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TMI Blog2019 (12) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... lso, at the time of sealing and desealing of the external data storage device as well as the time of obtaining printouts therefrom, a certificate should have been obtained as per the provision of Section 36-B of the Act. No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellant was obtained by the department, the credibility of the computer printout gets vitiated. Hon ble Apex Court in case of ANVAR P.V VERSUS P.K. BASHEER AND OTHERS [ 2014 (9) TMI 1007 - SUPREME COURT] has held that the computer printout can be admitted as 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 computer printouts as prescribed under Section 65B(4) of Evidence Act, 1972. It has been clearly laid down in para 15 of this judgment that all the safeguards, as prescribed in Section 65B(2) (4), of the Act, is required to be met so as to ensure the source and authenticity, pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to temper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on the printouts taken from the laptop computer obtained during the search. And the appeals were allowed by setting aside the order passed by the Adjudicating Authority - The ratio of this case is applicable in toto in case at hand also thus the demand is not sustainable and liable to be set aside. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2011. Similarly, the statements of Shri Sudipto Bhattacharya, Shri Deepak Kumar Agarwal and Shri Sitaram Agarwal were also recorded. Further, the statement of one buyer of billets, some of the buyers of M.S. wire rods and one broker were also recorded during the investigation. Accordingly, on the basis of the recovery of the handwritten exercise book, hand written loose sheets, the file and computer printouts recovered from the residence of Shri Ravi Bhushan Lal, the department concluded that the appellant has clandestinely removed the goods valued at ₹ 378,33,93,311/- during the period from 2010 to 2011, and thus evaded the Central Excise duty to the extent of ₹ 38,96,89,511. It was alleged by the department that the appellant had cleared finished goods without assessment and payment of duty and thus, evaded the central excise duty amounting to ₹ 13,11,367/-. Further, it was alleged that the appellant had cleared inputs without payment of duty and, accordingly, a central excise duty of ₹ 9,05,130/- was also demand. Accordingly, a Show cause notice No. 574/CE/84/2011/INV dated 24.09.2013 was issued to the appellants for demand of central excise duty invok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments resumed, therefore, cannot be treated as relied upon documents in the proceedings. The learned Counsel relied upon the judgment of Hon'ble Karnataka High Court in case of Nenmal Shankarlal Parmer Vs. Assistant Commissioner of Income Tax (Investigation) reported at 1992 (195) ITR 582, and Premier Glass Industries Vs. C.C.Ex. 2000 (123) E.L.T. 703 (Trib). The learned Counsel also submitted that the entire proceedings were conducted in absence of two independent and respectable habitants of the locality and the of search which was conducted without warrant that vitiated the search proceedings under Section 100 of Cr. P.C. and the recovery of documents from the residential premises and factory premises is, therefore, illegal and not sustainable and cannot become a basis for creating such a huge demand against the appellant. 6. The learned Counsel further argued that the panchnama dated 30.03.2011 by which data were obtained from the external data storage device seized from the residence of Shri. Ravi Bhushan Lal should have been carried out in the presence of any Computer expert and certification from the person who had control over it him have also not been obtained, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of Section 36-B of the Act due to above cited reasons. Ld. Advocate 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 prescribed certain guidelines before accepting electronic documents as an admissible piece of evidence. The learned Counsels have also relied upon various other decisions as under; M/s. S.N. Agrotech Vs. CC New Delhi; [2018 (361) ELT 0761( Trib. Delhi)] M/s. Shivam Steel Corporation Vs. CC & CCE BBSR [2016 (339) ELT 310 (Trib. Kolkata)] M/s. Jindal Nickel & Alloys Ltd. Vs. Commissioner of Central Excise, Delhi [2012 (279) ELT 134 (Trib.-Del.)] Commissioner of Central Excise, Trichy Vs. Sri Ulaganayagi Amman Steels [2009 (241) ELT 537 (Tri.-Chennai)] Copier Force India Ltd. Vs. Commissioner of Central Excise, Chennai-[ 2008 (231) ELT 224(Trib.-Chennai)] Shri UlaganayagiAmmal Steels Vs. CCE, Trichy [2008 (231) ELT 434 (Tri.-Chennai)] SSI, Chakra Cements Ltd. Vs. Commissioner of CCE, Guntar [2008 (231) ELT 67 (Tri.-Bang.)], Premier Instruments & Controls Ltd. Vs. CCE, Coimbatore [2005 (183) ELT 65 (Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial premises would be thus third party evidence. The counsel for the appellant placed reliance on the case of Santosh Tobacco Vs. Commissioner of Central Excise, Delhi-I, 2014 (311) E.L.T. 465 (Tri. - Del.), Commissioner Of Central Excise, Delhi-I Vs. Vishnu & Co. Pvt. Ltd. 2016 (332) E.L.T. 793 (Del.), in support of his argument on this issue. b. The panchanama at the residential premises of Ravi Bhushan Lal on 30.03.2011 was prepared by Ratan Das and Ashok Haldar. The Appellant has prayed for their cross examination which was outrightly denied their cross-examination by the adjudicating authority, as such the panchanama cannot be relied upon in the proceeding. c. The loose paper sheets which were resumed, during the search at the residence of Shri Ravi Bhushan Lal were used as evidence without knowing the author of the said loose sheets, in absence of which the evidentiary value gets destroyed. d. There was also no list of things and places from where the documents were seized in the course of search, which makes the seizure proceeding vitiated as held in the case of Deepak Hinges Pvt. Ltd. Vs. Commissioner, 2019 (21) G.S.T.L. J119 (Tri. - Allahabad)] e. There was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority had failed to follow the requirement of Section 9D of the Act regarding examination in chief of witness placing reliance on the following orders/judgments:- G-tech Industries Vs. Union of India- reported at 2016 (339) ELT 209. C.C. Vs..Bussa Overseas Properties Ltd., reported at 2007 (216) E.L.T. 659 (S.C.) C.C.E. v. Parmarth Iron Pvt Ltd., reported at 2010 (260) E.L.T. 514 (All.) Hukum Chand ShyamLal v. Union of India- reported at (1976) 2 SCC 128. 12. It has also been submitted that the shortage of the goods as detected by the DGCEI officers cannot be admitted since, the stock verification was done on the basis of average weighment and eye estimation and in actual there was no shortage at the time of stock taking of the goods. The officers did not carry out the actual weighment of the raw materials and also the finished goods. The following method was done to reach at the quantum of shortages; a. The weight of 9068 bundles of M.S. Wire Rods was estimated by ascertaining the weight of 10 bundles and multiplying for the average weight with the number of bundles, b. The M.S. Billets also average weight per piece was worked out and the total stock was arriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from time to time and no such discrepancies were pointed out by the Audit team. He further submitted that the demand is not sustainable both on merit as well as on limitation and, therefore, the impugned order imposing duty, penalty and interest against the appellant and their directors are not sustainable and liable to be set aside. 15. The learned Authorized Representative of the Department reiterated the findings of the impugned order and submitted the panchnamas were drawn in presence of pancha witnesses, which were duly signed by the officer and also by Shri Ravi Bhushan Lal. Therefore, the search proceedings were made in presence of independent witnesses and the same cannot be challenged by the appellant at this stage. It was further submitted that at the time of the visit of the officer shortage of the stock of finished goods was noticed by the officers and the Director of the company has accepted the manner of stock taking and agreed to pay central excise duty on the shortages of the finished goods. He has further stated that the Director, Assistant General Manager (Finance) and Shri Ravi Bhusan Lal, the employee of the company have admitted the duty liability of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of Shri Ravi Bhushan Lal was obtained by the officer after obtaining the printouts from the alleged storage device and the panchanama proceedings started late at about 8:00 p.m. The statement of Shri Ravi Bhushan Lal was obtained only after the Panchanama proceedings were over, and therefore, the officers recorded his statement during his detention in the office that too in night. To test the veracity of the search proceedings the crossexamination of the Pancha witness was necessary, which was not allowed to the appellant and, therefore, we are left with no option; but agree to the contention of the learned Advocate that the veracity of the panchanama is doubtful. We have also considered the judgments cited by the learned Advocate and hold that search and seizure proceedings are made in violation of Section 100 of Cr PC read with Section 18 of the Act, for the reason that department has failed to follow the provisions of Section 36-B of the Act. We also agree with the contention of the learned Advocate that at the time of sealing and desealing of the external data storage device as well as the time of obtaining printouts therefrom, a certificate should have been obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borative evidences. The investigating authority failed to elucidate the system adopted for the preparation of the relied upon documents which were allegedly based on these documents. The details contained on the loose sheets and third party documents are actually not comprehensible and, therefore, cannot be accepted as admissible piece of evidence. Moreover, none of the 12 persons on whose statement reliance was placed by the department were cross-examined. 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 of the Act has to be construed strictly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory. We have also considered the judgment 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. 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.), 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. 21. We have considered the submissions made by the other appellants as regard penalty imposed against them. We find that no material evidence was brought on record to prove the charges to attract penalty against them, except the statements which were relied upon by the department without following the mandate of Section 9-D of the Act. Under the circumstances we also set aside the duties and penalties imposed on the other appellants as well. 22. Further, we find that an similar issue has come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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