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TMI Blog2024 (1) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant. It is found that the said Sanjay Bhalotia through an affidavit dated 24.01.2008 claimed that those papers belonged to him and he had inadvertently left those papers on the table of Nimananda Pradhan on 19.05.2006 when he had visited the Appellant s Office about an hour before the search by DGCEI - the statement dated 18.02.2009 has no evidentiary value as the Appellant has not been informed about the contents of the statement. Without sharing it with the Appellant, it cannot be used against him. Accordingly, the statement dated 18.02.2009 cannot be taken to into cognizance. Demands of Rs.32,36,758/- and Rs 3,37,080/- have been worked out on the basis of the details available in the computer sheets recovered from the office of the Appellant - HELD THAT:- The department has not followed the mandate under section 36B and the author of the entries made in the computer printout has not been identified. Accordingly, it is observed that the computer sheets recovered cannot be relied upon to work out the duty liability on the allegation of clandestine removal. As the demands mentioned at Sl. no (i) and (ii) of para 2 has been confirmed solely based on the data available i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amily based private limited company, the Director is the ultimate beneficiary of the illegal activities. The Director has already been held responsible for the short accountal of sponge iron and penalty has been imposed on him. Thus, Mr. R.S.Pandey, DGM being employee of the company is not liable for penalty and accordingly the penalty imposed on him is set aside. Appeal disposed off. - HON BLE SHRI R. MURALIDHAR , MEMBER ( JUDICIAL ) And HON BLE SHRI K. ANPAZHAKAN, MEMBER ( TECHNICAL ) Shri K. K. Acharya , Advocate , for the Appellant Shri S. S. Chattopadhyay , Authorized Representative for the Respondent ORDER Per : K. ANPAZHAKAN : A Show Cause Notice dated 11.09.2007 was issued to the Appellant demanding duty of Rs.54,11,824/-on the basis of an investigation conducted by DGCEI. The Notice alleged suppression of production, under valuation and clandestine clearance of sponge iron by the Appellant during the period May 2005 to April 2006. The Notice was adjudicated and the demands made in the Notice were confirmed vide Order-in-Original dated 30.03.2009, along with interest and penalty equivalent to the duty on the Appellant. Penalties of Rs 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chennai (2002 (141 ELT 119 (Tri.)] and (ii) Girnar Spinning Ltd. Vs. CCE, Chandigarh [1998 (104) ELT 720 (Tri.)]. (c) The seized computer print-out has several details such as Date, Truck No., Quantity, Rate, Amount, Payment, Type of payment and Remarks. There is no corresponding invoices for several entries in that print-out in the Appellant s records. Based on the details available in the computer print-out, the investigating authorities have concluded that 2122.91 MT of Sponge Iron, were the clandestinely removed, without payment of duty amounting to Rs.32,36,758/- (d) There is not an iota of tangible, clinching or positive evidence like any admission of clandestine removal, purchase and consumption of unaccounted raw materials, discrepancy between recorded stock and physical stock, seizure of any goods en route, consumption of excess electricity, actual clandestine removal of finished goods without payment of duty, mode of removal, evidence of transporters and buyers of the clandestinely removed goods and flow back of funds pertaining to clandestine removals. Hence, the demands made without any corroborative evidence for clandestine clearances, is not sustaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of transporters and buyers of the clandestinely removed goods and flow back of funds pertaining to clandestine removals. They stated that the demands confirmed in the impugned order without any of the above mentioned evidences are not sustainable. 8. The Ld D.R reiterated the findings of the adjudicating authority in the impugned order. He submits that the Appellant has accepted that there are discrepancies between the Private records and the entries available in the RG-1 Register maintained by them. Shri Pandey who is overall incharge of the production has admitted the genuineness of the production data reflected in the additional sheets of the report. Thus, it is very clearly evident that RG-1 has not reflected all the goods manufactured by the Appellant. The production shown in the additional sheets working out to 1753 MT of Sponge Iron Lumps and 689 MT of Sponge Iron Fines, totally 2442 of MT, have not been recorded in the RG-1 and cleared clandestinely. Regarding non availability of corroborative evidence to establish clandestine removal, he cited the decision of the Hon ble High Court of Madras in the case of Lawn Textile Mills Pvt. Ltd Vs CESTAT, Chennai reported in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch by DGCEI. It is observed that the Commissioner has conducted an investigation and obtained a written statement dated 18.02.2009 from the said Sanjay Bhalotia after the personal hearing was over. In the said statement, Shri.Sanjay Bhalotia has disowned the Computerized Sheets and denied having sworn in any such affidavit dated 24.01.2008. But, the copy of the written statement dated 18.02.2009 taken from Mr.Bhalotia was neither supplied to the Appellant, nor was placed on record. Thus, we observe that the statement dated 18.02.2009 has no evidentiary value as the Appellant has not been informed about the contents of the statement. Without sharing it with the Appellant, it cannot be used against him. Accordingly, we hold that the statement dated 18.02.2009 cannot be taken to into cognizance. 12. We observe that the demands of Rs.32,36,758/- and Rs 3,37,080/- have been worked out on the basis of the details available in the computer sheets recovered from the office of the Appellant. In their submissions, the Appellant questioned the evidentiary value of the computerized documents relied upon by the department to allege clandestine clearance, since the mandate provided under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained is derived; (c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and (d) the information contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities. 14. From the above, it can be seen that the procedure prescribed in section 36B must be followed to rely on the computer sheets as evidence. It is observed that the department has not followed the procedure prescribed in Section 36B. The author of the entries made in the computer has not been identified. Shri. Bhalotia who owned the computer sheets has not been questioned, before issue of the Notice. Hence, we hold that the computer sheets recovered cannot be relied upon to arrive at clandestine clearance. 15. We observe that this view has been held by the Tribunal in the case of (i) Shivam Steel Corporation Vs CCE, BBSR-II, 2016(339)ELT 310(Tri- Kolkata) (ii) Super Smelters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en his findings with respect to the discrepancies and the evidentiary value of the documents in the impugned order, which is reproduced below: 7. I find that three types of documents were recovered from the assessee s factory viz. Daily Production and Raw Materials Report, Daily Production Report and Daily Stock Tally Report. While the second report is prepared manually, the other two are computer generated. The Daily Production Raw Material Report is the master report which contains exhaustive data relating to various parameters of production viz. production of sponge iron, consumption and stock of the main raw materials, average of metalisation, feed rate of raw materials, diesel consumption etc. Although these reports are normally prepared in single sheets, it was found that on some days it contained an additional sheet which reflected the production of sponge iron and consumption of raw materials in respect of a particular klin (out of Klin-I, II III) not covered in the main report. In his statement, Sri Ramashish Pandey, DGM (Production) affirmed the correctness of these reports, (both the main reports and the additional sheets) and stated that RG-1 is maintained on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrectness. 11. The analysis of the three aforesaid documents point to a clear modus-operandi followed by the assessee. While these reports are prepared by different persons and for different purposes, the quantities of production reflected therein individually tally with the RG-1 quantities on most of the days as discussed earlier. On some days, there is difference between the said reports and the RG-1, but on those days, production of the excess quantities are reflected identically in each of the three reports. Thus an obvious pattern is discernible in the procedure adopted by the assessee which suggest that on receipt of cue from the management, the actual figures of production are not shown correctly on certain days which are otherwise faithfully recorded in the three sets of private records. This establishes the linkage of the documents and correctness of the figures reported therein. As the Daily Production and Raw Material Report is the basic document for logging of production in the RG-1, the assessee would normally expect that the Department would refer it for cross-checking and hence it s figures always match with RG- 1. But as investigation reveals, on some days o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these reports were prepared by them and the data contained therein are related to production and clearance related to the Appellant's factory. We observe that the additional sheets bear the dated signatures of Sri Pandey, DGM (P) and his deputy U. Mohanta, AGM (P). The authenticity of the figures reflected therein have also been corroborated by two other reports of the Appellant. The Appellant could not give any valid reasons for the shortages in the RG-1 as compared to the other two reports. Accordingly, differential duty has been arrived at on the basis of these reports and confirmed in the impugned order. 19. In their submission, the Appellant submits that the department presumed that there is no rejection on quality ground and all the output is entered on the same day in the RG-1 register. We observe that the excess production on some days have been arrived at based on the production contained in the additional sheets, the validity of which has been established on the basis of the signatures affixed therein. We observe that the production shown in the additional sheets works out to 1753 MT of Sponge Iron Lumps and 689 MT of Sponge Iron Fines, totally 2442 of MT. This qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction for the Department to immediately detect the same. Therefore, in case of clandestine removal, where secrecies involved, there may be cases where direct documentary evidence will not be available. However, based on the seized records, if the Department is able to prima facie establish the case of clandestine removal and the assessee is not able to give any plausible explanation for the same, then the allegation of clandestine removal has to be held to be proved. In other words, the standard and degree of proof, which is required in such cases, may not be the same, as in other cases where there is no allegation of clandestine removal. 21. In this case, the shortages have been arrived at on the basis of the registers maintained by the Appellant themselves. The reasons for the discrepancies have to be explained by the Appellant only, as they are the authors of the entries made in the Registers. However, the Appellant could not give any valid explanation for the shortages. Thus, by relying on the decision cited above, we hold that the discrepancies in the registers itself is sufficient to corroborate the clandestine clearance. Accordingly, we hold that the demand of Rs. 18,37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed on him. 23. In view of the above findings, we pass the following order: (i) We set aside the demand of Rs. 32,36,758/- and Rs 3,37,080 confirmed in the impugned order on the basis of computer print-outs seized from the Appellant s premises. (ii) We uphold the confirmation of the demand of Rs. 18,37,986/- on the basis of difference between RG-1, Daily Production and Consumption of Material Report and Daily Stock Tally Report. The Appellant is liable to pay this duty along with applicable interest. (iii) We impose penalty of Rs. 18,37,986/- under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. (iv) We reduce the penalty imposed on the Director Shri. C.S. Grewal from Rs. 10,00,000/- to Rs. 2,00,000/-, under Rule 26 of the Central Excise Rules, 2002. (v) We set aside the penalty imposed on Sh. R.S. Pandey, DGM. (vi) We set aside the penalty imposed on Shri. Nimananda Pradhan, Manager. (vii) The Central Excise duty along with interest and penalty confirmed in this order may be appropriated from the amount of Rs.40 Lakhs deposited by the Appellant at the time of investigation. (viii) The appeals filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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