2024 (4) TMI 298 - AT - Central Excise

Clandestine removal - admissibility of electronic evidence - burden/onus to prove - suppression of facts or not - Demand of duty and Levy of penalty u/r 26 of the Central Excise Rules, 2002 - Levy of penalty on Director - HELD THAT - When Appellant is charged with production of specific quantity and payment of royalty against the said quantity, the burden of proof shifts to it under Section 106 of the Indian Evidence Act and in such circumstances of the case when Hon'ble Supreme Court in the judgment noted in Order-in-Original in the case of COLLECTOR OF CUSTOMS, MADRAS AND OTHERS VERSUS D. BHOORMULL 1974 (4) TMI 33 - SUPREME COURT has clearly stated that law does not requires the prosecution to proof the impossible but it is required to establish such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue and had hinted at Section 106 of the Indian Evidence Act in an indirect way, as could be noticed from the submissions of Learned Authorised Representative, the Revenue has clearly established a case of clandestine removal against the Appellant and following decision of this Tribunal at Allahabad passed in the same M/s. Kamdhenu Ispat Ltd. matter in respect of another Franchise named Advance Impex Pvt. Ltd., the liability in the nature of duty, interest and penalty on the Appellant Company, as being confirmed by the learned Commissioner, is confirmed. Having regard to the fact that personal involvement of the present as well as previous Director is not made out from the materials available on the record and the present Director is In-charge of the company, which is having another Excise registration number, against whom no proceeding for the shortage of raw material discovered in 2011 has been initiated and there is specific observation by the Commissioner that the previous Director was responsible only for day to day activity of the Appellant Company, the findings in confirming penalty on both Samir Bhagat and Raman Gupta not confirmed. The appeal of Appellant Company is dismissed.

Summary

Issues Involved:
1. Demand of Central Excise duty, interest, and penalty on the Appellant Company.
2. Imposition of penalty on the Ex-Director and present Director of the Appellant Company.

Summary:

Issue 1: Demand of Central Excise Duty, Interest, and Penalty on the Appellant Company

The Appellant Company, M/s. Khatushyamji Re-Rolling (Nanded) Pvt. Ltd., was accused of evading Central Excise duty amounting to Rs. 8,83,30,407/- based on data retrieved from the computer of a third party, M/s. Kamdhenu Ispat Ltd. The Appellant argued that the demand was based solely on computer printouts without complying with Section 36B of the Central Excise Act, 1944, and Section 65B of the Indian Evidence Act, 1872, which require mandatory certification for electronic evidence. The Tribunal agreed that without the required certificate, the printouts could only be considered corroborative evidence if other allegations were substantiated. The Tribunal found that the Appellant failed to provide evidence to refute the allegations and upheld the demand, interest, and penalty on the Appellant Company, confirming the liability as established by the Commissioner.

Issue 2: Imposition of Penalty on the Ex-Director and Present Director

The penalties of Rs. 2,00,000/- each imposed on Raman Gupta, Ex-Director, and Samir Bhagat, present Director of the Appellant Company, were challenged. The Tribunal noted that there was no evidence of personal involvement of the Directors in the alleged clandestine activities. The Tribunal found that the present Director was in charge of another unit with a separate Excise registration, and no proceedings were initiated against him for the raw material shortage discovered in 2011. The previous Director was responsible only for day-to-day activities. Consequently, the Tribunal set aside the penalties imposed on both Directors.

Order:

The appeal by the Appellant Company is dismissed, confirming the duty, interest, and penalty as ordered by the Commissioner. The appeals by Samir Bhagat and Raman Gupta are allowed, and the penalties imposed on them are set aside. The order is modified accordingly.