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TMI Blog2024 (5) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... e is correct or the same needs to be arrived at only based on the evidences available on record - demand of Central Excise Duty on CGC on the amounts collected in cash over above the value - HELD THAT:- The data in the pen drive seized from M/s SVPNSN Balasivaji Co., was retrieved at some point of time in earlier proceedings. As per SCN, Sl. No. 12 of RUD are printouts of ledgers contained in pendrive and laptop bound into 5 books. As per SCN, Sl. No. 13 is the extract of ledgers recovered from M/s. SvPNSN Balasivaji Co. Sl.No.38 is the print out of ledger taken from laptop of Shri B.Saravanan seized in 2017. The other proint outs are the whatsapp messages, SMS, contact details obtained from several mobile phones. While recording statements during this investigation, the officers have asked the partners/directors of CGC and B. Saravanan to affix their signatures in these bound books - it is not understood how such affixing of signature on bound books would make the data retrieved from electronic item to be admissible in evidence in para 13.4 of impugned order the excerpts from statement of Shri B. Saravanan would show how the department got his signature on these bound books - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of undervaluation. On the basis of the data retrieved from the pendrive /laptop the price of the goods sold by dealers at Gujarat and Maharastra has been adopted to quantify duty on the goods cleared by the appellant. The price of such goods which have seasonal demand (festival seasons) would vary when sold by dealers, at different places. The quantification of duty on the basis of dealer price at Maharastra and Gujarat appears to be too extra ordinary method for quantification of duty and in appropriate too. The demand of duty, interest, penalties cannot sustain. The impugned order is set aside - Appeal allowed. - MS. SULEKHA BEEVI.C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Mr. S. Jaikumar Mr. M. Karthikeyan, Advocates (Sl.No.1-7) Mr. L. Gokulraj, Advocate (Sl.No.8) Mr. N. Mariappan, Advocate (Sl.No.9) For the Appellant Ms. Anandalakshmi Ganeshram, Assistant Commissioner (A.R) For the Respondent ORDER The issues involved in all these appeals being the same and connected they were heard together and are disposed of by this common order. 1. The appellants are engaged in manufacture and clearance of fireworks falling under Chapter Heading 3604 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts recorded from various persons revealed that: CGC cleared goods to various buyers on the discounted value than the MRP printed on the packs; The invoice value of such goods were much lesser than the MRP as well as actual transaction value; The buyer also had the leverage to sell the goods at much higher price than the actual transaction value in as much as the MRP printed was higher than the actual transaction value The actual transaction value was arrived at by the DGGI by adding the value declared in the invoice as reflected in the record / ledger maintained by key commission agent Shri Saravanan and the cash amount receivable / received as maintained in another ledger/record by Shri. Saravanan for the above sales. The periodical returns filed by CGC for Central Excise did not properly reflect the invoice value. The Income Tax Returns filed by CGC also did not properly reflect the cash amount received /receivable as maintained by Saravanan; 6. Shri. B. Saravanan had admitted the above modus operandi in his statements deposed before the officers, but later on retracted these statements. The investigation indicated that Shri. K. Jeyasankar, masterminded the entire practice of is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission agents which would be shared to the dealer from where commission agents have to collect the amounts in cash. This was to identify each other to verify the genuineness and correctness of the person. After collecting the amount in cash, commission agent as well as fireworks dealers used to confirm Shri K. Jeyasankar either over normal voice call or WhatsApp voice call through mobile. The commission agents handed over such amounts to Shri K. Jeyasankar or to the person communicated by Shri K. Jeyasankar. One of the persons as per the instruction of Shri K. Jeyasankar to whom the amount was handed over in cash was M/s Vijay Jewellery, Sivakasi. Normally all conversations would be carried out over normal voice calls or WhatsApp voice calls only to avoid any digital or physical evidence. Some times the conversations would be in SMS, WhatsApp messages. 7.3 On comparison of ER1 returns the value of the bills/invoices recovered from their billing software showed that the appellants have short declared the assessable value in their monthly returns. So also in their VAT returns and Profit and Loss statements. 7.4 Based on the above, show cause notices were issued to the appellants p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod from August zoi6 to June 2017 under Section 11AC of the Central Excise Act 1944. with option to pay penalty equal to 25% of the penalty imposed if the entire amount of excise duty along with interest and reduced penalty is paid within 30 days from the date of receipt of this order; v) I order to appropriate the voluntarily discharged amount of Rs. 1,42,26,800/- (Rupees One Crore Forty two Lakhs Twenty six thousands and eight hundreds only) already paid by M/s Coronation Fireworks Factory vide CIN No.20210220183621313056 dated 20.02.2021 against the confirmed demand at para No. 33.1 (i); and vi) Since I have already imposed penalty under Section 11AC of Central Excise Act. 944. I consider that it is not required to impose penalty under Rule 26 27 of the Central Excise Rules, 2002 again for the same offence on the company, therefore I drop the penalty proposed under Rule 26 27 of the Central Excise Rules, 2002 33.2 M/s Sri Coronation Fireworks Private Limited [SCN N05/2021 C. Ex) i) I confirm the demand of differential Central Excise duty of Rs.1,95,30,192/- (Rupees One Crores Ninety-Five Lakhs Thirty Thousands One Hundred and Ninety Two Only) being central excise duty not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002 33.3 M/s Naya Carnation Fireworks [SCN No. o6/2021-C.Ex] i) I confirm the demand of differential Central Excise duty of Rs.25,90,015/- (Rupees Twenty F ve Lakhs Ninety Thousand and Fifteen Only) being central excise duty not paid M/s Naya Carnation Fireworks, collected / received in cash from the dealers/customers towards differential value between the actual transaction/taxable value of the manufactured goods cleared/supplied lesser/suppressed transaction/ taxable values reported in the invoices and value or the manufactured final products supplied /cleared/sold without issuance of invoices under Section ilAt4? the Central Excise Act 1944; ii) I confirm the demand of Rs.5,42,707/- (Rupees Five Lakhs Forty two Thousand and Seven Hundred and Seven Only), being central excise duty not paid by M/s Naya Carnation Fireworks on suppressed / short declared in the ER1 Returns filed by them when compared with total value of the invoices issued by them during the period from August 2016 to June 2017 as detailed in Para No.29.15 should not be treated as suppressed/short declared assessable values during the period under Section 11A(4) of the Central Excise Act 1944; iii) I confirm deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11AA of the Central Excise Act 1944; (iv) I impose a penalty Rs.43,62,229/- (Rupees Forty Three Lakhs Sixty Two Thousands Two Hundred and Twenty Nine Only), being central excise duty not paid by M/s Bee Cee Fireworks Industries, collected / received in cash from the dealers/customers towards differential value between the actual transaction / taxable value of the manufactured goods cleared / supplied lesser / suppressed transaction / taxable values reported in the invoices and value of the manufactured final products supplied /cleared/sold without issuance of invoices under Section 11AC of the Central Excise Act 1944, with an option to pay penalty equal to 25% of the penalty imposed if the entire amount of excise duty along with interest and reduced penalty is paid within 30 days from the date of receipt of this order; (v) I order to appropriate the voluntarily discharged amount of Rs 43,62,229/- (Rupees Forty-Three Lakhs Sixty-Two Thousand Two Hundred and Twenty Nine only) already paid by M/s Bee Cee Fireworks Industries, Sivakasi vide CIN No. 20201027112605304435 dated 27.10.2020 against the confirmed demand at para no. 33.4 (i); and (vi) Since I have already imposed pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or omission (as discussed in above paras), separately in terms of Rule 27 of the Central Excise Rules, 2002 34.5 (i) I impose penalty for Shri B. Saravanan, Proprietor, M/s SVPNSN Balasivaji Co 140 /1, Dr. Ambedkar Road, Virudhunagar 626001 Rs.10,00,000/- (Rupees Ten Lakhs only) for the acts of commission and/or omission (as discussed in above paras), separately in terms of Rule 26 of the Central Excise Rules, 2002; (ii) I drop penalty for Shri B. Saravanan, Proprietor, M/s SVPNSN Balasivaji C 140/1, Dr. Ambedkar Road, Virudhunagar 626001 for the acts of commission and/or omission (as discussed in above paras), separately in terms of Rule 27 of the Central Excise Rules, 2002. 34.6 I drop penalty for Shri Hitesb Jain, 10C, Gopala Kothan Street, Madurai 625001 Shri P. Vimal Kumar Jain, No. 138, North Avani Moola Street, Madurai- 625001 for there is no involvement of planning and executing in the current proceedings during the impugned period 35. The Show Cause Notice No 4,5,.6, 7 /2021 C-Ex dated 03.09.2021 issued to M/s The Coronation Fireworks Factory, M/s Sri Coronation Fireworks Private Limited, M/s Naya Carnation Fireworks, and M/s Bee Cee Fireworks Industries of Sivakasi by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C are engaged in the manufacture of fireworks falling under chapter heading 3604 of the Central Excise Tariff and the said goods attracted Central Excise duty at the rate of 12.5% during the relevant period. The relevant shareholding pattern of all the 4 companies are tabulated hereunder for ready reference. Serial No. Name of the Unit Constitution Name of Partners/Directors S/Shri % of shares 1. The Coronation Fireworks Factory Partnership P Kanagavel (expired in 2021) 97 K Jeyasankar 1 K Balaji 1 K Jeyakumar 1 2. Sri Cornation Fireworks Pvt Ltd Private Limited P Kanagavel 40.7 P Kanagavel (HUF) 14.3 K Jeyasankar 15 K Balaji 15 K Jeyakumar 15 3. Naya Carnation Fireworks Partnership K Jeyasankar 2 K Balaji 49 K Balaji (HUF) 49 4 Bee Cee Fireworks Industries Partnership K Jeyakumar 49 K Jeyakumar (HUF) 50 K Balaji 1 8.4 For ease of argument, the issues as framed by the Adjudicating authority (AA) in the impugned Order-in-Original (OIO) are referred to as below; Whether the evidences, including electronic evidences, recovered by the investigating officers during earlier proceedings for another company can be considered and relied as evidence in a subsequent investigation and proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant that third-party evidences cannot be relied upon to hold liability against the appellants. 8.6 In respect of the view taken by AA as to compliance of Section 36B and evidentiary value of the electronic evidences, the AA has in para 29.10 of the impugned Order-in-Original given a complete go-by to the statutory requirements provided under section 36B of CEA which stipulates various conditions for admissibility of electronic evidence admissible in proceedings. 8.7 AA, in para 29.10 of the impugned OIO has observed that, as the said electronic evidences namely the laptop/pendrive were recovered in the earlier proceeding against M/s. SFW and the said proceeding against M/s. SFW had culminated by way of a settlement under the SVLDRS scheme, the same has to be considered as compliance to section 36B of CEA. The Ld. Counsel submitted that the above conclusion of the AA is not only patently illegal but also against the spirit of SVLDRS scheme as spelt out by the CBIC in their circular no 1071/4/2019-CX dated 27.08.2019 and also the related FAQ (Q 42) released by the department. The AA has not only ignored the legal provisions but has also disregarded all judicial pronouncements in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions 36B of Central Excise Act and 65B of the Indian Evidence Act 1872 has been totally disregarded. 8.11 The appellants are left with awe and despair to comprehend as to how the ratio in the above judgement would be of any assistance to the department to hold that the electronic evidences are credible evidences in compliance with section 36B of CEA. Notwithstanding the above, it is very relevant and pertinent to mention that even the retrieved and relied upon documents are under cloud. The following communications for seeking the retrieved documents and its corresponding authenticity during the course of investigation are noteworthy in this regard: a) Letter dated 03.01.2022 was issued by the authorised representative of the appellants wherein at para 3.3 (ii) a request was made for the proceedings documented while retrieving data of ledger from the laptop of Shri. B. Saravanan which is relied upon as RUD No. 38 of SCN. In response to the said letter the deputy director DGGI, Madurai vide reply dated 02.02.2022 at para 7 stated that the print outs referred as RUD 38 in the Show cause notice was retrieved by Government forensic laboratory. b) Further another Letter dated 09.02.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the proceeding, the AA has deemed to have accepted the depositions of Shri B Saravanan made during the cross examination conducted before himself and hence cannot discard or dismiss the same during adjudication. 8.15 Further the AA has also dismissed the various depositions made during cross examination by the witnesses giving flimsy reason that they have retracted after a lengthy passage of time. The denial of allegations by the witness during cross-examination cannot be considered as a retraction statement. In this context the AA has not only ignored the well settled legal position that such cross examination would be the first legitimate opportunity for the witnesses to come out in open and give fair deposition, but has not also taken cognisance of the very pertinent and relevant facts namely; A) The entire proceedings were during the thick of pandemic, B) No copies of the statement were given till the Show Cause Notice was issued, C) There was an impending threat of arrest induced by the investigation supported by the arrest of Sri K Jeyshankar in the proceedings and, D) The untimely and unexpected demise of Sri Kanagavel the founder of CGC. Ignoring all the above, the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s activities of CGC starting from manufacturing, finances, sales and all other policy decisions of CGC till he was alive. 8.18 The appellants hold central excise registration separately. However, the demand is raised against two registration numbers only. All the four group companies have been issued SCNs. Again, the first para of the operative portion of the order, the AA has stated that the demand is confirmed for goods supplied without issuing invoices also. However, in last part of para 29.13 it is observed that there are no clearances made by appellants without issuing invoices. 8.19 The appellants have not indulged in any undervaluation of goods. They have discharged excise duty and filed ER-1 returns. The entire case is made up by the department after the case against M/s. SFW Ltd ended up in opting for SVLDRS. It is prayed that the appeals may be allowed. 9. The Ld. AR Ms. Anandalakshmi Ganeshshram appeared and argued for the department. It is submitted that the data from the seized electronic gadgets were retrieved under mahazar proceedings following due procedures as per Section 36B of CE Act, 44 and relevant provisions of CGST Act, 2017 read with Indian Evidence Act, 187 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities. (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether (a) by a combination of computers operating over that period; or (b) by different computers operating in succession over that period; or (c) by different combinations of computers operating in succession over that period; or (d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly. (4) In any proceedings under this Act and the rules made thereunder where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement can be relied upon to convict the accused in spite of subsequent retraction, The Hon ble Court answered in affirmative and accordingly the retracted statements were relied upon. It was held that the retractions were made after almost a year and were only an afterthought and were not raised at the first available opportunity. This judgement is applicable to the present case. 9.6 In this connection reliance is also placed on the judgement of the Hon ble Supreme Court in the case of Telestar Travels Pvt. Ltd., Vs. Special Directory of Enforcement [2013 (289) ELT 3 (SC)] in which it was held that if the statements are based on consideration of relevant facts and circumstances and found to be voluntary, they can be relied on irrespective of retraction and when subsequent retraction was mere afterthought to escape consequences of the violations committed. These judgement are squarely applicable to the present case. 9.7 It is submitted that it is clear that CGC, their directors/partners, employees and Sales Representatives colluded among themselves and also with their dealers and commission agents engaged by them and ensured that excisable firecrackers manufactured by their firms na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned order, and are reiterated as under: a. Whether the evidences, including electronic evidences, recovered by the investigating officers during earlier proceedings for another company can be considered and relied as evidence in a subsequent investigation and proceedings initiated against the noticees namely CGC and others. b. whether the evidences more particularly the electronic evidences have complied with the provision of Section 36B of the Central Excise Act, 1944 (hereinafter referred to as CEA ) to be considered as an evidence for the purpose of demand of Central Excise Duty under the CEA? c. Whether the quantification of demand as arrived in the Show Cause Notice vide para 7.1 to 7.17 adopting percentage of cash to invoice value is correct or the same needs to be arrived at only based on the evidences available on record? d. Whether demand of Central Excise Duty on CGC on the amounts collected in cash over above the value is correct or not; e. Whether interest to be demanded; and f. Whether suppression clause is to be invoked and consequently penalty is imposable on the assessee and Co-Noticees. 12. The first issue (a) being dependent on other issues, unless we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a party. Secondly, because the procedure contemplated under Section 36B has not been complied. 12.3 In para 29.9 and 29.10 the adjudicating authority has discussed these contentions of the appellant. Undisputedly, the pen drive and lap top were not recovered during the investigations initiated against the appellant. So also, it is admitted by department that the proceedings against M/s Standard Fireworks was closed after the issuance of Show Cause Notice (dt. 27.10.2018), as the main noticee M/s Standard Firework and co-noticee, Shri B. Saravanan and others had settled the matter under the SVLDR Scheme. The argument put forward by appellant that the evidence in the nature of pen drive and laptop collected in an earlier investigation cannot be used in the current proceeding has been brushed aside by the adjudicating authority by observing in the impugned order, that though the appellant contend that the evidence cannot be used in a subsequent proceeding, there is no legal bar and that appellants have not substantiated their contention with relevant legal provision or judgements. The discussion of the adjudicating authority in this regard is as under: Now coming to the question bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d seizure. Sub-section (2) of Section 12F provides that the provisions of the code of Criminal Procedure Code 1973 relating to search and seizure shall, so far as may be, apply to search and seizure under this Section. 12.6 On perusal of mahazar dt. 26.10.2017 of the earlier proceedings, the pen drive was seized and kept in a brown colour cover duly signed by Shri B Thirumani Selvan, Shri B. Saravanan and by the officers. The lap top seized was kept in a carton box duly sealed with paper seal containing the signature of Shri B Thirumani Selvan, Shri B Saravanan and the officers of the department. Some loose sheets as made up file 1 to made up file 6 and mobile phones of Shri B Saravanan and Shri Thrumani Selvan were also seized. 12.7 After such seizure and recording of statements in regard to investigation against M/s Standard Fire Works Ltd., a show cause notice was issued to M/s. SFW and others which was concluded or closed after the noticees there in opted for SVLDR Scheme. In such circumstances, we are left to guess that after the closure of that case, the department has opened these sealed evidences (one pen drive and lap top) again to view and retrieve the data. The evidence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed witnesses were called upon by the Senior Intelligence Officer and other officers attached to the Directorate General of Goods Service Tax Intelligence, Madurai Regional Unit to witness the opening and retrieval of data proceedings including the whatsapp chats from electronic gadgets which were seized earlier under mahazar proceedings dated 26.10.2017 from the office premises of M/s. Sv.P.N.S.N. Balasivaji Co., 140/1, Dr. Ambedkar Street, Virudhunagar 626001 by the officers of DGGSTI, Chennai Zonal Unit, to which we have also agreed upon. The said officers further informed that on the reasonable belief that the aforesaid seized electronic gadgets (i.e. two numbers of Mobile Phones) Thereafter, the officers packed the aforesaid seized Mobile Phones carefully and sealed the same with adhesive tapes paper sealed the cover. We, the witnesses, Shri. B. Saravanan and Shri R. Surreandar and the Senior Intelligence Officer have affixed our dated signature on the said paper seal. The officers informed that the all the aforesaid seized Mobile phones were again taken over into the custody of the officers. The Pen drive (Sandisk 64GB) used to store the above retrieved data was put into a sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l these casts heavy shadow on the evidentiary value of the pen drive and lap top seized in 2017 and used as evidence in this proceedings. 12.12 The appellant vide letter dated 03.01.2022 and 05.-01.2022 issued a preliminary reply to the show cause notice. In these letters the appellant requested permission to cross examine the mahazar witnesses who participated in imaging (retrieval of data) as well as cross examination of technical experts (R. Surendar, R.Karthick- Forensic experts). However, the request of appellant was denied as per letter of adjudicating authority dated 21.02.2022. This letter of adjudicating authority reads as under: - 2. In this regard it is seen that totally 8 Mahazars were drawn and 16 witnesses were there. The witnesses have not given any statement against the notices/co-noticees. Therefore you are requested to give the reason for your request for cross examination of all witnesses to the Mahazars . 12.13 Again to the request of the appellant to supply the data retrieved from electronic items, the department has issued reply dated 02.02.2022 which reads as under: The printouts of contact details and images (Sl.Nos.54 55 in Annexure A to the referred Show C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act. In para 29.3 of impugned order the adjudicating authority states as under: The data from the seized electronic gadgets were retrieved under mahazar proceedings following due procedures as per Section 36B of Central Excise Act, 1944 and relevant provisions of Central Goods Services Act, 2017 read with Indian Evidence Act, 1872 Information Technology Act, 2000 and were stored in the external hard discs for further investigation and seized electronic gadgets were sealed once again after retrieving the data from them in the presence of the owners of the electronic gadgets and independent witnesses . 12.16 The procedure to be followed by the investigating officer while collecting evidence in the nature of electronic gadgets is provided in Section 36B of the Central Excise Act 1944 has been already noticed in para 8.1. As per Section 36B a certificate has to be made to the effect that such computer / laptop / pen-drive during the material period was operating properly, was ordinarily being used in the course of business, being supplied with information etc. No such certificate is before us. Without complying Section 36B it is not possible to hold that the data retriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and laptop seized in 2017. At the cost of repetition, we say that we are in the dark as to how and when the data in these electronic items were retrieved, after the closing of the case against M/s Standard Fireworks Ltd. The Hon ble Apex Court in the case of Anvar P.V. Vs P.K. Basheer 2017 (352) ELT 416 (S.C) considered the admissibility of electronic evidence and held that unless accompanied by certificate the print outs from computer and electronic items are not admissible in evidence. The relevant para of the judgement reads as under: - 14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied : (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and (e) The certificate must be signed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the certificate in terms of Section 65B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible. 12.19 Section 36B of Central Excise Act, 1944 is similarly worded as Section 65B of Indian Evidence Act 1872. The Hon ble High Court of Delhi in the case of CCE Vs Jindal Nickel Alloys Ltd., 2020 (371) ELT 661 (Delhi) considered the admissibly of electronic evidence where the allegation was suppression of production of finished products and clearance of goods. The Hon ble High Court held that the provisions of Section 36B are mandatory. The Court held as under: - There is nothing to indicate compliance with the strict stipulations contained in sub-sections (1) and (2) of Section 36B of the Act in the present case. We, therefore, find no reason to interfere with the findings of the CESTAT regarding non-compliance of Section 36B of the Act either . 12.20 The pen drive and laptop are not seized from the appellant. Therefore Section 36A does not apply. These were seized in 2017 from M/s SvPNSN Balasivaji who was a co-noticee in the earlier proceedings. These are therefore nothing but third-party documents as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating authority that as Shri B Saravanan filed application under SVLDRS, it is an admission of the entire thing. That therefore, the integrity of the electronic evidence (pen drive and lap top) cannot be disputed and would suffice compliance of Section 36B of Central Excise Act, 1944. We are unable to fathom any logical or legal sense to this reasoning and as to how the application filed under SVLDRS would suffice compliance of Section 36B of C.E. Act, 1944. The findings of the adjudicating authority in para 29.10 of impugned order reads as under: Now I proceed to decide on the evidentiary value of the evidences more particularly the electronic evidences in compliance with Section 36B of the CEA. As narrated above, the reliance of electronic evidences recovered from M/s SvPNSN Balasivaji Co by way of a pen drive and a laptop vide Mahazar dated 26.10.2017, has been used as an evidence under the earlier proceeding and the said proceeding has culminated by way of, all the notices settling their case under SVLDRS scheme. It is also pertinent to mention that Shri B. Saravanan who is the proprietor of M/s. SvPNSN Balasivaji Co from whose premises the said evidences including electro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under duress and co-ercion. Along with his reply to show cause notice in the present case, Shri. B. Saravanan furnished the copy of cross-examination. The deposition of Shri B. Saravanan and Shri B. Thirumaniselvan (Accountant) recorded in earlier proceedings on 25.9.2019 are noteworthy and reproduced as under: 13.4 From the above, it can be seen that in earlier proceedings these witnesses (noticees) have completely denied the allegations. In the present investigation the statement of Shri B. Saravanan and Shri. Thirumaniselvan were recorded again on 09.12.2020 and 23.12.2020. The department was fully aware that they had denied the allegations as well as pendrive and laptop during cross-examination in earlier investigation. The statement so recorded in present proceeding is in a question-answer form, and recording the statement they have deposed supporting the case of the department. Question No.7 and its answer is relevant and reads as under: Q.7 Please go through the printouts of the ledgers (bound into 5 books) in the names of M/s. Sri Saravanan Traders, Virudhunagar at Bombay and M/s Ganesh Traders, Virudhunagar at Virudhunagar, which were seized from your Virudhunagar office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination proceedings as to its truth and veracity. A.2 I have seen the record of the cross-examination dated 25.09.2019 as referred above and have appended my signature of having seen the same. I concur totally with the depositions made during the above said cross-examination and confirmed the same as true and correct. 13.7 The evidence tendered by the key witness from whom the pen drive and lap top were recovered shows that he has denied the allegations. The original authority has disregarded his retraction of statement as an afterthought. We fail to understand how it can be an afterthought as department was already aware that they have denied the allegations during cross-examination in earlier proceedings. The adjudicating authority observes that Shri B Saravanan has been consistently inconsistent but however, proceeds to make his application under SVLDRS as a reliable, stable act. Though adjudicating authority considers the deposition of Shri B Saravanan to be unreliable, has based his entire findings, merely on the act of Shri B Saravanan in preferring an application under SVLDRS. 13.8 A mere retraction may not make a statement irrelevant or inadmissible. In the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the said count. Hence, I am of the view that there is no clearance without issuance of invoices in the current proceeding. To amplify further, the entire Show Cause Notice is only for redetermination of the excisable goods manufactured and cleared by the notice for the period 01.08.2016 to 30.06.2017 and not for any removal of excisable goods without issuance of invoice. Accordingly, I hold that, though there is passing reference of clearance of finished products without issuance of invoices, the same is inconsequential and irrelevant to the current proceedings. (emphasis supplied) 13.11 In page 80 of the SCN at point (xi), it is stated that CGC supplied goods to dealers without issuance of invoices. The undervaluation alleged in SCN to demand duty is on the basis of both suppressing the actual value in the invoices and also supply of goods without invoices and thereafter colleting the consideration in cash. In para 5.12 of SCN at page 83/108 while explaining the modus operandi, it is stated that the cash so collected was handed over to M/s Vijaya Jewellery others. But none of them have been made co-noticees or any investigation made in this regard. The relevant part of SCN re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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