2023 (12) TMI 299 - AT - Central Excise

Clandestine removal - M.S.Rods - Reliability of Computer printouts - deemed document - demands confirmed in the impugned order has relied mainly on the documents recovered from various premises and the statements recorded during the course of investigation - corroborative evidences or not. Whether the data retrieved from various premises belonged to the Appellant's company and the data can be relied upon as evidence to demand duty? - Whether the conditions mentioned in Section 36B has been followed in this case or not, to rely upon the data retrieved through computer printouts as evidence? - HELD THAT - Section 65B of Evidence Act is parimateria with Section 36B of the Central Excise Act, 1944. From the above observation of the Hon'ble Apex Court, it is found that unless the conditions of Section 65B(2) of the Evidence Act, which is parimateria with Section 36B(4) of the Central Excise Act are complied with, no reliance can be placed on any computer printouts . Admittedly, the procedure set out in Section 36B has not been followed in this case - in the present case the author of entry of data has not been identified. As per the impugned order the entry in computer was done by Shri Chittaranjan Bhukta or Sri Rajeev Agarwal or Sri Manoj Kumar Sahoo. However, no certificate was obtained from any of them - the material evidence available on record do not establish that the documents recovered from all the Factory, Registered office and the premises at Rameshwar Patna are all belonged to the Appellant Company and the data cannot be relied upon to demand duty - the questions answered in negative. Whether the procedure as set out in Section 9D of the Central Excise Act, 944 was followed in this case or not? If not followed, then whether the statements recorded under Section 14 of the Central Excise Act, 1944 can be relied upon to demand duty? - HELD THAT - Had the adjudicating authority followed the provisions of Section 9D and examined the witnesses who have given the statements, the truth in this statement could have come out. Thus, the statements recorded in this case has lost its evidentiary value by not following the provisions of Section 9D. Thus, Procedure set out in Section 9D has not been followed in this case - Question answered in negative. Whether the allegations of clandestine clearance of finished goods by the Appellants are substantiated with corroborative evidence? - Whether the demands confirmed in the impugned order on clandestine clearance of finished goods is sustainable in the absence of any evidence of procurement of the major raw materials for manufacture of the finished goods M.S. Rods, without invoices? - HELD THAT - The investigation has not brought in any corroborative evidence to substantiate the allegation of clandestine removal. In view of the above findings, the investigation has failed to establish the alleged clandestine clearance of goods by the Appellants and hence the demands confirmed in the impugned order are not sustainable - question answered in negative. Whether penalty is imposable on the Appellant company and it's Director and Chief Accountant on the basis of the evidences available on record? - HELD THAT - In the impugned order, the adjudicating authority has concluded that Shri. G.D Agarwal is behind the entire clandestine activities. The MD of the company was in the direct knowledge of the entire clandestine operations in the company. The Chief Accountant was involved in the preparation of documents. Accordingly, penalty has been imposed on them. However, the evidences brought on record has not established that they are involved in clandestine manufacture and clearance of the goods. As the evidence available on record does not establish the clandestine manufacture and clearance, the penalty imposed on the above said persons is not sustainable - question answered in negative. Accordingly, the demand of duty confirmed in the impugned order are liable to be set aside. When the duty demand itself is not sustained, the question of demanding interest and imposing penalty does not arise - the impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Admissibility of Computer Printouts as Evidence
2. Compliance with Section 36B of the Central Excise Act
3. Compliance with Section 9D of the Central Excise Act
4. Corroborative Evidence for Clandestine Clearance
5. Evidence of Procurement of Raw Materials
6. Imposition of Penalties

Summary:

1. Admissibility of Computer Printouts as Evidence:
The case involved the admissibility of computer printouts as evidence. The Appellants contended that the computer printouts were not admissible under Section 36B of the Central Excise Act, as the necessary conditions were not satisfied. The Tribunal agreed, noting that the printouts were not certified by a responsible person as required by Section 36B, and thus could not be relied upon to demand duty.

2. Compliance with Section 36B of the Central Excise Act:
The Tribunal observed that the computer printouts were taken in the presence of a telephone operator, not a responsible official. The Tribunal held that the requirements of Section 36B were not met, making the computer printouts inadmissible as evidence.

3. Compliance with Section 9D of the Central Excise Act:
The Appellants argued that statements recorded during the investigation were not examined in chief or allowed cross-examination as per Section 9D. The Tribunal agreed, citing that the provisions of Section 9D were not followed, thus the statements could not be relied upon to confirm the demands.

4. Corroborative Evidence for Clandestine Clearance:
The Tribunal noted that the demand was based solely on private records without corroborative evidence. There was no evidence of manufacture or removal of finished goods, no examination of production contractors, and no verification of buyers mentioned in the invoices. The Tribunal held that without corroborative evidence, the allegations of clandestine clearance were not substantiated.

5. Evidence of Procurement of Raw Materials:
The Tribunal found no evidence of procurement of major raw materials without invoices. The investigation failed to examine raw material suppliers, transporters, production staff, or dispatch staff. The absence of such evidence made the demands unsustainable.

6. Imposition of Penalties:
Penalties were imposed on the Appellant company's Managing Director, Shareholder & Constituent Attorney, and Chief Accounts Officer for abetment of the offense. However, the Tribunal found no evidence to establish their involvement in clandestine activities. Consequently, the penalties were set aside.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, concluding that the demands of duty, interest, and penalties were not sustainable due to the lack of admissible evidence and corroborative proof.