2024 (10) TMI 8 - AT - Central Excise

Clandestine removal - inclusion of panchnamas as RUDs Intended for the sake of completeness - data retrieved from pen-drive and the PCU and Laptop - data retrieved by GEQD - HELD THAT - It has specifically been recorded in case of C.G. ST C C. E-ALWAR VERSUS KAMDHENU ISPAT LTD AND KAMDHENU ISPAT LIMITED VERSUS C.C.E. S.T. -JAIPUR-I (VICE-VERSA) 2018 (5) TMI 905 - CESTAT NEW DELHI that the concerned official of GEQD was not examined by the adjudicating authority and, therefore, the matter was remanded directing it to be re-adjudicate after examining the concerned official of GEQD in a personal hearing in the presence of the assessee or its representative for the purpose of arriving at the proper conclusion on the veracity of the data retrieved. It was also recorded in the first round of litigation that the adjudicating authority had doubted the data and further remarked that the laptops and other devices were possibly manipulated in the office of the DGCEI. While passing the impugned order the Principal Commissioner specifically declined to examine and allow cross-examination of the officials of GEQD on the ground that GEQD enjoys trust of premier investigating agencies including CBI and NIA that had played a major role in investigation of several high profile cases. To cast a doubt on working or result of such prestigious institution without a solid reason or evidence is an attempt to delay the process of adjudication - the Commissioner has openly defied the direction of this Tribunal. The reasoning that since GEQD is a premier institute, it is above examination or cross-examination cannot be accepted. Simply because an expert has a high profile does not mean that the evidence produced by such an expert cannot be questioned and can be used against anyone without even giving them an opportunity to cross-examine such a person. The Principal Commissioner clearly erred in holding that the officers of GEQD was not required to be examined or cross examined. The mandatory procedure prescribed under section 36B of the Central Excise Act was not followed with respect to the data retrieved from the several computers by the officers of DGCEI. Therefore, such data is not admissible as evidence. This sole document is not sufficient to either charge the assessee with clandestine removal or to recover duty from it. Consequently, the confirmation of demand of duty interest and penalty against the assessee as well as the penalty imposed on Prakash cannot be sustained. The impugned order is set aside - appeals are allowed.

Summary

Issues:
Assessment of central excise duty, imposition of penalty under section 11A(4) and 11AC, penalty under rule 26(1) of Central Excise Rules, 2002, relevance of retrieved data, compliance with statutory procedures, admissibility of evidence, examination of officials from GEQD, cross-examination rights, interpretation of section 9D of Central Excise Act, 1944.

Analysis:
The judgment involves an appeal by M/s Balaji Furnaces Pvt. Ltd. and Director Shri Navnitya Prakash Goyal against the Order-in-Original passed by the Commissioner of CGST, Alwar. The appeal contests the demand of central excise duty, interest, and penalties imposed. The case originated from a search conducted by DGCEI at the premises of M/s Kamdhenu Ispat Limited, leading to the recovery of incriminating evidence, including an ingot purchase file and data from a pen-drive. Show cause notices were issued to Kamdhenu and alleged suppliers, including the appellants, based on this evidence.

The Tribunal previously remanded the case due to doubts regarding the veracity of the retrieved data and the need for examination of GEQD officials. However, the Principal Commissioner declined to allow examination or cross-examination of GEQD officials, citing the institution's reputation. The Tribunal found this refusal unjustified, emphasizing the importance of following statutory procedures and granting the right to cross-examine. The Commissioner's failure to adhere to the Tribunal's directions was deemed erroneous.

Furthermore, it was noted that the mandatory procedure under section 36B of the Central Excise Act was not followed for data retrieved from computers by DGCEI, rendering such data inadmissible as evidence. Consequently, excluding the GEQD report, data from pen-drives, and statements recorded without compliance, only the ingot purchase file remained as evidence against the appellants. The Tribunal deemed this single document insufficient to sustain the demand of duty, interest, and penalties, leading to the allowance of the appeals and setting aside of the impugned order.

In conclusion, the judgment highlights the importance of following statutory procedures, ensuring the admissibility of evidence, and granting the right to examine and cross-examine officials. The decision underscores the necessity of valid evidence to support charges and penalties in excise duty cases, ultimately leading to the relief granted to the appellants.