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2020 (1) TMI 321 - AT - Central ExciseClandestine Removal - suppression of production - shortage of finished goods and raw materials (coal) - period April 2011 to Nov 2013 - admissibility of evidences and statements - corroborative evidences of not - Section 36B of the Central Excise Act 1944 - Section 9D of the Central Excise Act 1944 - HELD THAT - The entire case of the department is based upon the computer printouts taken from the computer hard disk from the premises of the appellant at the time of search. That on careful perusal of the Panchnama dated 04.07.2014 (RUD-15) drawn at the Room No. 113 Computer Cell of Central Excise Hqrs Raipur it is found that that the officers have taken the printout (on the basis of which Central Excise Duty of Rs. 3, 03, 41, 494/- for the period April 2011 to Nov 2013 has been demanded)from the one time writable DVD (after copying) however the said DVD has been written from Hard Disk No. 2 on 03.07.2014. We further find that the Panchnama dated 03.07.2014 has not been relied upon in the show cause notice and neither the appellant nor his authorised representative was present on 03.07.2014 when the data from the Hard Disk No. 2 was retrieved on DVD. It is clear that the said Hard Disk could have been tempered therefore cannot be relied upon as evidence inasmuch the said data has been retrieved without ensuring the presence of the appellants - further no certificate has been produced by the department as envisaged under Section 36B of the Central Excise Act 1944 which provides the conditions to be fulfilled in order to admit the said documents in evidence. The computer printouts relied upon by the revenue are not admissible in evidence - As far as statements recorded under Section 14 of the Central Excise Act which have been relied upon by the revenue it is found that the learned Commissioner had denied the cross-examination of witnesses therefore in view of the decision of Andaman Timber Industries Vs CCE Kolkata 2015 (10) TMI 442 - SUPREME COURT and CCE Vs Kurele Pan Products Pvt. Ltd. 2014 (4) TMI 463 - ALLAHABAD HIGH COURT the said statements cannot be relied upon as evidence. Thus the statements relied upon by the revenue are not admissible and cannot be relied upon as evidence and has to be eschewed from evidence - further there is no corroborative evidence adduced by the department in order to allege huge production and removal of goods. There is no reliable evidence adduced by the department in order to prove clandestine production and removal of goods - the demand of Rs. 3, 03, 41, 494/- along with interest and penalty for the period April 2011 to Nov. 2013 on allegation of suppression of production and clandestine removal of Sponge Iron is hereby set aside - further the appellant has not contested the demand of Central Excise Duty Rs. 2, 81, 953/- on allegation of shortages of finished goods and raw materials before the learned Commissioner. Hence the duty demand of Rs. 2, 81, 953/- is confirmed however penalty is set aside. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Demand of Central Excise Duty Rs. 3,03,41,494/- for the period April 2011 to November 2013 on allegations of suppression of production and clandestine removal of Sponge Iron. 2. Demand of Central Excise Duty Rs. 2,81,953/- on allegations of shortages of finished goods and raw materials. 3. Penalty on the Director, Sh. Vishal Singh, and others. Detailed Analysis: 1. Demand of Central Excise Duty Rs. 3,03,41,494/- for the period April 2011 to November 2013: The department's case was based on computer printouts taken from hard disks seized during a search at the appellant's premises. The appellant argued that these printouts were inadmissible under Section 36B of the Central Excise Act, 1944, and that no corroborative evidence was provided. The Tribunal agreed, noting that the printouts were taken without the appellant's presence and without a certificate as required by Section 36B. The Tribunal cited several judgments, including Anwar P.V. vs. P.K. Basheer, which clarified the stringent conditions for admitting electronic records as evidence. The Tribunal found that the department failed to comply with these conditions, rendering the computer printouts inadmissible. Additionally, the Tribunal noted that the statements recorded under Section 14 of the Central Excise Act were not admissible as evidence since the appellant was denied the opportunity to cross-examine the witnesses, violating Section 9D of the Act. Consequently, the demand of Rs. 3,03,41,494/- was set aside. 2. Demand of Central Excise Duty Rs. 2,81,953/- on allegations of shortages of finished goods and raw materials: The appellant contended that the stock verification was conducted based on eye estimation, which is insufficient to substantiate the demand without evidence of clandestine removal. The Tribunal noted that the appellant did not contest this demand before the Commissioner. Hence, the duty demand of Rs. 2,81,953/- was confirmed. However, the Tribunal set aside the penalty associated with this demand. 3. Penalty on the Director, Sh. Vishal Singh, and others: The Tribunal found no evidence of clandestine removal of goods or any goods being confiscated or held liable for confiscation. The penalty of Rs. 5,00,000/- imposed on Sh. Vishal Singh, Director of the appellant, was set aside. The Tribunal emphasized that the extended period for issuing the show cause notice could not be invoked, and no interest or penalty could be imposed against the appellant. Conclusion: The Tribunal set aside the impugned order dated 27.02.2018, except for the confirmation of the duty demand of Rs. 2,81,953/-. The appeals were allowed with consequential relief as per law.
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