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2019 (12) TMI 938 - AT - Central ExciseClandestine removal - SSI Exemption - use of brand name - rural area - N/N. 8/2003 CE dated 01.03.2003 - demand against the Appellant Unit is based upon the pen drive said to be seized from the table drawer of office in factory - HELD THAT - The statement of buyer of goods has been relied upon who on the basis of alleged sales data found in pen drive have stated that they received the goods without payment of duty. Coming to the submission of the Appellant we find that the pen drive was taken under possession by the officers vide panchanama dated 19.10.2010 - The panchnama dated 19.10.2010 does not record the sealing of the pen drive in presence of the panch witness or any director/ employee of Appellant unit. It is only in panchnama dated 02.12.2010 that it is recorded that the pen drive was sealed earlier and was opened in presence of panchas. Even this Panchnama dt. 02.12.2010 is disputable as on Page No.1 it records that the panchnama proceedings of opening of pen drive and taking out printout were started at 5PM but on the 3rd Page it records that the proceeding started at 3.00 PM and completed at 4.30. We also find that the pen drive was opened on 19.10.2010 during the visit of the officers. However the panchnama dated 19.10.2010 is silent about any alleged sales data found in pen drive. The alleged data finds mention only in panchnama dated 02.12.2010. In such case we find that the panchnama proceedings are not reliable piece of evidence having observed the serious discrepancies in panchnama proceeding - the appellant has vehemently argued that the Pen drive data cannot be relied upon as requirement under section 36B of Central Excise Act 1944 was not followed. Acceptable evidences or not - HELD THAT - Section 65B of the Evidence Act 1872 and Section 36B of the Central Excise Act 1944 are parimateria and hence the ratio laid down by the Apex Court is squarely applicable for the invocation of the provision of Section 36B of the Central Excise Act 1944 and any reliance placed on the computerized printouts without following statutory procedures and conditions of Section 36B are not acceptable as evidence. Further as required under sub-section (4) of Section 36B no certificate has been obtained as well as none of the conditions under Section 36B(2) of the Act 1944 was observed. In such situation the printout cannot be accepted as evidence to support the clandestine removal of the goods. Cross-examination of persons - HELD THAT - The pen drive data did not contain the name of Appellant the quantity and description of goods was also not appearing. When the statements were solely based upon pen drive data with no corroborative evidence either from the Appellant Unit or from side of persons whose statements were recorded in that case it was incumbent on the part of adjudicating authority to allow cross examination. In absence of same the demands could not have been confirmed against Appellant. In the present case the statements were relied upon as corroborative evidences but the cross-examination of such persons who made such statements was denied without valid ground. There is no other corroboration evidencing alleged clandestine removal. Hence in such view of facts we hold that the demand based upon pen drive and statements is not sustainable. Apart from above there are no evidence in the form of documentary evidence or physical evidence of clearance of goods or purchase of goods was found either from the Appellant unit or buyers of goods. Confiscation of goods bearing brand name KLMN - HELD THAT - The Appellant has produced certificate issued by the Gram Panchayat that the factory is situated in rural area. In terms of para 4 (c) of the Notification No. 8/2003 CE dated 01.03.2003 the factory situated in rural area even if manufacturing others branded goods is eligible for said exemption. Therefore the Appellants are eligible for SSI Exemption and the goods cannot be confiscated. Since we have held that the demand against M/s JBC is not sustainable the penalty upon Appellant Unit and other co-appellants is also not sustainable - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Legitimacy of duty demand based on data from a seized pen drive. 2. Admissibility of electronic evidence under Section 65B of the Indian Evidence Act and Section 36B of the Central Excise Act. 3. Denial of cross-examination of witnesses. 4. Confiscation of goods bearing another brand name and eligibility for SSI exemption. 5. Imposition of penalties on the appellants. Detailed Analysis: 1. Legitimacy of Duty Demand Based on Data from a Seized Pen Drive: The demand against M/s Jogi Bearing Co. (JBC) was based on data allegedly found in a pen drive seized from the office. The appellant argued that the pen drive was not properly sealed or recorded in the initial panchnama dated 19.10.2010, and discrepancies were noted in the subsequent panchnama dated 02.12.2010. The Tribunal found serious discrepancies in the panchnama proceedings, making the evidence unreliable. The pen drive data did not contain the name of the appellant unit, nor did it specify the quantity or description of goods. 2. Admissibility of Electronic Evidence: The Tribunal noted that the requirements under Section 65B of the Indian Evidence Act and Section 36B of the Central Excise Act were not satisfied. No computer was identified from which the data was produced, and the necessary conditions and certifications under Section 36B(2) and (4) were not met. The Tribunal cited the Supreme Court's judgment in Anvar PV v. V.K. Basheer, emphasizing the need for strict compliance with these provisions to ensure the authenticity and reliability of electronic evidence. 3. Denial of Cross-Examination of Witnesses: The appellant's request for cross-examination of witnesses, including buyers, suppliers, and transporters, was denied. The Tribunal held that without cross-examination, the statements could not be relied upon, especially when they were based solely on the disputed pen drive data. The Tribunal referenced the Delhi High Court's judgment in Basudev Garg, which underscored the necessity of cross-examination when statements are used against an assessee. 4. Confiscation of Goods Bearing Another Brand Name and Eligibility for SSI Exemption: The appellant argued that their unit was situated in a rural area, making them eligible for SSI exemption under Notification No. 8/2003-CE. The Tribunal accepted the certificate from the Gram Panchayat confirming the rural location of the factory. Consequently, the goods bearing the "KLMN" brand name could not be confiscated, and the appellant was entitled to the SSI exemption. 5. Imposition of Penalties on the Appellants: Given the Tribunal's findings that the duty demand was unsustainable and the goods could not be confiscated, the penalties imposed on M/s JBC, its partner Shri Sandeep A. Bhalodia, and other co-appellants were also deemed unsustainable. The Tribunal set aside the impugned order and allowed all appeals with consequential reliefs. Conclusion: The Tribunal found that the duty demand and penalties were based on unreliable evidence from a pen drive that did not meet the legal requirements for electronic evidence. The denial of cross-examination further weakened the case against the appellants. The confiscation of goods was also overturned due to the appellant's eligibility for SSI exemption. Consequently, the Tribunal set aside the impugned order and allowed the appeals with consequential reliefs.
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