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TMI Blog2019 (8) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... oshi Industries, Bhagwati Power & Steel Limited, J S Forge Private Limited, Maheshwari Steels, Sandeep Agarwal, Bhagwan Das Agarwal, Shri Santosh Agarwal, M/s Jai Balaji Industrial Limited, Crest Steel & Power Private Limited, M/s Hariom Ingots & Power Private Limited (The main appellant) Versus Pr. Commissioner of Central Tax Per Bijay Kumar: 1. These appeals are filed by M/s. Hari Om Ingots and Powers Pvt. Ltd.(hereinafter referred to as 'the main appellant/company') and other appellants against Order-in-Original No. RPR/EXCUS/000/COM/087/2018 dated 10.12.2018 wherein the learned Commissioner has confirmed the demand of Rs. 13,62,40,831/- under Section 11A(4) of the Central Excise Act,1944(hereinafter referred to as 'the Act') alongwith Interest under Section 11AA of the Act. Further a demand of Rs. 3,57,289/- has also been confirmed against the main appellant in respect of shortage of goods detected at the time of verification of the stocks. Penalty of equivalent amount is also imposed the appellant under Section 11AC(1) (c) of the Act. Separate penalties of Rs. 10,00000/- each have been imposed against Shri Sandeep Agarwal,Shri Santosh Agarwal,Shri Bhagwandas Agarwal the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant, their Accountant, seller of the Raw Material, purchaser of the furnished goods, were also recorded by the department. On the basis of the loose documents recovered from the aforesaid Car and on the basis of the Computer Data, the department concluded that the appellant has cleared the goods valued at Rs. 70,52,63,430/- during the stipulated period 2011-12 clandestinely, and thus evaded Central Excise duty to the tune of Rs. 7,26,42,133/-. Similarly, it was concluded by the department that the appellant has cleared goods valued at Rs. 51,45,52,577/- without payment of Central Excise duty during the disputed period (2012-13) and evaded the Central Excise duty to the tune of Rs. 6,35,98,698/-. Accordingly, a Show Cause Notice F. No. IV(6)INV/Hari Om/44/ 2012-13/P/4123 dated 06.05.2016 was issued to the main appellants for demand of Central Excise duty amounting to Rs. 13,62,40,831/- under Section 11A(4) of the Act alongwith Interest, and penalty under Section 11AC of the Act. Central Excise duties were also demanded from the other appellants along with penalties as per show cause notice separate penalties were imposed on the Directors of the main appellant. 3. The main appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th duty demanded by the learned Commissioner under the provisions of the Act and the Rules. 6. Shri Anurag Mishra, learned Counsel of the appellants submitted that the entire search and seizure operation was made in the appellants factory in violation to Section 100 of CrPC read with Section 18 of the Act. He submitted that one of the witnesses, namely Shri K.Shrinu, was panch witness both at the search proceedings in factory premises as well as on the residential premises on the same day and almost on the same time. The learned Counsel has submitted that the residential premises of the Director and the factory premises of the appellant are far away and it was not possible for a person to be present on the same time on both the places. The learned Counsel also submitted that the panchnama and recovery proceedings made in the residential premises of the Director was without any search warrant and the document resumed there from cannot be relied upon in the proceedings. The learned Counsel also relied upon the judgment of Hon'ble Karnataka High Court in case of Nenmal Shankarlal Parmer Vs. Assistant Commissioner of Income Tax (Investigation) reported in 1992 (195) ITR 582, Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the fact that printouts were produced by the computer during the period over which the computer was used regularly to store or process information. f) Absence of any certificate of authorization to support the fact that printouts were produced by the computer over that period by the person having lawful control over the use of the computer. g) Absence of signature by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities. 8. The learned Counsel submitted that the Computer printout which has been relied upon by the department against the appellant to prove the charges of clandestine removal are not an admissible evidence in according to the provisions of Section 36-B due to above cited reasons. He heavily relied upon the judgment of Hon'ble Apex Court in case of M/s. Anwar P.V. Vs. P.K. Basheer- reported at 2017 (352) ELT 416 (S.C) wherein the Hon'ble Supreme Court has set certain fundamentals to accept electronic documents as an evidence. The learned Counsel has also relied upon various decisions; * M/s. S.N. Agrotech Vs. CC New Delhi; [2018 (361) ELT 0761( Trib. Delhi)] * M/s. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard-disks and retrieval of the data is admissible for want of cross-examination of Sh. Vipul Saxena, who has done cloning of the data from the computer system. We, therefore, hold that the computer printouts cannot held to admissible evidence in terms of Section 36B(2) & (4) of the Central Excise Act in the case at hand." 10. As regard to the loose papers sheets recovered from Car with Registration No.CG04H1321 of Shri Om Prakash Sai, Accountant, the learned Counsel submitted that these are third party documents. Also, there are glaring infirmities in respect to the documentary evidence. These infirmities are as follows: (i) Hand-writing expert not consulted to verify the authorship of the loose sheets and documents. It was important, since the documents were recovered from a third party. Moreover, the sets of documents were un-related and also un- authenticated. (ii) The investigating authority has not mentioned the manner and approach adopted in the preparation of the relied upon documents from the loose sheets and third party documents. The details contained on the loose sheets and third party documents are actually not comprehensible and therefore the preparation of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was approved by the Hon'ble Punjab & Hariyana High Court as reported in 2001 (254) E.L.T. 205 (P & H). He submitted that private records are not reliable and thus not admissible in evidence as there is no tangible evidence to conclusively relate them to the appellant. The Accountant, from whose Car the said loose records were recovered as initially accepted that the said records pertained to production and clearance activity of the appellant; but the said statements were not only retracted by him but also during his cross-examination he denied that the said records related to the production activity of the appellant company. The department failed to recover any other documents so as to prove that those documents related to the production and clearance made by the appellant company. These documents are thus not reliable accordingly to learned advocate placing reliance on the following judgments; * Kuber Tobacco Products Pvt. Ltd. Vs. CCE [2013(290) E.L.T. 545 (T)] * Rhino Rubbers Ltd. Vs. Collector[1996(85)ELT 260 (T)] * CCE Vs. Rajratan Synthetics Ltd. [2013(297) E.L.T. 63 (T)] * Savitri Concast Ltd Vs. CCE [2015(329) E.L.T. 213 (T)] * Balajee Structurals (India) Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination in chief. In such a scenario, their oral statement cannot be relied upon. He further submitted that appellant was allowed cross examination of few of the witnesses, who has categorically deposed that their statements were extracted under coerosion threat and under duress. He further submitted that the Adjudicating Authority had failed to follow the mandate of Section 9D of the Act regarding examination of witness in chief placing reliance on the following judgments:- (i) G-tech Industries Vs. Union of India- reported at 2016 (339) ELT 209. (ii) C.C. Vs.. Bussa Overseas Properties Ltd., reported at 2007 (216) E.L.T. 659 (S.C.) (iii) J.&K. Cigarettes Ltd. Vs. CCE, reported at 2009 (242) E.L.T. 189 (Del.) = 2011 (22) S.T.R. 225 (Del.). (iv) C.C.E. v. Parmarth Iron Pvt Ltd., reported at 2010 (260) E.L.T. 514 (All.) (v) Hukum Chand Shyam Lal v. Union of India- reported at (1976) 2 SCC 128. 15. He further submitted that the demand is also barred by limitation as all the material facts were within the knowledge of the department, as the main appellant was paying huge Central Excise duty on regular basis RT-12 Returns were regularly being the audits were also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e panchnamas proceedings were made in the presence of independent witnesses which was not only signed by the proper officers; but also by the representative of the company. No objection as regard to the panchanama proceedings were made by the appellant on the date of the search. He further submitted that Directors of the company were present and witnesses the entire search and seizure operation and they have not objected that Shri K. Shrinu is witness to the both of the panchnama at the office as well as residential premises. The learned AR submitted that Shri K.Shrinu and Shri Sunil Kumar Pandey, who were the panch witnesses to the panchnama were not the employees of the appellant company, as the appellant could not produced their appointment letter, attendance register, salary slips etc. Therefore, the search proceedings were made in presence of independent witnesses and same cannot be challenged by the appellant at this stage. 18. Learned Authorised Representative submitted that at the time of the visit of the officer shortage the stock of the finished goods was noticed by the officers and the Director of the company has accepted the manner of stock taking and agreed to pay cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Authorised Representative further submitted that the statements of the raw material suppliers clearly established that the appellant has purchased the goods from them without payment of Central Excise duty. The learned AR submitted that it is a sufficient proof to establish that the appellant is procuring the raw material without payment of Central Excise duty and manufacturing the goods out of the said non duty paid goods for clandestine removal. The learned AR submitted that recovery of computer data, loose paper sheets from the accountant and the confessional statement of various persons clearly established that the appellant company were engaged in illicit manufacture and clandestine removal of the goods without payment of Central Excise duty. He supported the contentions of the learned Commissioner and submitted that the order of the learned Commissioner is justifiable and liable to be upheld. 21. Heard the parties and perused the case records. 22. Before going into merit of the case, we have to consider as to whether the entire search and seizure operation was made according to the provisions of Section 100 of the CrPC read with Section 18 of the Act. As regard to the Qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eates a suspicion. Further also no certificate from the competent authority was obtained by the officers even at this point of time. The Hon'ble Apex Court in case of M/s. Anwar P.V. Vs. P.K. Basheer reported at 2017 (352) E.L.T. 416 has clearly laid down that the computer printout can be admitted in evidence only if the same are produced in accordance with the provisions of Section 65B(2) of the Evidence Act. A certificate is also required to accompany the said of computer printouts as prescribed under Section 65B(4) of Evidence Act. It has been clearly laid down in para 15 of this judgement that all the safeguards as prescribed in Section 65B(2) & (4), of the Act be met with to ensure the source and authenticity, pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tempering, alteration, transposition, excision etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. We may add here that the provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act, 1944 of the Act are pari materia. It is evident from the panchanama, record of cross-examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, during the cross-examination the Accountant has categorically stated that he has already retracted his earlier statements and he has never stated that the said document pertains to production and clandestine removal of the goods from the appellant factory. In C.C.E. Vs. Kuber Tobacco Product Ltd. [2016(339) E.L.T. A-130] the Hon'ble Delhi High Court has held that without any corroborative evidence, loose papers, documents cannot be a sufficient to prove charges of clandestine removal. The Hon'ble Delhi High Court in case of C.C.Ex. Vs. Vishnu & Co. Pvt. Ltd.[2015-TIOL-2792-HC-DEL-CX] has also held that merely on the basis of statement made by the third party including transporter, agents and employees are not sufficient to prove the charges of clandestine removal in absence of independent corroborative evidence. The Hon'ble P & H High Court in case of M/s. G-Tech Industries Ltd. Vs. Union of India[2016(339) ELT P&H] has held that Section 9D has to be construed strictly, as mandatory and not merely directory. We have seen that the learned Commissioner not only denied the cross- examination of officers who has conducted the raid, but also of other persons whose cross-examination w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine removal. 27. The shortage which was detected by the officers is the on average weight method basis and, therefore, mere admission by the directors, who deposited the duty for the shortage, is not enough to proof that the goods were clandestinely cleared from the appellant factory. We have also considered the judgement cited by the appellant in case of C. C. Ex. Lucknow Vs. M/s.Sigma Castings reported at 2012 (282) E.L.T. 414 (Trib.Delhi), M/s. AAR Kay Industries Vs. C. C. Ex., Chandigarh reported at 2004 (165) E.L.T. 412 (Trib.-Del.), M/s. Micro Forge (I) Pvt. Ltd. Vs. C. C. Ex. Rajkot reported in 2004 (169) E.L.T. 251 (Trib.- Mumbai), C.C.Ex. Indore Vs. M/s. Kapil Steel Ltd. V/s 2006 (204) E.L.T. 411 (Trib.-Del.), M/s. D.P. Steels Industries Vs. C.C.Ex Jaipur reported at 1995 (78) E.L.T. 492 (Tribunal), C.C.Ex. Lucknow Vs. M/s. Kundan Casting (P) Ltd. reported at 2008 (227) E.L.T. 465 (Trib.-Del.), M/s. RHL Profiles Vs. C.C.Ex. Kanpur reported at 2013 (290) ELT 247 (Trib.-Del.). In view of the findings contained in these judgments we hold that the shortage was detected on average basis is not sustainable and, therefore, we set aside the demand. 28. We have considered the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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