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TMI Blog2004 (12) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture and clearance of excisable goods. It was found by the Tribunal that the print-outs were neither authenticated nor recovered under Mahazar. It was also found that the assessee in that case had disowned the print-outs and was not even confronted with what was contained therein. The Tribunal rejected the print-outs and the Revenue s finding of clandestine manufacture and clearance. We find a strong parallel between the instant case and the cited case. Nothing contained in the print-outs generated by Sampath Kumar s PC can be admitted into evidence for non-fulfilment of the statutory conditions. It is also noteworthy that the computer print-outs pertained to the period February, 1996 to September, 1998 only but the information contained therein was used for a finding of clandestine removal of waste and scrap for earlier period also, which, in any case, was not permissible in law. In the result, we hold that the entire demand of duty on waste and scrap is liable to be set aside. Demand of duty on original equipments - There is no rebuttal to the assessee s case that the finding that 90% of the OE clearances were replacements is not supported by anything contained in the regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod November, 1993 to 28-9-1996 and another penalty of Rs. 40 lakhs under Section 11AC read with Rule 173Q for the period 29-9-96 to September, 1998. 2. We have examined the records and heard both sides. Ld. Sr. Counsel has chosen to address the penalty issue first. According to him, both the penalties are liable to be vacated in view of the fact that the entire amount of duty had been paid prior to issuance of the show cause notice. Ld. Sr. Counsel has relied on the Tribunal's Larger Bench decision in C.C.E., Delhi v. M/s. Machino Montell (I) Ltd. [2004 (168) E.L.T. 466 (Tri. - LB), as also on the Tribunal's decision in. M/s. Rashtriya Ispat Nigam Ltd. v. C.C.E. [2003 (161) E.L.T. 285 (Tri)]. It has also been pointed out that the Revenue's appeal against the Tribunal's decision in the case of Rashtriya Ispat Nigam Ltd. (supra) was dismissed by the Apex Court vide 2004 (163) E.L.T. A53 (S.C.). The view thus approved by the Apex Court is that, where duty was paid prior to the issuance of show cause notice, no penalty is imposable under Section 11AC or Rule 173Q. 3. Ld. Sr. Advocate has referred to the demands of duty in three categories. The demand of duty on was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that the assessee would not mind accepting this objection of the Revenue. Ld. Counsel, however, pleads strong case on limitation against the demand of duty on components. Referring to the findings recorded in para 52 of the impugned order, ld. Counsel submits that ld. Commissioner wrongly invoked the larger period of limitation by recording a finding which is beyond the scope of the show cause notice. It is also submitted that the assessee had no intention to evade payment of duty inasmuch as any duty paid by Unit No. 1 would be available as Modvat credit to Unit No. 2. Therefore, according to ld. Counsel, the demand of duty on components is time-barred. 5. Referring to the demand of duty on finished goods, ld. Counsel gives a brief account of the relevant facts. Where finished goods were found defective, the same were returned by the buyer for rectification of defect. If the defects were rectifiable, they would be rectified and the goods cleared to the same buyer without payment of duty. Where the defects were beyond repair, readymade finished goods from the store would be supplied to the buyer. These replacements were also done without payment of duty. Ld. Counsel subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue, the Commissioner's findings are reiterated. 8. After giving careful consideration to the submissions, we find that, on the penalty issue, the appellants have a good case based on case law. It is an admitted fact in this case that the entire amount of duty demanded was paid prior to the issuance of show-cause notice. It has been held in the cases cited by ld. Sr. Advocate that, where duty was paid prior to the issuance of show-cause notice, no penalty was liable to be imposed on the assessee under Section 11AC or under Rule 173Q. Therefore, the penalties imposed in this case under the said provisions of law are liable to be vacated. 9. On the demand of duty on waste and scrap, again the appellants have made out a strong case on merits. The demand covering the period November, 1993 to September, 1998 is based on certain computer print-out relating to the period February, 1996 to September, 1998. These print-outs were generated from a personal computer of Shri G. Sampath Kumar, a junior officer of the Company, whose statements were also recorded by the department. Admittedly, whatever facts were stated by Shri Sampath Kumar, in his statements, were based on the entries con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e averments in the memorandum of appeal that it is an admitted fact that Shri Sampath Kumar was the person having lawful control over the use of the computer. The computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the company. It was also not shown that information of the kind contained in the computer print-out was regularly supplied by the Company to the personal computer of Shri Sampath Kumar in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party who wants to rely on the computer print-out, to show that the information contained in the print-out had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. We have considered the Tribunal's decision in International Computer Ribbon Corporation v. CCE, Chennai (supra). In that case, as in the instant case, computer print-outs were relied on by the adjudicating authority for recording a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was stated by Shri Lakshminarasmihan was not corroborated by anybody in charge of the Service Station for the period of dispute. No independent positive evidence of clandestine removal is also available in respect of the equipments. There is no rebuttal to the assessee's case that the finding that 90% of the OE clearances were replacements is not supported by anything contained in the registers maintained in the Service Station. We do not find sufficient evidence to support the Commissioner's finding that 90%, OE clearances were replacements attracting levy. 12. The appellants seem to have a good case on the limitation issue as well. Ld. Commissioner, in para 52 of his order, recorded a finding of suppression of "the fact" and misdeclaration of value in relation to clearances of components from Unit 1 to Unit 2. This finding is solely based on the assessee's admission of undervaluation of the goods. But, unlike suppression, undervaluation does not seem to have an inbuilt element of mens rea, nor did the assessee concede that they had intent to evade payment of duty while excluding certain overheads from the assessable value of the goods. The facts and circums ..... 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