement in removing or transporting offending goods liable to confiscation. Since no goods were seized and ordered to be confiscated, the Tribunal held that the penalties imposed on the Managing Director and Director were not warranted.

Conclusion:
The Tribunal set aside the impugned order, holding that the allegations against the appellant were not sustainable. The appeals were allowed with consequential benefits to the appellants as per law.