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TMI Blog2024 (10) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 65B of the Evidence Act is fulfilled. The aforesaid judgment of Supreme Court in Anvar P. V. was followed by the Supreme Court in ARJUN PANDITRAO KHOTKAR VERSUS KAILASH KUSHANRAO GORANTYAL AND ORS. [ 2020 (7) TMI 740 - SUPREME COURT] , though with a slight modification. The Supreme Court held that if the original device is not produced, then electronic record can be produced in accordance with section 65B (1) of the Evidence Act together with the requisite certificate under section 65B (4). It is not in dispute that the hard disk from which the printouts were subsequently taken was not found installed in the CPU. The Panchnama drawn on 04.07.2013 records that the officers found that Vaibhav Goel had removed a hard disc from his kitchen and had tried to throw it away. The panchnama does not mention that any officer had seen Vaibhav Goel actually remove the hard disc from the CPU. It only records that Vaibhav Goel had removed a hard disc from the kitchen and had tried to throw it away. At a different place, the panchnama records that the officers conducted a thorough search of the entire residential premises and found one hard disc hidden in a corner lying near the dog house. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act had been satisfied. The impugned order dated 30.06.2021 passed by the adjudicating authority, therefore, cannot be sustained - appeal allowed. - HON BLE MR. JUSTICE DILIP GUPTA, PRESIDENT AND HON BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) For the Appellant : Ms. Nisha Bineesh, Shri Anurag Mishra, Advocates and Ms. Sanya Bhatia, C.A. For the Respondent : Shri Rakesh Agarwal and Shri Ratnesh Kumar Mishra, Authorised Representatives ORDER JUSTICE DILIP GUPTA: The order dated 30.06.2021 passed by the Additional Director General (Adjudication), adjudicating two show cause notices dated 10.02.2015 and 26.12.2015 has been assailed in this appeal. This order seeks to confirm the demand of central excise duty on M/s. Trikoot Iron and Steel Casting Ltd. Trikoot Iron Steel under section 11A(10) of the Central Excise Act 1944 the Central Excise Act . Payment of interest under section 11AA of the Central Excise Act and penalty under section 11AC of the Central Excise Act have also been ordered. The order also confirms the demand of central excise duty on the castings articles found short in the factory premises of Trikoot Iron Steel. The order also directs for confiscation of MT En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments. It was found during the course of search that there was a secret office in the kitchen on the ground floor where a computer was installed and three computer monitors were connected in separate rooms on the second floor with cables in which employees of the businessman used to enter the data of both accounted and unaccounted sales made by the factory on a daily basis. The entire system was well secured and password protected but the officers were able to lay their hands on to the incriminating data stored in the hard disc as explained in detail in the panchnama dated 04.07.2013 (RUD-1). xxxxxxxxxxxx 9. It appears that M/s. TISCL is engaged in clandestine manufacture and clearance of finished goods and the excess stock as detailed below have not been entered in the stock register with the intention to clear them without payment of duty and hence, the same were seized on 04.07.2013 at the factory premises of M/s. TISCL:- S. No. Commodity Quantity found excess (MT) Value (Rs.) Duty involved (Rs. @ 12.36% 1. End cuttings (+)7.710 2,15,880/- 26682.77 2. Miss-rolls (TMT) (+)577.615 1,61,73,220/- 1999009.99 3. MS Ingots (+)438.805 1,31,64,150/- 1627088.94 Excess 2,95,53,250/- 3652 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the residence) with site key and license key. On being asked how these keys can be taken Shri Goel stated that for this he has to talk to expert for this. On direction of Shri Vaibhav Goel, Shri Mohit spoken to one Shri Dua on mobile no. 989700675. Shri Dua informed after some time that site key is 'EIGIDADEJTBO' and license key is 'HJHTVOGSVQ'. Shri Mohit configured the printer and started taking printouts of sale, purchase and cash data which contain both accounted and unaccounted transactions of M/s Trikoot Iron and Steel Castings Ltd. Some printout from one of the pen-drive Toshiba 4GB recovered were also taken after connecting the same with the CPU. These printouts were signed by Shri Mohit and Shri Vaibhav, since the printouts are large in number, these were affixed with stamp of the company by Shri Mohit. The whole process of taking of print out of the data contained in the said CPU and the one pen-drive took a lot of time and printed started mal-functioning, the other hard discs and pen drive could not be scrutinized. Therefore, the officers discontinued the process of taking printouts on the spot and seized the said three Hard disks and seven pen drive pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s. Trikoot Iron Steel Casting Ltd., Muzaffarnagar at Roorkee Road, Near D M Residence, Muzaffarnagar on 04.07.2013, they had interalia resumed three hard drives and seven pendrives from the said premises after taking some printout under Panchnama dated 04.07.2013 as per following details: xxxxxxxxxxx We, the panchas and Shri Mohit Vaish inspected the paper seal and found that the paper seals affixed on the same were intact. Shri Mohit Vaish also identified all the above mentioned CPU/printer/hard drives/pen drives and satisfied himself that these were the same items which were taken in possession by the officers on 04.07.2013. 3. Then Shri Rathore in the presence of Shri Mohit Vaish and we the witnesses attached harddrive No. WD5000AZRX (mentioned at S. No. 1 above) with the CPU and printer (both also resumed from the residence on 04.07.2013 and identified by Shri Mohit Vaish). After that the hard drives and pen drives were attached with the above mentioned CPU one by one. By using the CPU and printer resumed from the residence of Shri Vaibhav Goel, Director, the office took printouts of the data stored in the harddrive No. WD5000AZRX and Toshiba 4 GB pendrive white colour (men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) B(ii) to this show cause notice. A summary of demand is given as below:- Year (Amount in Rs.) Total assessable value of clearance Accounted sale as per ER-1 (RUD-54)/Invoices (RUD-60) Differential assessable value Duty payable Total January 2012 to March 2012 101,61,65,546 21,51,57,807 80,10,07,739 8,57,64,733 June 2012 to March 2013 272,75,67,914 63,04,53,523 209,71,14,391 25,92,03,339 April 2013 to June 2013 143,00,79,413 24,30,32,518 118,70,46,895 14,67,18,996 1st to 3rd July 2013 4,53,84,447 30,77,206 4,23,07,241 52,29,175 TOTAL 521,91,97,320 109,17,21,054 412,74,76,266 49,69,16,243 Therefore, it appears that M/s. Trikoot Iron and Steel Casting Ltd., Meerut Road Industrial Area, Near ITI, Muzaffarnagar (U.P.) evaded Central Excise duty amounting to Rs. 49,69,16,243/- on the goods cleared clandestinely by them during the aforesaid period. (emphasis supplied) 10. The main submissions made by the appellant in response to the show cause notice are: (i) The Panchnama proceedings were conducted under threat, coercion and use of physical force. The same are in violation of the principles laid down for conduct of such proceedings and are not truthful. There are also apparent incons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Mohit Vaish, accountant of M/s TISCL and the witnesses. I find that the panchnama dated 4.7.2013 drawn at the residence of Sh. Vaibhav Goel, sufficiently satisfies the procedure prescribed in law, as held by Kuber Tobacco Products Ltd. Versus Commissioner of C. Ex. Delhi 2013 (290) E.L.T. 545 (Tri. - Del.). Thus I find that the panchnama lists the electronic gadgets and documents recovered and has recorded the search proceedings in detail and therefore the said panchnama can be relied upon in this case. Thus, the contentions of the Noticee do not have feet and are accordingly rejected. xxxxxxxxxx 40.7 The Noticee has contended that since the contents or relevance of particular document was not mentioned in the panchnama, the credibility of the evidentiary value of these papers is doubtful, is again not tenable as discussing a resumed or seized document in the body of panchnama is not a legal requirement. xxxxxxxxxx 40.8 The Noticee has contended that the panchnama records the serial numbers of the Seagate and the Simmtronics hard drives, whereas in the case of hard drive WD5000AZRX, only the model number is recorded not its serial number. This contention is not relevant as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 36B of the Central Excise Act. 41.1 In this regard I find that a number of conditions stipulated under Section 36B(2) need to be satisfied for data to be admissible as evidence. xxxxxxxxxxxx Let me examine if the above stipulated condition are satisfied in the instant case. The first condition is that computer printout are produced by the computer which was used regularly to store information of an acitivity regularly carried out over that period by the person having lawful control over the use of the computer. In the instant case the computer was found installed in the residential premises of the Directors of M/S TISCL. During the search proceedings conducted in the residential premises on 4.7.2013 the officer also found one hard disk hidden in a corner lying near the dog house. The officers also found two hard disks from the cupboard of the kitchen of the said premises. The officers connected the hard disk found in the corner near dog house with the CPU installed in the kitchen. On scrutiny of the data, it was found that there was a program in MSDOS and it was informed by Shri Mohit Vaish, Accountant present at the residence of the Directors of M/s TISCL, that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Learned counsel for the appellant submitted that it may not be necessary in the present case to controvert the factual findings regarding the alleged clandestine removal of goods, as the impugned order deserves to be set aside for the sole reason that the provisions of section 36B of the Central Excise Act have not been complied with. In this connection learned counsel submitted that: (i) The quantification of duty payable by the appellant has been calculated on the basis of the total value of clearance determined from the computer printouts taken from the hard disk and pen drive recovered on 04.07.2013, after deducting value of clearances of the goods as declared in ER-1 returns. It was, therefore, obligatory on the part of the department to establish the admissibility of the documents; (ii) The Panchnama does not mention the vital details of the recovery of hard disc and pen drives; (iii) The conditions stipulated in section 36B of the Central Excise Act have not been observed in recovering the electronic records/documents. The printouts, therefore, could not have been taken into consideration; (iv) The requirement of issuance of a certificate under section 36B of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer, (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained 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 reproduces 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 (c) in any other ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ults of these processes; and (b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process. 16. Section 3 of the Evidence Act defines document as follows: Document. -- Document means any matter expressed or described upon any substance by means of letter, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter. 17. Evidence in section 3 of the Evidence Act is defined as follows: Evidence. -- Evidence means and includes (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; Such statements are called oral evidence; (2) all documents including electronic records produced for the inspection of the Court; such documents are called documentary evidence. 18. Section 36B of the Central Excise Act deals with cases where any document is required to be produced as an evidence in proceedings under the Central Excise Act and the Rules framed thereunder. Such certificate should be signed by a person occupying a responsible posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. 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 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible. xxxxxxxxxxxxx 24. The situation would have been different had the appellant adduced primary evidence, by making available in evidence, the CDs used for announcement and songs. Had those CDs used for objectionable songs or announcements been duly got seized through the police or Election Commission and had the same been used as primary evidence, the High Court could have played the same in court to see whether the allegations were true. That is not the situation in this case. The speeches, songs and announcements were recorded using other instruments and by feeding them into a computer, CDs were made therefrom which were produced in court, without due certification. Those CDs cannot be admitted in evidence since the mandatory requirements of Section 65B of the Evidence Act are not satisfied. It is clarified that notwithstanding what we have stated herein in the preceding paragraphs on the secondary evidence on electronic record with reference to Sections 59, 65A and 65B of the Evidence Act, if an electronic record as such is used as primary evidence und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision. The marginal note to Section 65B then refers to admissibility of electronic records . 21. Section 65B(1) opens with a non-obstante clause, and makes it clear that any information that is contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document, and shall be admissible in any proceedings without further proof of production of the original, as evidence of the contents of the original or of any facts stated therein of which direct evidence would be admissible. The deeming fiction is for the reason that document as defined by Section 3 of the Evidence Act does not include electronic records. 22. Section 65B(2) then refers to the conditions that must be satisfied in respect of a computer output, and states that the test for being included in conditions 65B(2(a)) to 65(2(d)) is that the computer be regularly used to store or process information for purposes of activities regularly carried on in the period in question. The conditions mentioned in subsections 2(a) to 2(d) must be satisfied cumulatively. 23. Under Sub-section (4), a certificate is to be produced that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument. All this necessarily shows that Section 65B differentiates between the original information contained in the computer itself and copies made therefrom the former being primary evidence, and the latter being secondary evidence. 32. Quite obviously, the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where the computer , as defined, happens to be a part of a computer system or computer network (as defined in the Information Technology Act, 2000) and it becomes impossible to physically bring such network or system to the Court, then the only means of proving information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). This being the case, it is necessary to clarify what is contained in the last sentence in paragraph 24 of Anvar P.V. (supra) which reads as if an electronic record a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med in exercise of the Information Technology Act, by exercising powers such as in Section 67C, and also framing suitable rules for the retention of data involved in trial of offences, their segregation, rules of chain of custody, stamping and record maintenance, for the entire duration of trials and appeals, and also in regard to preservation of the meta data to avoid corruption. Likewise, appropriate rules for preservation, retrieval and production of electronic record, should be framed as indicated earlier, after considering the report of the Committee constituted by the Chief Justice s Conference in April, 2016. (emphasis supplied) 22. It transpires from the aforesaid two judgments of the Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar that: (i) Any documentary evidence by way of an electronic record under the Evidence Act can be proved only in accordance with the procedure prescribed under section 65B of the Evidence Act. The purpose of this provision is to sanctify secondary evidence in electronic form generated by a computer; (ii) Any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 36B of the Central Excise Act, 1944. (emphasis supplied) 24. In Popular Paints and Chemicals vs. Commissioner of Central Excise and Customs, Raipur , the Tribunal observed: 15.2. Thus, it has been clearly laid down by the Supreme Court that the computer printout can be admitted in 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 said of computer printouts as prescribed under section 65B(4) of Evidence Act. It has been clearly laid down in para 15 of this judgment that all the safeguards as prescribed in Section 65B (2) (4), to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tempering, alteration, transposition, excision etc without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. We may add here that the provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act are pari materia. 15.3 It is evident from the appeal that the investigation officers while seizing h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Appellants was obtained by the department, the credibility of the computer printout gets vitiated. (emphasis supplied) 26. The aforesaid decisions of the Tribunal, which are in the context of the provisions of section 36B of the Central Excise Act, hold that a printout generated from the personal computer that has been seized cannot be admitted in evidence unless the statutory conditions laid down in section 36B of the Central Excise Act are complied with. The decisions also hold that if the data is not stored in the computer but officers take out a printout from the hard disk drive by connecting it to the computer, then a certificate under section 36B of the Central Excise Act is mandatory. 27. The contentions advanced by learned counsel for the appellant and the learned authorized representative appearing for the department have to be examined in the light of the aforesaid observations. 28. What transpires from the two Panchnamas dated 04.07.2013 and 15.07.2013 is:- (i) The officers found that Vaibhav Goel removed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly. Details of the seized hard discs and pen drives were mentioned in Annexure-A to the Panchanama; (xiv) Subsequently, on 15.07.2013 another Panchnama was drawn. The Panchnama records that the hard drive mentioned at serial no. 1 was attached with the CPU and printers resumed from the residence of Vaibhav Goel on 04.07.2013 and printouts of the data stored in the hard drive and Toshiba 4GB pen drive were taken; (xv) The other hard drives and pen drives did not contain any relevant data and so printouts were not taken. 29. It is not in dispute that the hard disk from which the printouts were subsequently taken was not found installed in the CPU. The Panchnama drawn on 04.07.2013 records that the officers found that Vaibhav Goel had removed a hard disc from his kitchen and had tried to throw it away. The panchnama does not mention that any officer had seen Vaibhav Goel actually remove the hard disc from the CPU. It only records that Vaibhav Goel had removed a hard disc from the kitchen and had tried to throw it away. At a different place, the panchnama records that the officers conducted a thorough search of the entire residential premises and found one hard disc hidden in a corner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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