2017 (5) TMI 562 - AT - Central Excise

SSI exemption - N/N. 108/95-CE dated 20.11.9 - demand on the ground that the appellants have not supplied the certificate before clearance of the goods in terms of the condition of the notification - Held that - If the clearance for which required certificate is not produced and the same are added to the clearance as per chart, the total clearance remain within the exemption limit under Notification - appellant is entitled for SSI exemption. Whether the data retrieved from the CD is admissible evidence in terms of section 36(b) of the Central Excise Act or not? - Held that - the data retrieved from the CD can be admissible evidence if it satisfies the provision of section 36(b) of the Act - the condition of section 36 has not been met out. Moreover, the printouts have been taken in the absence of the appellants and panchnama was drawn. The panchas were not allowed for cross examination by the appellants and the data retrieved from the CD was never confronted with the appellants during the course of investigation - the data retrieved from the CD is not admissible to confirm the demand. Whether on the basis of data retrieved from the CD without further investigation, the demand can be confirmed against the appellants or not? - Held that - In the absence of any corroborative evidence on the basis of the data retrieved from the CD, the demand is not sustainable - Further in the case of clandestine removal of the goods, the matter should be investigated in a prescribed manner - demand set aside. Whether the statement made by Shri Arun Kheria during the course of investigation on 17.2.2005 agreed to duty on the clearance made to Kerala and Tamil Nadu Government is admissible in the facts and circumstances of the case or not? - Held that - Merely making statement by Shri Arun Kheria does not cast liability on the appellant when the appellant is able to produce requisite certificate under Notification No.108/95-CE for clearances made to Kerala and Tamil Nadu Government. In that circumstance, the demand cannot be confirmed on the basis of statement of Shri Arun Kheria. Whether the penalty can be imposed on the appellants in the facts and circumstances of the case or not? - Held that - the demands are not sustainable against the appellants, therefore, the question of imposition of penalty on the appellants does not arise. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Entitlement to SSI exemption under Notification No.108/95-CE.
2. Admissibility of data retrieved from the CD in terms of section 36(b) of the Central Excise Act.
3. Validity of demand confirmation based on data retrieved from the CD without further investigation.
4. Admissibility of the statement made by Shri Arun Kheria during the investigation.
5. Imposition of penalty on the appellants.

Issue-wise Detailed Analysis:

(a) Entitlement to SSI exemption under Notification No.108/95-CE:
The appellants argued that they were entitled to SSI exemption under Notification No.108/95-CE for clearances made to Kerala and Tamil Nadu Government. They produced the required certificates in response to the show cause notice, which was not disputed. The adjudicating authority denied the exemption because the certificates were not supplied before the clearance of goods. However, the Tribunal referred to its previous decisions in Bajaj Tempo Ltd. and Dynaspede Integrated Systems Ltd., which held that the benefit of the notification could not be denied merely because the certificate was produced subsequently. The Tribunal concluded that the clearances made as per charts B, C, and F of the show cause notice were not sustainable, subject to the production of the required certificates.

(b) Admissibility of data retrieved from the CD in terms of section 36(b) of the Central Excise Act:
The Tribunal examined whether the data retrieved from the CD could be considered admissible evidence under section 36(b) of the Act. It referred to the case of Premium Packaging Pvt. Ltd., which outlined the conditions under section 36(b) for the admissibility of computer printouts. The Tribunal found that these conditions were not met in the present case, as the data was retrieved in the absence of the appellants, and the panchas were not allowed for cross-examination. Therefore, the data retrieved from the CD was deemed inadmissible.

(c) Validity of demand confirmation based on data retrieved from the CD without further investigation:
The Tribunal held that the data retrieved from the CD was not admissible evidence and noted that no further investigation was conducted to corroborate the data. Referring to the case of Arya Fibres Pvt. Ltd., the Tribunal emphasized that tangible evidence is required to establish clandestine manufacture and clearance. Since no corroborative evidence was provided, the demand based on charts D and E was not sustainable.

(d) Admissibility of the statement made by Shri Arun Kheria during the investigation:
The Tribunal found that the statement made by Shri Arun Kheria, in which he agreed to pay duty on clearances to Kerala and Tamil Nadu Government, did not cast liability on the appellant. The Tribunal noted that the appellant had produced the required certificates under Notification No.108/95-CE, and thus, the demand could not be confirmed solely based on the statement. The Tribunal distinguished this case from the Supreme Court decision in D. Bhoormull, as there was no corroborative evidence supporting the statement.

(e) Imposition of penalty on the appellants:
Since the demands were not sustainable, the Tribunal concluded that the question of imposing penalties on the appellants did not arise. The Tribunal set aside the impugned order and allowed the appeals with consequential relief.

Conclusion:
The Tribunal answered all issues in favor of the appellants, setting aside the impugned order and allowing the appeals with consequential relief. The judgment emphasized the importance of corroborative evidence and adherence to procedural requirements in cases involving clandestine manufacture and clearance.

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