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2024 (5) TMI 1109 - AT - Central ExciseRecovery of short-paid excise duty along with interest and penalty - admissibility of electronic evidences recovered by the investigating officers during earlier proceedings for another company - reliable evidence or not - compliance with the provision of Section 36B of the Central Excise Act, 1944 or not - quantification of demand as arrived in the Show Cause Notice vide para 7.1 to 7.17 adopting percentage of cash to invoice value is correct or not - suppression of facts or not. Electronic evidences have complied with the provision of Section 36B of the Central Excise Act, 1944 or not - demand adopting percentage of cash to invoice value is correct or the same needs to be arrived at only based on the evidences available on record - demand of Central Excise Duty on CGC on the amounts collected in cash over above the value - HELD THAT - The data in the pen drive seized from M/s SVPNSN Balasivaji Co., was retrieved at some point of time in earlier proceedings. As per SCN, Sl. No. 12 of RUD are printouts of ledgers contained in pendrive and laptop bound into 5 books. As per SCN, Sl. No. 13 is the extract of ledgers recovered from M/s. SvPNSN Balasivaji Co. Sl.No.38 is the print out of ledger taken from laptop of Shri B.Saravanan seized in 2017. The other proint outs are the whatsapp messages, SMS, contact details obtained from several mobile phones. While recording statements during this investigation, the officers have asked the partners/directors of CGC and B. Saravanan to affix their signatures in these bound books - it is not understood how such affixing of signature on bound books would make the data retrieved from electronic item to be admissible in evidence in para 13.4 of impugned order the excerpts from statement of Shri B. Saravanan would show how the department got his signature on these bound books - The affixing of signatures on the bound volume of books would not suffice compliance of Section 36B. Compliance of requirement of Section 36B of Central Excise Act - HELD THAT - Without complying Section 36B it is not possible to hold that the data retrieved from pen-drive and laptop (seized in 2017) is admissible in evidence. This is more important as this pen-drive and laptop are the only documents relied by AA for confirmation of demand of the duty - Though some kind of certificate is produced for retrieval of data from mobile phones, there is no certificate at all for compliance of Section 36B for retrieval of data from the pen drive and laptop seized in 2017. Section 36B of Central Excise Act, 1944 is similarly worded as Section 65B of Indian Evidence Act 1872. The Hon ble High Court of Delhi in the case of CCE Vs Jindal Nickel Alloys Ltd., 2019 (11) TMI 122 - DELHI HIGH COURT considered the admissibly of electronic evidence where the allegation was suppression of production of finished products and clearance of goods. The Hon ble High Court held that the provisions of Section 36B are mandatory. The evidence tendered by the key witness from whom the pen drive and lap top were recovered shows that he has denied the allegations. The original authority has disregarded his retraction of statement as an afterthought - A mere retraction may not make a statement irrelevant or inadmissible. In the present case, the witnesses were already subject to cross examination in 2019 as per Section 9 D of the Central Excise Act, 1944. After such cross-examination and filing of SVLDRS application, he is again summoned to give statement under Section 14 on the very same set of facts. It is deposed by him that on 09.03.2021 and 10.03.2021 he has given statements before the officers only because he was assured that he would not be implicated in the proceedings. Undervaluation on the basis of both suppressing the actual value in the invoices and also supply of goods without invoices - HELD THAT - In the search conducted in the present proceedings, though CPU, laptop, mobile phones were seized these have not been the basis for allegation of undervaluation or demand of duty. Other than the electronic evidence of 2017 and the retracted statements there is no evidence to establish undervaluation. It is therefore concluded that department has miserably failed to establish the allegation of undervaluation. On the basis of the data retrieved from the pendrive /laptop the price of the goods sold by dealers at Gujarat and Maharastra has been adopted to quantify duty on the goods cleared by the appellant. The price of such goods which have seasonal demand (festival seasons) would vary when sold by dealers, at different places. The quantification of duty on the basis of dealer price at Maharastra and Gujarat appears to be too extra ordinary method for quantification of duty and in appropriate too. The demand of duty, interest, penalties cannot sustain. The impugned order is set aside - Appeal allowed.
Issues Involved:
1. Admissibility of electronic evidence recovered during earlier proceedings. 2. Compliance with Section 36B of the Central Excise Act, 1944. 3. Correctness of quantification of demand. 4. Demand of Central Excise Duty on amounts collected in cash over invoice value. 5. Demand of interest. 6. Invocation of suppression clause and imposition of penalty. Summary: Issue 1: Admissibility of Electronic Evidence Recovered During Earlier Proceedings The Tribunal found that the pen drive and laptop, recovered during a 2017 investigation of a different company (M/s Standard Fireworks Ltd.), were not admissible in the present proceedings against CGC. The Tribunal noted that the appellants were not party to the earlier proceedings, and there was no evidence of how the data was retrieved or maintained over the years, casting doubt on the integrity of the evidence. Issue 2: Compliance with Section 36B of the Central Excise Act, 1944 The Tribunal held that the requirements of Section 36B of the Central Excise Act, 1944, were not met. The adjudicating authority failed to provide the necessary certification that the electronic records were produced by a properly functioning computer in the ordinary course of business. The Tribunal emphasized that compliance with Section 36B is mandatory for the admissibility of electronic evidence. Issue 3: Correctness of Quantification of Demand The Tribunal found the method of quantifying the demand, based on the prices of goods sold by dealers in Gujarat and Maharashtra, to be inappropriate. The Tribunal noted that the quantification should be based on the actual evidence available on record, and the method adopted by the department was legally and logically impermissible. Issue 4: Demand of Central Excise Duty on Amounts Collected in Cash Over Invoice Value The Tribunal concluded that the department failed to establish the allegation of undervaluation and evasion of excise duty. The evidence relied upon by the department, primarily the electronic evidence from 2017 and retracted statements, was found to be unreliable and inadmissible. Issue 5: Demand of Interest Since the demand of duty was not upheld, the demand for interest also could not be sustained. Issue 6: Invocation of Suppression Clause and Imposition of Penalty The Tribunal set aside the penalties imposed on the appellants, as the primary demand of duty was not upheld. The Tribunal also ordered the refund of the seized cash amounting to Rs. 1,82,25,000/- as it was deemed irrelevant to the case. Conclusion: The Tribunal set aside the impugned order, allowing the appeals with consequential relief as per law. The demand of duty, interest, and penalties were found unsustainable.
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