9911796707
TMI Blog2025 (4) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28.07.2010, Officers of DGCEI conducted simultaneous search operations at the factory premises of the Appellant-company, residence of Sri Ghanshyam Dalmia (alias Bunty Dalmia), Director of Appellant-company, and premises of one M/s Vasundara Power and Infra Pvt. Ltd., ("VPIPL" in short) situated at erstwhile Cinema Hall/Video Hall. From the said office premises of M/s Vasundhara Power & Infra Pvt. Ltd., the Officers of DGCEI purportedly seized 16 Nos of CDs and 2 Nos Pen Drives (Seized from Shri Ranjan Kumar Satpathy, Staff) under Panchnama dated 28.07.2010. The 16 CDs and Pen drives were seized and kept in an envelope. From the factory premises of the Appellant, certain loose sheets/private records were seized. 1.2. On the day of search, on 28.07.2010, some print outs were taken from CD Nos. 13, 14, 15 and 16 and kept in Doc. No. 11/DGCEI/RRU/VMPL/O/10. Subsequently, on 14.09.2010 and 15.09.2010, at the DGCEI Office, the CDs viz., CD No 1, CD No. 2, CD No. 9, CD No.10, CD No.11, CD No.12, CD No.13, CD No.14, CD No. 15 and CD No. 16, and Pen drives were inserted in the computer of DGCEI and printouts were taken in presence of Sri Ranjan Kumar Satpathy, Data Entry Operator, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complying with the mandatory conditions of Section 36B. He states that the CDs/Pen Drives were seized and kept in envelope without any sealing; the said two Pen Drives were seized from Shri R.K. Satpathy; the demand has been raised on comparison of Computer Printouts/CD Printouts/Pen Drive Printout etc. with the statutory records (DSA/RG-1) and the entries which were not found tallying with the statutory records, were assumed to have been related to clandestine production and removal of Sponge Iron. 2.1. In this regard, the Ld. Counsel for the appellants submits that in the instant case no "certificate" as required under Section 36B(4) of the Central Excise Act, 1944 has been adduced to substantiate the authenticity of the pen drive/CDs and computer printouts. He contends that the question of genuineness or otherwise of computer printout will arise only if conditions of Section 36B are satisfied. In support of this view, the appellant relied upon the decision in the case of CCE Vs. Shivam Steel Corporation (2023) 2 Centax 259 (Ori.). 2.2. It is also submitted on behalf of the appellants that the evidentiary value of the said CD/Pen Drive/Computer printouts is sought to be sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has entered the data in the computer. In the above background of the case, the appellants have contended that compliance of Section 9D was all the more necessary. 3.2. It is further submitted that when statement of the person/witness on which reliance is placed is not examined in chief and not allowed for Cross Examination in accordance with Section 9D, such statement cannot be considered relevant piece of material; Section 9D deals with "relevancy of oral statements". In support of the above contentions, the Appellant relies on the following decisions:- (i) G.Tech Industries Vs. UOI [2016 (339) ELT 209 (P&H)] (ii) M/s J.J. Extrusion Pvt. Ltd., Vs. CCE [2025- VIL-320-CESTAT-KOL-CE] (iii) Hitech Abrasives P. Ltd. Vs. CCE [(2018) 362 ELT 96 (CHH.)] (iv) Jai Balaji Industries Ltd. (Unit-III) Vs. CCE [2023-VIL-771-CESTAT-KOL-CE] (v) Prinik steels (p.) Ltd. Vs. CCE [(2023) 12 TMI 1299-CESTAT-KOLKATA] 3.3. The Appellant submits that they had also demanded cross examination of the following persons in accordance with Section 9D of the Act: - (i) Shri R.K. Satpathy, Data Entry Operator; (ii) Shri Divyasing Behera, Manager (Accounts); However, since the adjudicating authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STAT-KOLKATA] (iii) Continental Cement Co. V. UOI [(2014) 309 ELT 411 (All.)] (iv) Hitech Abrasives P. Ltd. Vs. CCE [(2018) 362 ELT 96 (CHH.)] (v) Nova Petrochemicals v. CCE, Ahmedabad-II, [vide Final Order Nos. A/11207 - 11219/2013, dated 26-9-2013] 4.3. The Appellant submits that clandestine manufacture and clearance of finished goods cannot take place without purchase of raw materials; in respect of Iron Ore, it vaguely alleged on the basis of private records/loose sheets seized from third parties that the Appellant had purportedly procured 1366.415 MT of Iron Ore during May, 2009 and 1507.765 MT during May'2010, aggregating to 2874.180 MT of Iron Ore which is just 8.7%. The Appellant contends that the total Iron Ore required for manufacture of 20624.885 MT of Sponge Iron is at least 33000 MT @ 1:1.60. In this regard, the appellant submits that without Coal and Dolomite, it is technologically not possible to manufacture the impugned finished goods; that in the instant case, there is no allegation/evidence/finding of unaccounted receipt of Coal/Dolomite. In support of this claim, the appellant relies on the decision in the case of Phil Ispat Pvt. LTD. Vs. CCE reported in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority and justifies the confirmed demand and interest and penalties thereon. He prays that the appeals may be dismissed. 9. Heard both the sides, perused the appeal papers and considered the submissions made by both the sides. 10. We observe that the proceedings against the present Appellant No. 1, namely, M/s. Vasundhara Metaliks Pvt Ltd. has been initiated on the basis of the documents recovered from the premises of one M/s Vasundara Power and Infra Pvt. Ltd. ("VPIPL" in short) and some loose sheets/private records recovered from the factory premises of the Appellant. We observe that from the said office premises of M/s Vasundhara Power & Infra Pvt. Ltd., the Officers of DGCEI seized 16 Nos of CDs and 2 Nos Pen Drives. Scrutiny of the data recovered from the CDs, pen drives and loose sheets/private records revealed that the Appellant has been clearing the goods clandestinely. Thus, we observe that the prime evidence of the Revenue is the documents retrieved from CDs, Pen drives and some statements recorded from various persons associated with the manufacturing and clearing, during the course of investigation. We observe that the Appellants have raised the point about the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifying the documents containing the statement and describing the manner in which it was produced. (b) giving such Particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer (c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub- section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it." 10.3. A perusal of sub-section (2) of Section 36B of the Act reproduced above clearly reveals that the same mandates that such data/printouts can be admitted as evidence only when the computer in which the data was fed is owned by the person against whom the evidence is being used. We observe that the Department did not identify the person who has entered the data in the CDs and the pen drives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible without further proof of production of the original, to satisfy the conditions set out in Section 36-B(2) read with Section 36-B (4) of the CE Act. The said conditions are more or less similar to the conditions stipulated in Section 65-B (4) of the EA. The mandatory requirement of Section 65-B (4) was discussed by the Supreme Court of India in Anvar P.V. v. P.K. Basheer (2014) 10 SCC 473. It was held as under in the said judgment: "15. Under Section 65-B(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 65-B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of a certificate in this behalf by a person occupying the responsible official position in relation to the operation of the relevant device or the management of the relevant activity (whichever is appropriate) to be treated as evidence in any matter stated in the certificate and, for the purpose of the sub-section, the same shall be sufficient for a matter to be stated to the best of the knowledge and the belief of the persons stating it. In the present case, we observe that the officers had not obtained any certificate as required under Section 36B(4) of the said Act. It is also noted that none of the conditions stipulated under Section 36B(2) of the Act, 1944 have been followed. In such situation, it is difficult to accept the printouts retrieved from the sixteen CDs and two pen drives as evidence to support the clandestine removal of the goods. It is pertinent to note that the requirement of certificate under Section 36B(4) is also to substantiate the veracity of truth in the operation of electronic media. 10.6. Thus, we hold that the data recovered from the sixteen CDs and two pen drives cannot be relied upon in the proceedings in the absence of Certificate as mandated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during inquiry or investigation, 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). 18. It is only, therefore, (i) after the person whose statement has already been recorded before a gazetted Central Excise officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that with regard to alleged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s. Singhal Cement Agency, M/s. Praveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty (i) links between the document recovered during the search and activities being carried on in the factory of production; etc." 12.4. As we have observed that the entire case has been built with no corroborative evidence brought in whatsoever, we have no hesitation to apply the ratio of the case laws cited supra in respect of reliability of data recovered from Compact Disks / Pen drives, non-allowing of cross-examination of the persons recording the statements, non-production of corroborative evidence, and consequently, set aside the impugned order on these counts in respect of the confirmed demands. 12.5. Since the demands are being set aside, the corollary interest and penalties also get aside. 13. Regarding the penalty imposed on Shri Kamalpat Dalmia, Director of the Appellant-company / Appellant No. 2, we observe that the Department has not brought in any evidence against him warranting imposition of penalty under Rule 26 of the Central Excise Rules, 2002. Accordingly, we set aside the penalty imposed on him. 14. In view of the above findings, we set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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