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2019 (2) TMI 934 - AT - Central ExciseClandestine removal - MS Ingots - failure on the part of Revenue to prove the clandestine activity - admissibility of evidences - Section 36B of the Central Excise Act. Held that - The grave misconduct alleged in this case is clandestine removal and hence, the burden is always on the Revenue to establish the same, if not with mathematical precision, but, at least beyond reasonable doubts. Persons whose statements are recorded have retracted and such retractions find place in the record. On a perusal of the statements, even they are not leading us anywhere since no one has spoken as to him witnessing any event even the Mahazar is not beyond suspicion. In this context, Ld. Advocate s argument deserves merit when he says that the seizure of pendrive was from the personnel and that the same was not attached to any computer; that nowhere in the panchanama/Mahazar do we find the make of pendrives. Hence, the allegation of clandestine removal is not made out beyond doubts. Admissibility of evidences - Section 36B of the Central Excise Act - Held that - Section 36B of the Central Excise Act which plays a crucial role requires the Revenue to comply with its requirements when it comes to the admissibility of evidences in the form of micro-films, facsimile copies of documents and computer printouts - On a careful analysis of the basic requirement of Section 36B, what it requires as evidence is a document, may be a micro-film or facsimile or a statement contained in a document and included in a printed material produced by a computer. Therefore, it clearly has the effect of excluding any other thing other than a document, that is to say, it excludes any material or thing other than documents. We are therefore constrained to hold that the pendrive(s) not being a document should also get excluded from the provisions of Section 36B(1). In this case, we do not find either in the statements of any persons or by means of any independent investigation by the Revenue as to who was actually having lawful control over the use of the computer. This assumes importance especially when the case of the assessee is that the pendrive seized was a standalone pendrive, not attached or inserted in the computer. As a natural corollary, the printout obtained from the pendrive is not the one covered by Sub- Section (2) as the Revenue has nowhere established that the alleged printout was a result of regular supply in the ordinary course of the appellant s business. Strangely, the Revenue relies on such printouts, running over one thousand pages, but even then the same is not foolproof since undisputedly, the requirements of Section 36B (4) are not at all complied with. Sub-Section (4) (supra) requires a certificate if a statement is sought to be relied or used as evidence and no such exercise is done by the Revenue. We have come across umpteen number of cases wherein the courts have discorded the computer printouts, but the much worse situation here is that the alleged printouts were not from any computer but from standalone pendrive(s) fed into computer(s) in the office of the DGCEI which is palpably incorrect and susceptible to innumerable doubts. The Revenue has miserably failed to prove clandestine removal and therefore, the impugned demands cannot sustain - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Reliance on third-party documents and uncorroborated statements. 2. Alleged excess production beyond machinery capacity. 3. Electricity consumption as evidence of production. 4. Admissibility of computer printouts under Section 36B of the Central Excise Act, 1944. 5. Clandestine removal and unaccounted clearance of goods. 6. Burden of proof on the Revenue. Issue-Wise Detailed Analysis: 1. Reliance on Third-Party Documents and Uncorroborated Statements: The assessee contended that the Revenue relied on chits, small notebooks, and fax messages recovered from third parties, and uncorroborated statements of various persons who were not subjected to cross-examination and later retracted. The assessee argued that these so-called evidences have no evidentiary value to sustain the allegation of unaccounted receipt of scrap, suppression of production, and unaccounted clearance by sale. 2. Alleged Excess Production Beyond Machinery Capacity: The assessee argued that the alleged excess production of 36182.875 MT of CTD Bars and Rods and by-products could never have been manufactured since it was beyond the capacity of their machinery. The capacity of the machinery was inspected by the Deputy Director of the National Institute of Secondary Steel Technology, whose report favored the assessee. The electricity consumption was not disputed by the State Government, and there was no allegation of suppression of electricity usage. 3. Electricity Consumption as Evidence of Production: The Revenue's appeal was based on the action of the adjudicating authority sustaining the addition solely on electricity consumption. The Commissioner deduced clandestine removal based on electricity consumption, but the Hon'ble High Court of Jharkhand in similar cases held that electricity consumption alone is not sufficient to determine production. The Commissioner also accepted that it was impossible for the assessee to have manufactured and cleared the alleged quantity of clandestine removal. 4. Admissibility of Computer Printouts Under Section 36B of the Central Excise Act, 1944: The assessee contended that the pendrive printouts did not reflect the day-to-day activities, and the computer printouts were not in conformity with Section 36B. The Tribunal noted that the requirements of Section 36B were not complied with, as there was no certificate accompanying the printouts, and the pendrive was not attached to any computer. The Tribunal referenced the case of Anwar P.V. vs. P.K. Basheer, emphasizing that electronic records must meet specific conditions to be admissible. 5. Clandestine Removal and Unaccounted Clearance of Goods: The Commissioner considered weighment slips, internal corroborating documents, and documents seized from dealers as evidence of unaccounted clearance. However, there was no enquiry of lorry drivers or customers, and no discussion on gate passes for raw materials or finished products. The Tribunal found that the Revenue failed to prove clandestine removal beyond reasonable doubt, as the evidence was not conclusive. 6. Burden of Proof on the Revenue: The Tribunal emphasized that the burden of proof in cases of alleged clandestine removal is on the Revenue. The Revenue must establish the allegations with positive and concrete evidence. In this case, the Tribunal found that the Revenue failed to meet this burden, as the evidence presented was insufficient and unreliable. Conclusion: The Tribunal concluded that the Revenue failed to prove clandestine removal and the impugned demands could not be sustained. The Revenue's appeal was dismissed as withdrawn, and the assessee's appeals were allowed. The Tribunal also highlighted the importance of complying with Section 36B requirements for electronic evidence and the need for concrete evidence in cases of alleged clandestine removal.
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