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TMI Blog2018 (11) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... e company. Section 36B does not mention the word “private documents”, but provides that 'the computer printout contained in the statement was produced by the computer which was used regularly to store or process information for the purposes of activities regularly carried over by the person having lawful control over the use of the computer'. It can be reasonably understood that in clandestine clearances, the assessee will have hidden or parallel transactions, which are not reflected in the statutory records or records submitted before the authorities. Merely because such accounts are hidden from the authorities would not make the records unreliable. It is also pertinent to mention that the pen drive etc., was submitted before Government Examiner of Questioned Documents and a report called for. It is not reported that the data contained therein was tampered in any manner - the contention of the appellant that the data retrieved from the pen drive is private records and, therefore, not admissible as per section 36B is unacceptable. Apart from the pen drive, the departmental officers also recovered spiral pad, my writing pad, notebook which were seized under a mahazar from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not call for interference - the penalty of ₹ 30,00,000/- imposed on Shri Vivek Agarwalla and ₹ 10,00,000/- imposed on Shri Sanjay Agarwalla under Rules 26 of Central Excise Rules, 2002 is on the higher side, and the same is reduced - appeal allowed in part. - E/00118/2011, E/00139/2011 & E/00140/2011 - FINAL ORDER Nos. 42647-42649/2018 - Dated:- 17-10-2018 - Smt. Sulekha Beevi C.S, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) For the Appellant: Shri S. Sankaravadivelu, Adv. For the Respondent Shri A. Cletus, ADC (AR) ORDER Per Bench: The appellant M/s. Tulsyan NEC Ltd., [hereinafter referred to as TNL ] are engaged in the manufacture and clearance of TMT bars and are registered with the Central Excise department. The factory was functioning at K.G. Palayam, Pogalur, Coimbatore District in a leased premises belonging to M/s. Talent Steel Industries P. Ltd., [hereinafter referred to as TSIPL ]. The officers attached to DGCEI, Chennai conducted investigation into the transactions of TNL. Search operations were conducted at the factory of TNL on 19.03.2018, followed by search operations in the premises of their custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Shri Vivek Agarwalla had signed the related documents which were computer typed. When the handwriting of Shri Vivek Agarwalla was legible and the details recorded in the computer typed sheets were only 2-3 pages, no reason are put forward for not recording the statement of Shri Vivek Agarwalla in handwriting. This indicates that the contents in such documents were typed to suit the requirements of the investigation; (iii) It is also not explained why the details in the pen drive were said to have been downloaded before getting examined by GEQD, Hyderabad. The officers claimed to have downloaded the contents of the pen drive in 236 pages again on 24.03.2008, which is quite suspicious. The pen drive was opened twice before sending it to the GEQD; (iv) The contents of the pen drive are nothing but private records and does not have any evidentiary value. These are not kept in the ordinary course of business of the company and, therefore, not admissible in evidence. The representatives of M/s. Amma Alloys (India) Pvt. Ltd, and M/s. Talent Engineering (Che.) Pvt. Ltd., have denied that they have supplied raw materials to the appellants without accounting. So also, they have de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of business operation. The contents of the CPU/HD of Laptop seized are also not relied upon in the proceedings (Annexure Bal 3 to the show-cause notice). Even though, it is recorded under sub-para 6.1 of the show-cause notice that it was reasonably believed that the computers and the pen drive contained the actual transactions. The pen drive, claims to be recordings of various private records of the CEO/ entered by him on various occasions. Therefore, the contents of the pen drive cannot be equated with the contents of the computers/laptops used in the normal course of business operation. Notwithstanding the above submissions, it is further submitted that the pen drive was opened on 19.03.2008 and 24.03.2008 printouts were taken (para 5 para 6 of the show-cause notice) before sending to the Government Examiner of Questioned Documents (GEQD), at Hyderabad on 25.03.208 (para 6.1 of the show-cause notice). When such operations are carried out before sending to GEQD, reliance cannot be placed on the contests of the pen drive . (ix) Limitation: Inspite of the above deficiencies, if it is treated as an acceptable evidence, then it has to be accepted in its entirety. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statement dated 19.09.2008 deposed that the payment for unaccounted transactions were made to S/Shri Naidu, Ramachandran and Shri Vivek Agarwalla. It was also stated by him that some of the consignments were directly delivered to the customers and that he did not maintain any accounts for the unaccounted transactions and it was possible that he would have purchased the quantity of CTD bars as mentioned in the printouts. The department did not conduct any verification with S/Shri Naidu and Ramachandran. So also, no verification done with the consignments which are said to have directly delivered to the customers. Merely because he did not maintain any accounts for unaccounted transactions, it cannot be presumed that appellants had indulged in clandestine manufacture and clearances; and (xiii) He submitted that the adjudicating authority has confirmed the demand on clandestine manufacture and removal merely on preponderance of probability and that his findings are contradictory. Therefore, the demand, interest and penalties recorded are is liable to be set aside. 4. The learned Authorised Representative Shri A. Cletus supported the findings in the impugned order. His argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Hi-tech was recorded. From the statements as well as the documentary evidences, it was found that M/S. Hi-tech indulged in unaccounted supply of raw materials. On comparison, the data of unaccounted sales in the documents recovered from M/s. Hi-tech tallied with the unaccounted purchase of raw materials of the appellants herein. The learned Authorised Representative emphasized that a separate show-cause notice was issued to M/s. Hi-tech and after adjudication, the demand was confirmed. Though, M/s. Hi-tech filed appeal no. E/40182-40183/2013 before the Tribunal, the same was dismissed as contested on account of default of the appellants vide Final Order No.431388-41389/2017, dated 02.08.2017. 6. The statements of various other persons, who are suppliers of raw materials to the appellants was also recorded. Though, they were subject to cross-examination, nothing contradictory was deposed from their earlier statements. Investigations were conducted at the end of the buyers of finished products also. 7. The arguments of the learned counsel that the quantification of demand on the basis of the data retrieved from the pen drive is incorrect stating that if such figures are adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns and to submit before authorities of law are to be relied upon as evidence. It is a known fact that in cases of clandestine activities, the assessees will have parallel accounting, which are stored in books, computers, pen drive etc. Shri Vivek Agarwalla has categorically deposed that he was feeding the details on a day-to-day basis in the pen drive using his lap top and such figures were communicated to the DGM, Ms. Uma at the head office of the company. On verification of the details contained in the loose sheets and other documents recovered with the companies RG-I register for the relevant period, it was noticed that a quantity of 157.1 MTs and 145.6 MTs of waste and scrap had been shown as generated and cleared in Feb. '06. Whereas, the RG-I showed the quantities as 16.225 MTs and 'nil' respectively, for which, the CEO could not offer any explanation. Therefore, the data contained in the pen drive also has to be considered as transactions entered by the appellant in their ordinary course of business activities. The evidences retrieved from such pen drive are admissible as evidence. 9. The learned Authorised Representative submitted that the appellant has pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is that these being private documents and not documents kept in ordinary course of business, cannot be relied. From the facts, it is brought out that Shri Vivek Agarwalla, CEO of the appellant-company has deposed on several occasions that the details were entered by him in the pen drive seized by officers and the same were maintained for the purpose of reporting to Ms. Uma, DGM (Finance) in their head office at Chennai. This being the fact, it cannot be stated that the data was not part of the day-to-day activities of the company. Section 36B does not mention the word private documents , but provides that 'the computer printout contained in the statement was produced by the computer which was used regularly to store or process information for the purposes of activities regularly carried over by the person having lawful control over the use of the computer'. The admission by Shri Vivek Agarwalla that he was feeding the data to the pen drive for the purpose of monitoring and reporting to the head office would sufficiently establish that the said records were maintained in the ordinary course of business activities of the appellant, It can be reasonably understood that in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h for the unaccounted ransactions. Shri A. Mayilsamy was subjected to cross-examination on 19.09.2008. However, he has not effectively denied to the question regarding his earlier statement that after unloading the invoices were returned to the appellants and the amounts were paid to them by cash. This is discussed by the adjudicating authority in para 56 of the impugned order. 16. Apart from the pen drive, the departmental officers also recovered spiral pad, my writing pad, notebook which were seized under a mahazar from the factory of the appellants. Shri Vivek Agarwalla stated that in spiral pad, bills for the period 01.01.2008 to 18.03.2008 were entered. The document, namely, 'my writing pad' and 'notebook' contained the bills for the period Jan'08, Feb. '08 and Mar, '08. He has admitted that these were handwritten by him. The spiral pad contained data-wise details of accounted as well as unaccounted expenses. The price entered against sale were actually unaccounted sales made by the appellant factory. At the end of each day, difference between the total of sale and the corresponding total break-up of expenses was carried over to the subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued that there is a chance of tampering of the documents retrieved from the pen drive for the reason that the data from the pen drive has been retrieved by the department twice. That the department has not explained as to why the data from the pen drive has been retrieved twice. It has to be noted that the pen drive was initially opened and printouts taken at the factory premises on the date of inspection [19.03.2008] in the presence of Shri Vivek Agarwalla, who is the CEO and person using the computer. After initial scrutiny and finding discrepancies with regard to stock of raw materials, finished products and unaccounted purchase and sales, the said pen drive along with hard disk drive of the computers were sent for imaging and analysis to the Government Examiner of Questioned Documents [GEQD] at Hyderabad vide letter dated 25.03.2008. A report from the said authority dated 04.07.2008 was also received. In order to ascertain the complete information contained in the pen drive, data contained in the said pen drive were taken in the presence of Shri Vivek Agarwalla using his laptop in the O/o Deputy Director, DGCEI, Coimbatore. Undisputedly, while data was retrieved from the comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 22.05.2006 Mani 20,000 09 01.08.2006 Central Excise, Coimbatore 13,000 10 03.08.2006 Mani 10,000 11 11.08.2006 Central Excise, Annur 3,100 12 22.08.2006 South India 13,000 20. The bench made a specific query as to whether the appellants contend that these are illegal gratifications made by appellant to the department. The learned counsel for the appellant opted not to answer to such query. If the appellant is not able to explain the figures, then there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the respondent submitted before us that although the aforesaid statements of Managing Director of the Company and other persons were recorded during the course of judicial proceedings but the same were retracted statements, and therefore, they cannot be relied upon. However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, such statements made by the Managing Director of the Company and other persons containing all the details about the functioning of the company which could be made only with personal knowledge of the respondents and therefore could not have been obtained through coercion or duress or through dictation. We see no reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon. 19. We are of the considered opinion that it is established from the record that the aforesaid statements were given by the concerned persons out of their own volition and there is no allegation of threat, force, coercion, duress or pressure being utilized by the officers to extract the statements which corroborated each other. Besides, the Managing Director of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) In M/s. Gopal Industries Ltd., Vs Commissioner of Central Excise, Indore reported in 2007 (214) E.L.T.19 (Tri.-LB), the Tribunal observed as under:- 18.1 The Daily report tin factory note-book contained details of production and issue of tin containers by the appellant, which did not reflect in the statutory record. The details of production and clearance of tin containers were also shown in the note-book 'Daily production report' separately in respect of the appellant firm which tallied with the figures shown in the 'Daily report tin factory' which contained figures both for the 'new' tin factory as well in the name of the appellant. In this context, it will be noticed that the managing partner Shri Yogesh Garg confirmed in his statement recorded on 29-9-1998 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that these documents consisted of daily production reports written in notebooks, delivery challans, stock record of tins etc. The documents recovered pertained to production and clearance of tin containers. He also stated that amongst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants who had obtained the excise registration for the manufacture of such goods in the firm name. There cannot be more authentic evidence than recovery of the said private record from the appellant's factory which admittedly was prepared and bears the signatures of the supervisors of the factory, from the statements of the partner Shri Yogesh Garg, the Electronics Engineer, Shri Awadesh Kumar Saxena who has made several daily reports in the said book, and the authorized signatory, Shri Girijesh Rai in whose presence the note-books were recovered under a panchnama. In answer to question No. 18, Shri Awadesh Kumar Saxena who was shown the Daily production reports, stated in his statement dated 29-9-1998 that all these pertained to the appellants who manufactured the tin containers and that these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were prepared by Shri Rajeev Agarwal and others whose signatures he recognized. The authenticity of the recovered documents was admitted by the partner Yogesh Garg [noticee No. (2)] and noticee No. (6) (Girijesh Rai) who also admitted that the record pertained to u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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