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TMI Blog2019 (3) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... oal - the allegations are mainly based on the unsubstantiated data retrieved from laptop/ pen drive which is not reliable, as the same does not have evidentiary value as provided under Section 36B of the Act, as the condition precedent for placing reliance in respect of data obtained from computer/pen drive, etc have not been established, like whether the paper print out containing data was produced by the computer during the period over which the computer was regularly being used during the relevant period by the person having lawful control over use of the said computer. Further, the document seized from the guesthouse cum residential premises of Shri Nitin Agarwal also lack evidentiary value - also, it is evident from the records that stock verification have been done by way of eye estimation on the date of search, as no calculation sheet is admittedly available on record. Further, there is no corroborative evidence of clandestine activity by way of unexplained consumption of electricity, excess utilisation of labour, evidence of clandestine transportation nor there is evidence of any clandestine cash flow found. The allegations in the show cause notice are presumptive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of M.s SSPL [RUD-12] 2.8. Panchnama dated 08.08.2011 for cloning of hard disks of laptop seized from the residential premises of Shri Nitin, Agarwal, Director [RUD-14] 2.9. Panchnama dated 18.03.2013 for cloning of hard disks of laptop seized from the residential premises of Shri Nitin Agarwal, Director [RUD-16] 2.10. Panchnama dated 21.03.2011 for cloning of hard disks of laptop seized from the residential premises of Shri Nitin Agarwal, Director [RUD-17] 2.11. MS Excel Workbook-st recovered from pen drive (PNY 8 GB) recovered from the residential premises of Shri Nitin Agarwal [RUD-23] 2.12. Statement dated 07.07.2011, 12.08.2011 29.09.2011 of Shri G. Jagan Mohan Rao, Assistant Accountant, M/s SSPL [RUD 3, 25,26 27] 2.13. Letter dated 26.07.2011 of M/s SSPL, intimating payment of ₹ 30,00,000 as duties of excise [RUD-18] 2.14. Statements dated 07.07.2011 04.08.2011 of Shri M.P. Sharma, Factory Manager of M/s SSPL [RUD-4 13] 2.15. Statement dated 07.07.2011 of Shri M.K. Gupta, Cashier of M/s SSPL [RUD-2] 2.16. Statement dated 03.08.2011 of Shri Shyam Kandwal, Manager, City of office of M/s SSPL [RUD-11] 2.17. Pen drive (PNY 8GB) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factory premises or the two residential premises of its director, which establishes that the appellant has not manufactured cleared any goods clandestinely. 4.2. That entire case of the Department is based on the data retrieved from one pen drive only which was recovered during the search from the residence of the director. None of the hard disc of desktop computers or laptops or other pen drives contain any incriminating data. Reconstructed data or data retrieved from computer /laptop is not admissible as evidence under the provisions of Section 36B of the CEA, 1944, as it was not produced by the computer during the period over which it was used regularly to store or process information. The data has been retrieved from the pen drive subsequently after almost after 1 year 9 months from the date of search and not during the course of use of the hard disc, computer or pen drives. A demand of duty on the basis of reconstructed or retrieved data is not sustainable as such data does not satisfy the conditions laid down in Section 36B(2) as held in the case of Premium Packaging Pvt. Ltd. Vs. CCE, 2005 (184) ELT 165 (CESTAT) . Hence the demand of duty on the basis of the data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat these records show transactions of the appellant. The alleged suppliers of raw material and purchasers of the finished goods as per the said records have not been identified or questioned, nor they have admitted to having sold/ purchased the goods from the appellant as per these documents. The transporters have not admitted to having transported these goods to or from the premises of the appellant. None of the goods allegedly cleared without cover of invoices have been seized at any time. The alleged discrepancies in stocks are too minor to support the allegation of clandestine removal. In the absence of corroborative evidence, no reliance can be placed on the alleged incriminating documents and the demand of duty on the basis of these documents is not sustainable. 4.8. That in his statement dated 08.08.2011, Sh. Agarwal has specifically stated that these records have neither been maintained by him nor under his directions and he was not aware who had prepared these documents. 4.9. That the alleged incriminating documents and tally accounts have been prepared by some unidentified employee of the appellant or some other person. These records are not the official records of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 M.T. and not 1103.716 M.T. as alleged. The alleged shortage in stock of sponge iron was noticed also because the chart prepared for sponge iron in the statement dated 07.07.2011 is wrong or erroneous. 4.12. That in the case of Roll Tubes Ltd. Vs. CCE reported in 2013 (294) ELT 458 (CESTAT), it has been held that if the stock-taking is not done correctly, benefit of doubt must go to the assessee. In the case of CCE Vs. Silvertone Papers Ltd. reported in 2013 (287) ELT 478 (CESTAT) it has been held that mere acceptance of shortages cannot lead to a conclusion about clandestine clearance. In the present case, merely because the shortage in stock has been accepted by the appellant s director Sh. Nitin Agarwal and employee, Sh. M.P. Sharma (Factory Manager) it does not follow that the goods were removed clandestinely or that there was in fact a shortage in stocks as weighment of stock was not done. 4.13. That the alleged shortage in stocks is not supported by corroborative evidence of removal of goods without payment of duty from the premises of the appellant. Hence demand of duty on alleged shortages is not sustainable. 4.14. The summons issued to the panch witne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay wagons as the Railways, which is also a Govt. Department would not transport iron ore unless it is accompanied by a fit pass from the mine. If trucks are used for transporting iron ore, then, taking the average capacity of trucks as 13 M.T., approx., 2000 truck loads are needed to procure 25412 M.T. of iron ore. It is pertinent to note that not even a single truck has been intercepted by the Central Excise Department, the Department of Mines or any other Govt. department, which was found to have been transporting unaccounted iron ore to the premises of the appellant. Moreover, iron ore cannot be procured from any other person clandestinely as that other person can also cannot procure iron ore unauthorisedly, from the mines. As explained hereinabove, it is just not possible to procure iron ore unaccountedly. Thus the appellant could not have manufactured sponge iron and/or ingots clandestinely. The impugned order is however silent on this contention of the appellant. 4.18. That para 9 of the show cause notice gives a comparision of the purchase of iron ores as per official P L A/c. and as per private P L A/c. for the financial years 2009-10 and 2010-2011. As per this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the judgment of Hon ble CESTAT in the case of Premium Packaging Pvt. Ltd. Vs. CCE, 2005 (184) ELT 165 (CESTAT). 4.22. That no reliance can be placed on the statement dated 13.07.2011 of Sh. Nitin Agarwal as he has signed the statement dictated and typed by DGCEI officer on computer, only to buy peace with the department and to be able to catch his flight to Kanpur. This statement is neither voluntary nor true. Shri Agarwal also retracted from his statement through the interim defense reply. 4.23. That the amount of ₹ 34,09,162/- was deposited by the appellant during investigation, only to buy peace with the Department and to avoid arrest. Vide letter dated 25.02.2012 the appellant submitted that this amount had been deposited by them under pressure from the Department and requested that this amount be refunded to them. 4.24. That in the case of Hindustan Machines Vs. CCE reported in 2013 (294) ELT 43 (CESTAT), Hon ble Tribunal has held that the internal records maintained by a worker in private capacity are not sufficient to allege clandestine removal. In the case of Meenambal Fire Works Vs. CCE, 2002 (49) RLT 832 (CESTAT), Hon ble Tribunal set aside t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods shown consigned by M/s. Dewatram Co., Kanpur to M/s. Mamta Steels, Amethi, no invoices were issued by the noticee as these documents do not pertain to their company. that physical verification of stock was conducted by eye estimation only and the material was not weighed. That the payment of duty by the company on the alleged shortages was not voluntary. 4.28. That the allegation of clandestine removal is not supported by any material evidence like receipt of unaccounted inputs, mode of payment of consideration for unaccounted raw material, consumption of electricity, use of labour, proof of transportation and sale etc. Admittedly, no goods (raw material as well as finished goods) have been seized which were being transported without payment of duty. The department has not been able to identify any such transporters who have allegedly transported goods (raw material as well as finished goods) without invoices, and obtain any confirmation from them. No corroboration has been obtained from the alleged purchasers of finished goods regarding receipt of unaccounted goods or from the suppliers of raw material regarding sale of unaccounted raw material. Though it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reflect the actual transactions of the appellant. The allegation of under valuation is also not supported by any corroborative evidence. The statements dated 13.07.2011 and 08.08.2011 of Sh. Nitin Agarwal, wherein he has allegedly admitted undervaluation are neither voluntary nor true. Hence no reliance can be placed on them to confirm the demand of duty against the appellant. 4.33. That extended period of limitation is not invokable in the facts and circumstances of the present case. The appellant has not manufactured and cleared any goods clandestinely without payment of Central Excise duty. All clearances of the appellant are duly reflected in the accounts of the appellant. The entire case of the department is based only on conjectures and surmises and not on any cogent evidence on record. The demand is therefore not sustainable as it is time-barred. 4.34. That since the demand of duty itself is not sustainable being based only on conjectures surmises, penalty is also not imposable on the appellant or its director as has been held in, inter alia, the following cases :- -Mount Methur Pharmaceuticals Ltd. Vs. CCE 2006 (206) ELT 508 (Trib.) Spar Engg. Vs. CCE 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Neither there is evidence of any transportation for receipt of unaccounted iron ore. Similarly there is no evidence of receipt of other raw materials like dolomite and coal. We find that the allegations are mainly based on the unsubstantiated data retrieved from laptop/ pen drive which is not reliable, as the same does not have evidentiary value as provided under Section 36B of the Act, as the condition precedent for placing reliance in respect of data obtained from computer/pen drive, etc have not been established, like whether the paper print out containing data was produced by the computer during the period over which the computer was regularly being used during the relevant period by the person having lawful control over use of the said computer. Further the information contained in the statement reproduced or derived from information supplied to the computer was in the ordinary course of the said activities. We find that no such facts have been established by the Revenue, not even the person have been identified who maintained or entered the data on the computer and/or obtained the copy of any data on pen drive. Further we find that the document seized from the guesthouse cum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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