9911796707
TMI Blog2019 (12) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... s Suvidha Transport which allegedly showed details of transportation of goods from Chhatral Unit of Appellant to Mumbai. The statements of following persons were also recorded : (i) Shri MahendraManilal Shah, Director of M/s SSPL. (ii) Shri Snehal/ Bhavesh Shah, director of M/s STPL. (iii) NawalkishoreRadheyshyamDalal, Partner of M/s Allit Metals (iv) Babulal GaneshmalBhora, Proprietor of Rashmi Steels (v) Pradeep Jagdish Bhagat, Proprietor of Suvidha Roadways (vi) Jayantilal J. Sanghavi, Proprietor of Veer Ratan Steel, (vii) Mulchand J. Jain, Proprietor of Ratnaveer Metal (viii) MangilalBachrajBurad, Broker 2. Based upon pen drive/ papers and diary seized from residence of Shri Snehal/ Bhavesh Shah, kaccha slips seized from Shri Mahendra Manilal Shah, register seized at M/s Suvidha Transport and statements of traders, it was alleged that Shri Mahendra Manilal Shah in his statements accepted clearances of goods viz. S.S Pipes without payment of duty as found from the pen drive and diary seized from residence of Shri Bhavesh/ Snehal R. Shah. That in respect of challans in small papers seized from him, the same were related to sale of pipe without payment of duty to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the sale of SS Pipes recorded in pen drive. It indicated payment of freight of Rs. 3,16,32,259/- to Shri Pradeep, Proprietor of M/s Suvidha Roadways which was accepted by him. That the statements of traders/ brokers who have purchased SS Pipes as stated in pen drive ledger data shows the clandestine removal of goods from Appellant. The ledger account of Shri Mahendra M Shah namely "M M Shah" maintained in seized pen drive indicates that during the period from 01.04.2008 to 03.07.2012, Shri Mahendra Shah received amount of approx. 6.52 Crores and paid amount of 4.17 crores mostly in cash and cheques which proves the trail of cash realised from cash sales of the SS Pipes to the accounts of Shri Mahendra Shah and contradicts the claim of Bhavesh/ Snehal Shah that cash transactions were affected by him. Based upon above investigation, the Appellant Unit was issued show cause notice dt. 01.07.2013 alleging that M/s SSPL have clandestinely cleared SS Pipes without payment of duty of Rs. 11,29,73,580/- during the period June'2008 to December'2012. The demand was based upon following instances : (i) Demand of Rs. 9,44,35,432/- was based on Ledger Account " Pipe Sales" retrieved from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pipes by SSPL. The Appellant M/s SSPL has resisted the Show Cause Notice by filing replies dated 21.5.2014, 18.12.2014 and 16.1.2015. They disputed the evidentiary value of the Pen drive and papers seized from the residence of Bhavesh/Snehal R. Shah, the rough (Kachcha) documents recovered from the office of Mahendra M Shah and the transport register recovered from office of Suvidha Roadways, Vasai. There is no evidence of purchase of raw materials to manufacture the alleged huge quantity of SS pipes alleged to be cleared clandestinely and of consumption of excess electricity to manufacture such huge quantity. The Appellant's factory did not have the production capacity to manufacture such huge quantity alleged to be clandestinely cleared. They had sought cross-examination of all the persons whose statements are relied upon in the Notice and of the investigating officers which was not allowed. The demands made on the basis of Ledger Account "Pipe Sales" retrieved from Pen Drive seized from residence of Bhavesh/Snehal R. Shah is liable to be set aside as the data stored in the Pen Drive is inadmissible as evidence since the requirements of Section 65B of the Indian Evidence Act 187 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Pipe Sales" on the basis of which demand is raised nowhere bears the name of the Appellant M/s SSPL. The said account is appearing under the name "Star" and not Sunrise Stainless Steel P. Ltd. The persons whose statements have been relied upon in relation to the Ledger accounts retrieved from the Pen drive were not permitted to be examined under Section 9D of the Central Excise Act 1944 and their cross examination not granted to the Appellant. Since no opportunity of their cross examination has been given to the Appellant, the statements are not admissible in evidence. He places reliance judgments in case of Basudev Garg Vs. CC - 2013 (294) ELT 353 (Del), CCE v Premier Alloys Ltd - 2019 (366) ELT 659 (All). That Shri Mahendra Shah in his statement dated 5.3. 2013 stated that clearances of SS pipes were made on payment of duty and denied any cash sales without payment of duty. Shri Snehal R. Shah in his statement has stated that Sunrise Trade Wings P. Ltd, of which he was director, was trading in SS Patta, SS Coils and SS pipes and that he also carried on trading in his personal capacity and that the Ledger accounts retrieved from the Pen Drive seized from his residence pertained t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence, no case for clandestine removal can be said to have been made out as laid down by the Hon'ble Tribunal in the case of Arya Fibres P. Ltd v CCE - 2104 (311) ELT 529. Without prejudice to the aforesaid submissions, he submits that the name of Sunrise Stainless Steel P. Ltd, nowhere appears in the Diary and loose documents recovered from Snehal R. Shah. In case of confirmation of demand under Annx-4 based on rough documents (Kachcha challans) recovered from office of Mahendra M. Shah he submits that the same is liable to be set aside. Merely based on Kachcha/ rough documents, without any evidence of clandestine manufacture in the form of purchase and consumption of excess raw materials and power, case for clandestine removal cannot be made out. In respect of demand under Annx-5 based on transport register recovered from Suvidha Roadways, he submits that demand is not sustainable as no case of clandestine removal can be made out on the basis of third party documents, particularly when such third party is not allowed to be cross-examined. Even most of the entries mentioned in Annx-5 to the Notice do not figure on the pages of the said Register mentioned in Annx-5. Hence demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uvidha Roadways register containing details of booking was also seized. Based upon above records and statements, the demand has been made against M/s SSPL. We find that Shri Snehal/ Bhavesh Shah in his statement has stated that the Pen Drive ledger pertained to trading done by him of SS Patta, SS Coils and SS Pipes in his personal capacity. The show cause notice and the impugned order has alleged that the persons whose statements have been relied upon has stated that they were doing trading or acting as broker in SS Pipes of M/s SSPL. They have also verified the Pen drive ledger as pertaining to their firm. 10. We find that the Appellant Unit in its reply to show cause notice had challenged the authenticity/ genuineness of such pen drive data on the ground that the same is inadmissible in evidence as the requirements of Section 65B of the Indian Evidence act and procedure required under Section 36B of the Central Excise Act was not followed. We find that Section 36B of Central Excise Act is parimateria to Section 65 of the Indian Evidence Act. As per Section 36B(1) computer printout is considered as document for the purpose of central excise act and rules and is admissible as evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adable' information and sends it to the default storage memory device. However, before so storing, the said machine readable electronic record is created through the computer language; which is a binary digital language comprising of '1' and '0'." (page 13 of the judgment) "This digital information is stored on memory device of computer. This processed information can also be stored on as small device as a Micro SD card or the Pen Drive. Besides this, the electronic record can be reproduced on the optical and magnetic devices like the CD or the tape record. As is obvious, the tape records are already phased out. Its only the optical devices like the Hard Disc Drive, CD or the electronic storage devices like the Solid State Drive, Pen Drive and Data Cards, which are used. But all this information is readable only by machines. For making this information cognizable by human beings, it would be required to be converted in suitable output through other devices like, printer or a screen. Since, the electronic information record is comprised in digital codes formats, therefore, by using appropriate softwares&hardwares,virtually any information can be created by arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of information typed as electronic information in M.S. Word can be seen on screen; as well as; can be printed out on a sheet of paper. Therefore, the original electronic information is the information which is present in the forms of digital codes stored on default memory device. The computer output of the same is only reproduction of the same in different formats. Therefore, it is only this default memory device which contains the `Primary' information created by the computer processor. Any copy of this on any other device is only a `Secondary' information or the secondary evidence in legal parlence. However, what is normally sought to be produced before the Court in evidence is either the `output' or the `copy' of the original information stored as digital codes. Therefore, the conventional catagorization of evidence in `Primary' and `Secondary' evidence does not strictly holds good in case of electronic record or the computer output. Hence, Section 65-B of Evidence Act insists for certificate qua the authenticity of electronic evidence; without making any distinction of `Primary' or `Secondary' evidence, unlike the other documentary evidence." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd. (supra) and Laxman Exports Limited (supra). Apart from this, the decision of this court in J&K Cigarettes Ltd. (supra) clinches the issue in favour of the appellant. In that case, the validity of Section 9D of the Central Excise Act, 1944 was in question. The said Section 9D of the Central Excise Act, 1944 reads as under :- "9D. Relevancy of statement under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains :- (a) When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the given circumstances such a person cannot be produced for cross-examination. Thus, this provision makes such statements relevant for the purposes of proving the truth of the facts which it contains, in any prosecution for an offence under the Act in certain situations. Sub-section (2) extends the provision of sub-section (1) to any proceedings under the Act other than a proceeding before the Court. In this manner, Section 9D can be utilized in adjudication proceedings before the Collector as well. In the present case, provisions of Section 9D of the Act were invoked by the Collector holding that it was not possible to procure the attendance of some of the witnesses without undue delay or expense. Whether such a finding was otherwise justified or not can be taken up in the appeal." 14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in case of Premier Alloys Ltd. 2019 (366) ELT 659 (ALL), the Hon'ble High Court held as under : 32. In the present case, it is not a case of admission on the part of assessee himself or his authorized representative but statements relied herein are that of proprietors of transport companies and others. It would be travesty of justice to hold that ex parte statements recorded of other persons than assessee or its representatives can be relied as a sufficient evidence to pass an order adverse to assessee without allowing such persons to be cross-examined by assessee and that too despite demand. 33. So far as Section 9D is concerned, we find that it only renders statement made and signed by any person before any Central Excise Officer of a Gazetted Rank, relevant, for the purpose of proving anything in any prosecution for an offence, truth of facts which it contains but it does not declare such statement to be a conclusive evidence so as to base findings in regard to fiscal liability only on that statement. Making a document relevant for the purpose of proving truth of facts which it contains is one thing and holding such statement as conclusive evidence to prove a fact is anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in such papers was shown to M/s Vinod Steel which was not investigated. In absence of any evidence and merely on basis of such slips, the demand cannot be made. Similarly in case of demand made in Annexure - 5 the demands are based upon Transport Register seized from office of Suvidha Roadways at Vasai, We find that except said transport register which is a third party record, no other evidence of clandestine removal has been adduced. There is no corroboration of such register with no any incriminating document recovered from factory and hence the demand based upon such register cannot be made. We also find that the Appellant Unit in their reply had also stated that they do not have production capacity for manufacture of quantity as alleged to have been cleared clandestinely. The adjudicating authority has confirmed demand by relying upon the seized documents whereas the same could not have been relied upon in absence of corroborative evidence from the independent source or any evidence at the Appellant Unit's end. The show cause notice does not point out any discrepancy at the time of visit of the officers in raw material or finished goods stock. No inculpatory record/ papers w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppliers of these raw materials. There is a solitary evidence in the form of statement of supplier of one of the raw material i.e. Borax Powder, who indicated that the appellant had procured Borax Powder and not accounted the same in his record; and the said entries and information were deduced from the documents of the premises of Shri Anil Jadav and whose evidence has been discarded for having not been produced for cross examination; in the absence of any other tangible evidence to show that the appellant had been procuring the other major raw materials required for manufacture of Frit without recording in books of accounts, we are unable to accept the contentions of the ld. AR appearing for the Revenue and the findings of the adjudicating authority, that there was clandestine manufacture and clearance of the finished goods. The investigation has not proceeded further to bring on record unaccounted purchases of all the raw materials required for manufacturing of 'Frit'. 14. In the case of Dhanavilas (Madras) Snuff Co. - 2003 (153) E.L.T. 437 (Tri-Chennai), we find that in Para 6, the Tribunal has recorded as under : "6........Revenue ought to have produced the evidence of purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's appeal is concerned, we notice from the extracted portion of the Commissioner's order that Revenue is solely relying on the exercise note books mainly balance sheets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the Counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jarat, in the case of Nissan ThermowarePvt. Ltd. - 2011 (266) E.L.T. 45 (Guj.), has specifically held as under : "7. Thus, on the basis of findings of fact recorded by the Tribunal upon appreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error In giving benefit of doubt to the assessee." (Emphasis supplied) The above ratio, as laid down by Hon'ble High Court of Gujarat, would squarely cover the issue before us. 16. In the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proof that GSL has used 100% of its capacity for production of DTY. Except for these entries, there is no substantial material to show that such a huge quantity of POY has been cleared to GSL without payment of duty and that the entire quantity has been used of production of DTY. There is no proof of purchase of such huge quantity of POY from Nova by GSL. No evidence has been led by the Revenue to show that GSL had actually produced DTY out of POY supplied by Nova. There is no evidence of transportation of POY from Nova to GSL factory. Undoubtedly, huge quantities of raw material would be required for manufacturing such a huge quantity of POY. No evidence has been brought either in the SCN or in the Adjudication Order to show that raw materials have been purchased by Nova for manufacture of such a huge quantity of POY. There is no proof of any extra payment being made to Nova by GSL. In the absence of these evidences, the ld. Senior Advocate submitted that it would be impossible to conclude that Nova had cleared POY of such huge quantities to GSL, in the light of the decisions of this Tribunal, which he has earlier placed before us. He also submitted that V.N. Parab's statement, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or was in their exclusive possession and control, (2) that the secret books of account were maintained by or under the orders of the respondents, (3) that the said books of account were in the handwriting of either of the respondents or their accountant, or clerk or some other person employed by them". Admittedly none of the documents marked as A-19 to A-23 was recovered from the premises of Nova. It is not the case of the Revenue that these note books were maintained by V.N. Parab under the instructions of Nova. Further, these note books were not in the handwriting of any of the persons of Nova or its accountant or clerk or any employees of Nova. Applying the ratio of the decision of the Hon'ble Supreme Court in M.M. Mathew (supra), the documents upon which the show cause notice has placed strong reliance has no probative value. The ld. Senior Advocate further submitted that merely because the document has been produced during investigation, it does not establish its probative value. The Hon'ble Supreme Court in the case of Bareilly Electricity Supply v. Workmen, 1971 (2) SCC 617 has held that mere production of document does not amount to proof. Further, in the case of Life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A/19 and A/21, seized from GSL premises, of which V.N. Parab is the author. Even if the figures in the seized documents tally (this is disputed by Nova, since V.N. Parab has not, when he was being examined during the investigation, stated that they tally), that by itself cannot prove clandestine manufacture and clearance, the tests for which have been adequately explained by this Tribunal in the decisions cited earlier, amongst several others. The documents in question, have not been resumed from Nova's premises, nor is the author of the documents (V.N. Parab), a person in Nova's employment or acting under Nova's instructions. Reliance by the ld. Senior Advocate on the decisions of the Hon'ble Supreme Court in State of Kerala v. M.M. Mathew (supra) and Bareilly Electricity Supply v. Workmen (supra) are appropriate and supports the submission made on behalf of Nova. In cases like the present, where the demand is based on clandestine production, clearance and sale of excisable goods, mere entries in note books or diaries cannot establish the same. Proof of actual production, whether by direct evidence or corroborative evidence is a 'must', and the probative value of such evidence has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s without corroborating the same with any concrete evidence. Merely because Ashok Chiripal has stated that the entries mentioned in the diaries are true and pertains to the excess production of Polyester Yarn, would not be enough to fasten the liability upon Nova. There is no evidence of procurement of raw material i.e. Mono Ethylene Glycol (MEG) and Purified Terephtalic Acid (PTA) for the production of such a huge quantity of Polyester Chips in a period of less than 6 months. Not a single person has been identified by the Revenue who has supplied such a huge quantity of raw materials for the manufacture of Polyester Chips. That apart, no evidence have been led by the Revenue regarding production of such a huge quantity of POY. Undoubtedly, these POY could not have been transported without proper mode of transport. The Revenue has failed to bring on record any evidence regarding transportation of POY alleged to have been manufactured clandestinely. No buyer has been identified who has clandestinely procured the POY from Nova. Merely because Ashok Chiripal has explained the entries made in the diary, it cannot be accepted as a basis for demanding duty against Nova. The adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal regarding the nature of evidence required to affirm a finding of clandestine manufacture and clearance, a very important consideration which failed to be appreciated by the Adjudicating Authority was that, in respect of the instant demand, there was no evidence whatsoever of the procurement of the required raw materials (MEG & PTA) for production of the alleged 1910587.5 kgs of Polyester Chips in less than 6 months. Nor was there any evidence of actual production of such quantities by Nova. There is also no evidence of transportation of POY, if at all manufactured, to any buyer. No payments made by Nova to suppliers of raw materials, nor by buyers of POY to Nova have been specifically alleged or any evidence adduced of the same. The ld. Senior Advocate for Nova, in his written submissions, again referred to the decisions of the Hon'ble Supreme Court in Bareilly Electricity Supply case (supra), Ram Bihari Yadav (supra), LIC of India v. Ram Pal Singh Besin, (2010) 4 SCC 491 in support of the proposition that mere admission of a document in evidence does not amount to its proof, which has to be done in accordance with law. He also relies upon the fact that the entries in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips shown to have been transported were not entered in the Excise records. The statements of Vikram Oza and Nitin Patel, employees of Nova were to the effect that Nova was receiving PTA (one of the raw materials) which was not accounted for in the records. The ld. Special Counsel also showed us certain figures in the diaries about production on 31-3-2002 and submitted that the records and the statements cannot be belittled. We have considered the rival submissions. We are constrained to reiterate that it is one thing to make out the content of entries made in a document. It is totally a different thing to assess the probative value of the contents of the document. As repeated by this Tribunal, clandestine manufacture and clearance cannot be readily inferred from documents and statements. They have to be established on evidence, relatable to or linked with actual manufacturing operations. As far as the present demand is concerned, there is no such evidence forthcoming in the record before us. Mere reliance on note books/diaries or statements cannot justify a finding of clandestine manufacture and/or clearance. Investigation into the sources of supply of raw material (MEG & PTA in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orative evidence such as evidence of other inputs required for manufacture of aerated waters namely sugar, carbon dioxide being purchased and utilized in the manufacture of the final product during the period in dispute is required. There is no such corroborative evidence in the present case. There is also no evidence of higher electricity consumption." In the present appeal before us also there is no corroborative evidence except the PMX Reports. Revenue has also not contradicted the submission of the learned Advocate that the Managing Director of the Appellants was not even questioned about these reports. In the case of Rama Shyama Papers Ltd, supra, wherein the records were seized from the premises of one of the customer of the assessee, the Tribunal did not uphold the charge of clandestine removal as "the Revenue has not been able to adduce any corroborative evidence to show the movement of goods from the premises of the Appellant's company to the premises of M/s. Chitra Traders or the Customers when the goods were sent directly to as per the directions of Chitra Traders... The onus of proof that the goods were removed by the Appellants without payment of duty and without enter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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