9911796707
TMI Blog2024 (1) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 (9) TMI 1210 - CESTAT NEW DELHI ] it was held that on failure to follow the mandatory procedure prescribed under Section 36B of Central Excise Act, 1944, the electronic evidence cannot be accepted in evidence. Besides, the evidence of the printouts from the hard disk, the other evidence relied by department are the documents seized from Third parties like the Buyers of finished products, Transporters of goods, Suppliers of raw materials etc. Some of these documents are again, pen driver and computer printouts. The department has recorded statements from persons who are running these establishments. But none of them have been examined by the adjudicating authority as required under Section 9D of Central Excise Act, 1944. The appellant has requested for cross examination and the same has not been complied - without examining these persons / witnesses in evidence under summons, third party statements or third party documents cannot be admitted in evidence. In the case of REYNOLDS PETRO CHEM LTD VERSUS C.C.E. S.T. -SURAT-I [ 2022 (7) TMI 656 - CESTAT AHMEDABAD ] similar issue was considered and the Tribunal held that the burden of proof to establish the allegations i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as Central Processing Units (CPUs) of computers which were seized under mahazar dt.15.03.2008 drawn at the respective premises. The seized documents prima facie appeared to indicate large scale evasion of Central Excise duty by M/s.Hi-Tech. 3. During the search conducted at the factory premises on 15.03.2008, the officers inter alia found one computer containing the Hard Disk of Seagate model bearing S/N: 9RX4MWAD, 160GB, ST 3160215AS. The Recycle Bin of the said computer contained a file titled Scrap . On restoring the said file and browsing the said file Scrap , the officers noticed that the same contained inter alia the details of unaccounted transactions relating to sale of sponge iron and MS ingots / billets. Shri P.S.B. Kamath, Office Manager and Sri K.M. Ramesh, Accounts Assistant of M/s.Hi-Tech who were present during the search operation informed the officers that the said computer was used for recording of the transactions of the company for a considerable period of time. Sri P.S.B.Kamath informed that the computer was used by him for recording the transactions and that no repairs had been carried out on the computer. Sri K.M. Ramesh took a print out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Annexure Mahazar dated 15.03.2008, This file contains interalia details of correspondences with various customers of Hitech for sale of sponge iron, quality problems faced and production of sponge iron for certain periods. (vi) Six paper board files titled Iron Ore under Sl.no.9 of Annexure to Mahazar dated 15.03.2008. These files contain the details of receipt of iron ore which are accounted in the books of accounts by Hitech. (vii) Made up file under Sl.no.30 of Annexure to Mahazar dated 15.03.2008. This file inter alia contains correspondences with various buyers of sponge iron, MS ingots / billets from Hitech, certain transactions with a buyer for supply of MS ingots / billets and payments received / due from him and end cuttings received from the said buyers. (viii) An assembled computer system bearing serial No.55274 653914802423092. (ix) On a request from Hitech, the Hard Disk ('SEAGATE BARRACUDA 7200.7 80 GBytes Model ST 3800 11A, S/N 5JVVSXPS, P/N 9W2003-399) from the CPU bearing serial No.55274 6539148024 23092 that was seized from the office of HITECH vide Mahazar dt. 15.03.2008 was removed and the CPU tower was released to Shri J.Prem Kumar of Hite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials. On perusal of the made-up file, it showed that certain details regarding receipt of coal from various parties under 17 Railway Receipts along with quantity invoice / receipts were recorded under the title wagon details (coal) for the period from April 2007 to January 2008 with the remark A or W against each of the 17 entries. On verification of the receipts of coal with the details available in the form of mineral purchase file, it was found that there were receipts of coal as mentioned in the Sheet No.219 with the remark A which alone were found to be accounted by M/s.Hi- Tech. 10. Investigation was conducted with the coal suppliers and statements were recorded. Search was conducted at the premises of M/s.S.P Coal Resources (P) Ltd., Chennai on 08.02.2011 and the statement of Mr. N. Jagadesh, Manager (Operations) of the said firm was also recorded. 11. Search operation and investigations were conducted with regard to Iron ore supplier viz. M/s.Clariya Marketing Services (P) Ltd. Hospet and M/s.Sri Vinayaga Minerals, Tumkur. The statement of Sri K. Rajkumar, Proprietor of M/s.Clariya Marketing Services Pvt. Ltd. and Sri D.M. Shanker, Proprietor of Sri Vinay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Tribunal vide its Final Order Nos.41388-41389/2017 dt. 02.08.2017 had earlier dismissed the appeals for non-appearance on the part of the Official Liquidator as well as the Appellant, Sri P. Ganesh. The appellant thereafter approached the Hon ble High Court and vide Tribunal s Interim Order Nos.40049-40050/2019 dt. 22.03.2019 these appeals were restored to the files of the Tribunal. 14. When the matter was listed for final hearing, the Official Liquidator filed a report on 29.05.2023 as to the status of the proceedings in regard to the winding up of the company. It is stated in this report that in compliance of the order of winding up passed on 23.03.2015 the Official Liquidator took possession of available assets of the company in Provisional Liquidation in the presence of the Petitioner-Creditor and the representatives of the Ex-Directors. Further, the Indian Overseas Bank took possession of the property of the company in liquidation on 20.05.2014 under SARFAESI Act. As the company s assets have been taken possession by Indian Overseas Bank under the SARFAESI Act and no assets have been taken by official liquidator, the Official Liquidator is not in a position to proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under Rule 26, a penalty not exceeding the duty on such goods or two thousand rupees, whichever greater can be imposed. The power is discretionary and not absolute. It is submitted that such power is not to be exercised arbitrarily. The imposition of such huge penalty of Rs.50 lakhs is without reasonable explanation and not on the basis of the prescribed rules, procedure and law. It is not founded on reasons and facts. 15.6 The Ld. Counsel argued that the impugned order is passed without following the principles of natural justice and also without considering the statutory provisions of Sections 9D, 36A and 36B of the Central Excise Act, 1944. SCN was received on 02.05.2011. Repeated requests were made by appellants to return the not relied upon documents to defend the case on 19.05.2011, 14.06.2011, 29.07.2011, 17.09.2012, 24.09.2012, 29.09.2012 and 09.10.2012. The documents were not returned as per Rule 24A of Central Excise Rules, 2002. Such requests were not even adverted to by the adjudicating authority. Repeated requests were made for the imaged version of the hard disks [B-3, B-13 and B-18] and for copies of relied upon documents [B-7, B-8, B-11, B-17, B-33 and B-34 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has masterminded the entire gamut of nefarious activities, in the said para of the SCN, it is never alleged that the appellant is at the helm of affairs. However, the adjudicating authority in para 56.02 of the impugned order has given a finding that the appellant is also at the helm of affairs, which is contrary to the facts alleged in the SCN. 15.9. Penalty imposed by invoking Rule 26 is without jurisdiction. Under Rule-26, the condition precedent is that the person has dealt with any excisable goods, which such person knows or has reason to believe to be liable to confiscation. In the present case, there is no allegation or findings that the goods are liable for confiscation and the appellant is also not aware of any order of confiscation passed. Therefore, Rule 26 is not applicable. Reliance is placed on paras 9 and 10 of the decision of the Hon ble Karnataka High Court in the case of CCE Vs Vijaya Steels (P) Ltd. 2012 (282) ELT 215 (Kar) and also on para 11 of CESTAT s decision in the case of Air Carrying Corporation Pvt. Ltd. vs Commissioner 2008 (229) E.L.T. 80 (Tribunal). 15.10. It is submitted that Shri P. Ganesh was not managing the affairs and he has not master ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date : 08/08/2023 URGENT / COURT MATTER To The Additional Director General, DGGI Coimbatore Zonal Unit, 155-1, Lakshmanan Street, Behind Ukkadam Bus Stand, Ukkadam, Coimbatore 641001. Sir, Sub: Appeal filed by M/s. Hi-Tech Mineral Industries Covai Pvt Ltd and Shri.P. Ganesh, Commercial Director -Appeal Nos. E/408 12 40813 of 2013 -Reg. Please refer to this office letter dated 06.07.2023, on the above subject and your reply vide F.No.DGGI/INV/CM/65/2023-Gr F-O/oADG/1064 dated 27.07.2023. 2. It is evident from your letter dated 27.07.2023 and its enclosures that all relied upon documents were received by the appellant on 02.05.2011 and the non-relied upon documents were returned by the department on 17.11.2014. Further, as per DGGI letter dated 03.10.2012 (enclosed with the above reply), the soft copy of data contained in the hard disk was also supplied to the appellant on 02.05.2011. 3. However, since the appellant is insisting for imaged version of the hard discs seized, it is requested that kindly please inform this office that whether the said hard disk is still available in your good office and if answer is yes, then kindly please als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials. The evidence gathered showed that the appellants have procured raw materials which have been used in the manufacture of finished products which were cleared clandestinely. Added to this, the appellant has been penalised for using unauthorized electricity which also indicates that the appellant has used unaccounted power for manufacture of unaccounted finished products and clandestine clearance. Apart from the documents, the Department has also recorded statements of various persons whose statements corroborated the documentary evidence seized from the appellant s factory as well as others. Ld. A.R prayed that the appeals may be dismissed. 19. Heard both sides. 20. At the outset, it requires to be noted that there has been no representation for the main appellant though the duty of Rs.13,11,35,087/- has been confirmed on the appellant and equal penalty imposed. The Ld. Counsel appearing for the appellant. Shri P. Ganesh has argued that there is complete violation of principles of natural justice as the appellants have not been supplied with complete relied upon documents. It is also stated that non-relied upon documents have not been returned to them. Further, though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST OF RELIED UPON DOCUMENTS Description of Documents / Records Quantity Hard Disk of Seagate Model bearing S/N:9RX4MWAD, 160GB, ST 3160215AS Sl.N:3 of list of relied upon documents 1 Paper board Files Coal Coal Inward Statement (3 to 3 2/2) Sl.No: 7 of list of relied upon documents. 2 Box Files Mineral Purchase Period 01.04.2006 to 22.02.2007 (1 1/5 to 1 5/5) Sl.No.8 of list of relied upon documents 5 Paper Board File Iron Ore (9 1/6 to 9 6/6) Sl.N: 11 of list of relied upon documents 6 Hard Disk (SEAGATE BARRACUDA 7200.7 80 Gbytes Model ST 3800 11A, S/N 5JVVSXPS, P/N 9W2003-399) seized from office of HITECH vide Mahazar dated 15.03.2008 Sl.No: 13 of list of relied upon documents. 1 Invoice Files 2006-07, 2007-08 Sl.No.17 of list of relied upon documents 23 Nos Two Notes titled Full Load Enquiry Sl.No:33 of list of relied upon documents. Two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Covai (P) Ltd. 1 KA-0-AC 7071 Bills (bearing nos 32 33) (28 1/2 to 28 2/2) 2 Compact Discs sealed in paper cover 10 Nos Mahazar Dt : 15.03.2008 drawn at Factory (B-1) Description of the Documents / Records Quantity Made up file containing complete printout sheets serially numbered from 01 to 293 1 Flat File Containing Computer Printouts of Sundry Debtors etc. 1 Flat File Containing lorry trip sheets with bill of expenses 1 Monthly matter 2007 book containing 1 Telephone Diary bearing 1 One HCL laptop computer 1 Summon Dated 15.03.2008 Description of the Documents / Records Quantity General Ledger for the year 2005-06 6+4 Books Iron Ore Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dt. 17.09.2012 to the Deputy Director, DGCEI and the Commissioner informing that they have not received the documents and requested to provide documents along with imaged version of hard disk so as to enable them to file reply to the SCN. The letter reads as under : . ..6.0 In view of the above reasons, we are sending this letter wherein we have clearly explained the chronological events from the date of issue of show cause notice. It is also pertinent to mention here that we have not received any reply from you so far for our letter dated 29/7/2011. The entire facts of the issue are known to Mr. Suresh Rao, Senior Intelligence Officer. 7.0 Therefore, it is requested (i) to return the not relied upon documents and materials as listed in our letter dated 29.7.2011 as per Rule 24A of the Central Excise Rules,2002; (ii) to return the copies of relied upon documents as listed in our letter dated 29.7.2011 and also the imaged version of the hard disks. 8.0 An early action is solicited so as to enable to reply to the show cause notice and also to appear in person on 25.9.2012. 25. On 24.09.2012, for the first time, a reply was issued by the Dy. Director, DGCEI stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data conversation from the hard disk into the CD was not done in our presence through mahazar proceedings. Further, we have to ascertain whether the data in the Cd is from the data of the hard disk. Therefore, we will provide two new hard disks to you so that you can provide the imaged version of the hard disks. If you are able to do it with your own staff, it is well and good. Otherwise, if you are directing us to bring any computer experts, we would be doing it at our own expenses so that the imaging can be done in your presence. 5.0 An early date may be fixed to collect the not relied upon documents. It is also requested to inform the suitable date for taking photo copies of the relied upon documents and also to get the imaged version of the hard disks. 6.0 It is also further informed that, we have made our requests during May, 2011, June 2011 and July, 2011; a copy of the requests was also endorsed to the Commissioner of Central Excise each time; but we have neither received any reply from you nor received the documents; finally, you have asked us vide your letter dated 24/9/2012 to collect the non relied upon documents; the delay on your part have crippled us from making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants were recovered / handed over to the department during the course of investigation and that these are not made part of the relied upon documents. They have again requested to return such documents as per Rule 24A of Central Excise Rules, 2002. It is submitted in the letter that though department had given a CD and informed that data of three exhibits are transferred into the CD, the data in the CD is not complete as per SCN and not sufficient. They also requested for imaged version of hard disk to know the entire details. 30. As can be seen from the above correspondences, the appellants have been continuously requesting for the imaged version of the hard disk. During pendency of this appeal, the Bench had enquired whether the department would be able to provide imaged version of the hard disk, Ld. A.R replied that they are able to provide the same. However, the learned counsel for appellant submitted that getting the imaged version of the hard disk at this fag end of the proceedings after such lapse of time would not be useful at all as the company is no more in existence and they have no data with them for the reconciliation of the files. It is to be noted that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such an opportunity was denied. 2.3 We have sought for the copies of the relied upon documents B-7, B-8, B-11, B-17, B-33 and B-34, which were not provided to us. We have made our requests to the DGCEI on 14/6/2011, 29/7/2011 and 17/9/2012, duly endorsing a copy to you also. We have received the reply from DGCEI only on 25/9/2012 stating that the copies of relied upon documents were given. If it is so, it is not known as to why the DGCEI has taken more than one year to inform this. However, we have pleaded vide our letter dated 29/9/2012 that we may be permitted to take photo copies at our own expenses with out men, machine and materials. The said letter was also endorsed to you. The said request was not considered. These documents, especially B-7, B-8, B-11 and B-17 are accounted transactions, which are very much required to reply to the show cause notice. Further, the documents at Sl.No:33 and 34 are transporters documents, which are also very much required for us to prepare ourselves for the cross examination of the transporters. The photocopying work will take only one day with our assistance but we do not know as to why such an opportunity was denied. 4.0 The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to respond to the repeated requests and to say that the non-relied documents can be collected from their office after prior appointment. In this letter, it is stated that all necessary data of hard disk is supplied in the form of CD. However, there is no response to their request for providing an imaged version of the CD. It is only after the Bench enquired and directed vide interim order dt. 06.07.2023 that the department has replied stating that they are ready to furnish the imaged version of the CD. We do not understand why the department has taken so much time to respond to the requests made by appellant. They have written both to Deputy Director of DGCEI as well as Commissioner, Salem requesting to return / supply documents. 34. The non-relied documents taken away as per mahazar dt. 15.03.2008 is listed in letter dt. 29.07.2011 which has been reproduced above at para 21 of this order. 35. As per Rule 24A of the Central Excise Rules, 2002, the documents seized and taken into custody by the department has to be returned to the assessee. The Rule reads as under : RULE 24A. Return of records. The books of accounts or other documents, seized by the Central Excise Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir written submissions before theadjudicating authority on 09.10.2012. At the time of hearing in which they again expressed their grievance of inability to properly defend the case due to non-return of documents. In such circumstances, even a remand after such long lapse of time would not serve any purpose. 38. The Ld. Counsel has argued that even after repeated requests the department did not provide the imaged version of the hard disk seized by them and thereafter sent by the department to the Government Examiner of Questioned Documents, Directorate of Forensic Science, Hyderabad (GEQD). It was submitted that as the Company has been liquidated, and Managing Director no more, the appellant is not in a position to reconcile and understand the data even if provided after such long lapse of time. This submission of the appellant is not without substance. Only after the Bench enquired whether the department would be able to provide the imaged version, the department has responded positively. We do not understand why the department did not heed to the request of the appellant, if they had no problem to provide the imaged version. 39. In the written submissions dt. 09.10.2012, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department. The seized from the premises of third parties cannot be used without corroboration, and that the presumption under Section 36A would not be applicable unless these persons from whose custody the documents have been seized are made parties to the proceedings. The relevant paras read as under : 5.2 We find that in the present matter it is on record that during the search at the premises of the Appellants, no invoices/debit notes etc., raised to their customers were found. In the present matter, transactions records were called from the various customers of Appellant. The said alleged debit notes/invoices were provided by the customers to department. Further it is on record that during the search at the premises of M/s. Forward Resources Pvt. Ltd., department seized the records/documents containing Income tax TDS statements of Appellant. It is mandate of law that presumption of documents in certain cases under Section 36A of the Central Excise Act is available only when the documents are produced by or seized from the custody or control of the person concerned. Section 36A the Central Excise Act, 1944 is reproduced below :- Section 36A. - Presumption as to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 43. In the present case, the computer hard disk seized from the appellant s factory is the basis for the investig ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
