2018 (6) TMI 583 - AT - Central Excise

Clandestine removal - clearance of goods had not been recorded in their RG-1 - the main evidence on which the case of the Revenue finds support is the data printed out from the laptop - Held that - On the date of the search, soon thereafter, the laptop has been opened and certain details of production and dispatch for the period 1-7 July, 2011 was printed out in the presence of Shri Kailash Agarwal, Director. In the statement recorded soon thereafter, he also admitted these figures and further has paid the duty liability in respect of 445.590 MT alleged to have been clandestinely cleared - The forensic examination of the laptop does not appear to have been conducted in the presence of Shri Kailash Agarwal, Director. Neither Shri Kailash Agarwal nor Shri Manoj Agarwal, Director admitted to the truth of such data. In fact Shri Manoj Agarwal, in his statement has claimed that the deleted data (subsequently printed out) did not reflect the correct figures of production and clearance. It is also seen that Revenue has failed to carry out any further investigation into the allegation of clandestine clearance. Apart from the print out, no evidence has been brought on record regarding the unaccounted procurement of raw materials. No suppliers have been identified or investigated. Absolutely no investigation is on record regarding the buyers of such clandestinely cleared goods or transporters. It is settled position of law that clandestine clearance is a serious charge and such allegations have to be proved by Revenue with reliable and tangible evidence. Revenue has not succeeded in establishing the charge of clandestine clearance and consequently, the demand of Central Excise duty set aside - the penalty imposed on Shri Kailash Agarwal is reduced. Appeal allowed in part.

Summary

Issues:
1. Admissibility of computer printouts/data from seized laptop as evidence.
2. Ownership of the laptop and validity of data recovered.
3. Allegations of clandestine manufacturing and removal of goods.
4. Compliance with statutory provisions and evidentiary value of data.
5. Burden of proof on Revenue for clandestine clearances.
6. Applicability of cum-duty benefits and penalties.

Analysis:
1. The case involves a challenge to an Order-in-Original regarding the manufacture of excisable goods. The main contention raised was the admissibility of data from a seized laptop as evidence. The appellant argued non-compliance with statutory provisions, citing legal precedents. The Tribunal considered the circumstances of the seizure, statements of the Directors, and the subsequent payment of duty based on the data. The Tribunal held that the duty liability for the admitted clearance must be sustained.

2. Ownership of the laptop and the validity of recovered data were crucial issues. The forensic examination revealed deleted files with details of production and clearance. One Director admitted discrepancies in the data, while the other disclaimed its accuracy. The Tribunal emphasized the lack of corroboration and the absence of further investigation into clandestine clearances. The Revenue's case primarily relied on the laptop data, which was found insufficient to prove the allegations.

3. The case involved serious allegations of clandestine manufacturing and removal of goods, leading to substantial duty demands. The Tribunal noted the importance of tangible evidence to support such charges. The appellant raised concerns about the lack of evidence regarding procurement, sales, and transportation of the alleged goods. Legal precedents emphasized the need for reliable proof in cases of clandestine activities.

4. Compliance with statutory provisions, especially Section 36B of the Central Excise Act, was a key aspect of the arguments. The appellant contested the evidentiary value of the laptop data based on non-compliance. The Tribunal assessed the circumstances of data retrieval, admissions by the Directors, and the legal requirements for admissibility. Ultimately, the Tribunal upheld the duty liability for the admitted clearance but found the overall demand unsustainable due to insufficient evidence.

5. The burden of proof on the Revenue for establishing clandestine clearances was a significant issue. The Tribunal highlighted the lack of investigation into crucial aspects like raw material procurement, sales realization, and power consumption. Legal principles emphasized the necessity of concrete evidence to support allegations of clandestine activities, which the Revenue failed to provide in this case.

6. The case also involved considerations regarding cum-duty benefits and penalties. The Tribunal modified the original order, reducing the penalty imposed on one Director. The decision reflected a nuanced evaluation of the evidence, legal arguments, and the standards required to establish duty liabilities and penalties in excise matters.