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2020 (9) TMI 645 - AT - Central ExciseClandestine Removal - shortage of finished goods - Kraft Paper - main evidence for making allegation of clandestine removal and raising demand is computer printouts - Corroborative evidences or not - reliability of statements - period from April, 2009 to July, 2012 - HELD THAT:- As per section 36B of Central Excise Act, 1944, printed material produced by the computer shall be admissible as evidence only when the condition mentioned in Sub-section (2) and other provision contained in the said section 36B are satisfied. As per the condition laid down in subsection (2) the statement of computer printout must be produced by the computer during the period for which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer. In the present case it is admitted by the revenue itself that the statement was not produced in the computer which was seized, it is only having the backup data the data originally produced in different computer. As per the department the hard disc of the said computer was destroyed. Therefore it is clear that the computer which was seized, the data was not produced on the seized computer. No evidence was brought on record that the data retrieved from the computer was originally produced on different computer and the hard disc of the same was destroyed. It is only as per the statement of the director which was claimed by the appellant having been taken under duress and threat. As per clause (b) of Sub-section (2) of Section 36B the information must be regularly supplied to the computer during that period - In the present case the period involved is April, 2009 to June, 2012 during that period the computer which was seized was not in use therefore, clause (b) is not satisfied. Similarly, since the seized computer was not in use for the material period clause(c) is also not satisfied. Even the seized computer is not the computer to which the data was supplied in the ordinary course of the said activities, therefore, clause (d) is also not satisfied. In the present case also the undisputed fact is that the computer seized by the department, the data was not supplied in the said computer. Therefore, in terms of the Section 36B(2) the computer printout in the present case cannot be accepted as admissible evidence. Reliability on statements - HELD THAT:- The Adjudicating Authority has heavily relied upon the statements of directors and various alleged raw material supplier and buyers of goods. We find that the appellant have requested for cross-examination of all the witnesses but none of the witness was allowed to be cross-examined by the adjudicating authority. We find that since the entire basis of demand is computer printout and the statements of third parties, it is incumbent on the adjudicating authority to allow the cross-examination as required not only under Section 9D of the Central Excise Act but also to follow the Principle of Natural justice. As per statutory provision under Section 9D and also settled law, all the statements which were retracted in the form of reply to Show Cause Notice and without allowing the cross-examination of the witnesses cannot be used as admissible evidence, therefore all the statements are discarded. The major demand is based on the computer printout and various statements. Since both are not admissible evidence as discussed above the charge of clandestine removal is not established against the appellant. The appellant also made a submission that they were involved in the trading of kraft paper, since we have discarded the computer printout being not admissible evidence, we need not to discuss about the content of the data available in the printouts therefore, we need not to give finding on the aspect of trading of kraft paper, whether the same was factually carried out by the appellant or otherwise. The charge of clandestine removal in respect of major quantity could not be established by the revenue. Accordingly, consequential demand of duty worked out from computer printout is not sustainable - In respect of the co-appellants a penalty under Rule 26 was imposed. This penalty is consequential to the demand confirmed by the Adjudicating Authority. Since the major demand of duty confirmed itself is not sustainable penalties of co-appellants are also not sustained. Appeal allowed in part.
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