TMI Blog2019 (8) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... electricity more particularly, when the process of manufacture of MS Ingots/Silico Manganese are power intensive. Further, there is no evidence of extra use of labour/payment of any extra wages, shortage/excess of raw materials or finished goods. The excess stock of finished goods stood explained and accepted by the department. The allegation/findings on purchase of raw materials is not specific and there is no quantification of raw materials purchased out of accounts based on Purchase Register. It is well settled that charge of clandestine removal is a serious charge and must be proved by adducing tangible, cogent and affirmative evidence which are completely lacking in the instant case. In the case of SHARMA CHEMICALS VERSUS COMMISSIONER OF C. EX., CALCUTTA-II [ 2000 (12) TMI 161 - CEGAT, KOLKATA] this Tribunal has held that the noting in private records may raise suspicion but for confirming charge of clandestine removal, there must be corroborative evidence in the form of installed capacity, raw materials, utilization, labour employed, power consumed, goods actually manufactured and packed etc. Reliance on the data contained in laptop computer and print out taken for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re password protected which contained statutory records and the rest two files were un password protected from which the said nine print outs [Doc. No. 01/DGCEI/JRU/BFCL/F/08 to Doc. No.09/DGCEI/JRU/BFCL/F/08] were taken. In the course of investigation, statements were recorded from Sri Satya Nanda Jha on dated 19-05-2009 and 09-06-2009 u/s 14 of the Act when he was shown one Writing Pad [i.e. Annexure 38(i) (Doc.No.32/DGCEI/JRU/BFCL/F/08) seized from BFCL] containing cash transactions/cash transfer. An extract of the said Writing Pad is prepared by the officers of the DGCEI and placed under Annexure 38(ii) of the Show Cause Notice titled as Cash Transfer Statement alleging that it contains details of flow back of fund to the Appellants. From the seized laptop certain individual ledgers of vendors of BFCL/GFA were also printed and kept under Doc. No. 02/DGCEI/JRU/BFCL/F/08,Doc.No.03/DGCEI/JRU/BFCL/F/08 and Doc.NO.05/DGCEI/JRU/BFCL/F/08. On the day of search, physical stock of raw materials were taken and no discrepancy of any kind were noticed. Physical stocks of finished goods were also taken and excess stock were detected which were due to not recording production for 2/3 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia buyers vide reports dated 15-12-2009 [Annexure 25(ii)] and dated 11-01-2010 [Annexure 25(iii)] reported that the said goods were sold to the said consignees not by the BFCL/GFA, but by some Traders/manufacturer of Jharkhand i.e. (i) M/s Konark Ispat Udyog, Bokaro, (ii) M/s Sai Trading Co., Koderma, (iii) M/s Mahamayaa Ispat, Bokaro, (iv) M/s Ispat India, Koderma, (v) H.P. Enterprises and (vi) M/s Puja TMT Pvt. Ltd, Bokaro (which is a manufacturer of TMT Rods) and those Consignees have made payment for the value of the goods (including duties etc.) to the said Consignors through proper banking channels. It is also reported by DGCEI, Chennai/Kochi that the Appellants herein are in no way concerned with the manufacture, delivery, dispatch of the goods or receipts of the payment from the said consignees. 7. Thereupon, further inquiries were conducted with the Jharkhand Sales Tax Authorities in respect of the aforesaid Traders of Jharkhand i.e. (i) M/s Konark Ispat Udyog, Bokaro, (ii) M/s Sai Trading Co., Koderma, (iii) M/s Mahamayaa Ispat, Bokaro, (iv) M/s Ispat India, Koderma. No enquires were conducted with M/s H.P. Enterprises. The Jharkhand Sales Tax Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure-31]. On the basis of materials seized from M/s Damani Sales Corporation evasion of duty of ₹ 12.79 Lacs (on value of ₹ 88.71 Lacs) during April 2008 to May 2008 (two months) is sought to be proved. 10. In the investigation carried out by DGCEI, Kolkata it was revealed that the impugned goods were manufactured by other manufacturers i.e. M/s Samriddhi Ispat Pvt. Ltd., M/s Puja TMT Plant Pvt. Ltd. and on job work basis by M/s ASTL. 11. A Show Cause Notice dated 24-09-2012 was issued by Ld. Addl. Director General, DGCEI, Kolkata alleging that the BFCL has clandestinely removed/undervalued 42,851.569 MT of their final products i.e. M.S Ingots/TMT Bars/Miss Rolls/Mill Scale/end Cutting/Risers without payment of duty during the period 1st Setember 2007 to 15th October 2008. In the show cause notice it is further alleged against M/s GFA that it has resorted to clandestine removal/undervaluation of 9488.635 M.T. of final products i.e. Silico Manganese during the said period. Accordingly, M/s BFCL is required to show cause why Central Excise duty amounting to ₹ 22,74,84,876/- should not demanded along with interest and why penalty U/s 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty is on manufacture of the excisable goods. No duty can be fastened without evidence of manufacture of impugned goods. He further submitted that as per the report of DGCEI, Kochi and DGCEI Chennai, the buyers at Kochi and Chennai have categorically stated that they never bought any goods from BFCL/GFA but through one Mr. Pankaj who is director of M/s Puja TMT Plant P.Ltd., and which is a manufacturer of TMT Bars and further they have purchased from other five traders of Jharkhand through said Sri Pankaj. Therefore, enquiry by DGCEI, Kochi and Chennai demolishes the case of the department. Further, in course of enquiry by DGCEI, Jaipur, one Sri Govind Damani of M/s Damani Sales Corporation, buyer, also stated that they have bought goods from one M/s Maa Durga Trading Co which deals in goods of BFCL make and payment of which were made through banking channels to said M/s Maa Durga Trading Co. and all purchases from BFCL made directly by them are made on payment of duty. Hence, the investigation carried out by DGCEI no way proves that the impugned goods were manufactured and supplied by the Appellant. He added that manufacture of TMT Rod/Ingot (BFCL) and Silico Manganese (GFA) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGCEI/JRU/BGCL/F/08, therefore, are inconclusive. It is submitted by the Ld. Advocate that Statement of Sri Gourav Budhia was recorded at midnight/early morning hours at 3:00 AM 17th-18th of October 2010 and hence cannot be treated as voluntary. Further, Sri Gourav Budhia in his subsequent statement dated 02-02-2009 categorically disowned the Laptop and the data stored therein. The Ld. Advocate relied on the Ramlila Maidan Incident Vs UOI reported in (2012) 5 SCC 1 wherein it is held that sleep is a biological necessity and not allowing a person to have it amounts to metting out third degree torture. He further submitted that the so called Sale Register i.e. Document No. 08/DGCEI/JRU/BGCL/F/08 and 09/DGCEI/JRU/ BGCL/F/08 are extraneous materials and were never seized under any panchanama. The Pancha s did not put their signature as a witness on the Laptop Printouts . Further, one Pancha, simultaneously attended panchnama proceeding at two places hiding his identity and hence, it cannot be said that the Laptop printouts were taken in his presence (Panchnama on 16/17-10-2008). The Printouts under Document No. 08/DGCEI/JRU/BGCL/F/08 and 09/DGCEI/JRU/BGCL/F/08 and other comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation with buyers, transporters proves that the impugned goods were supplied by the Appellants and removed through bogus trading firms of Jharkhand. 18. Heard both the sides and perused the appeal records. We find that investigations carried out by DGCEI Chennai, Kochi, Kolkata and Jaipur does not bring home the charge of clandestine removal against the Appellants. In their reports dated 15-12-2009 and dated 11-01- 2010 DGCEI, Chennai/Kochi has reported that the said goods were sold to the said consignees not by the BFCL/GFA, but by some Traders/manufacturer of Jharkhand and those Consignees have made payment for the value of the goods (including duties etc.) to the said Consignors, through proper banking channels. It is also reported by DGCEI, Chennai/Kochi that the Appellants herein were no way concerned with the manufacture, delivery, dispatch of the goods or receipts of the payment from the said consignees. Further, enquiries conducted with Traders in Jharkhand does not bring home the charge as out of five trading firms, summonses issued to only two traders i.e. M/s Kanak Ispat Udyog, Bokaro and M/s Sai Trading Company could not be served while no enquiry is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by DGCEI, Chennai, Kochi, Jaipur, Kolkata instead of bolstering department s case, supports the contentions of the Appellants. 19. We find that the defence of the Appellant is fortified by the decisions in the case of Balashree Metals P.Ltd., Vs. UOI as reported in 2017 (345) ELT 187 (Jhar.) where in it is held that - 5.Having heard counsels for both the sides and looking to the facts and circumstances of the case, we, hereby, quash and set aside the Order-in-Original dated 3-3-2016 (Annexure-14 to the memo of this writ petition) mainly for the following facts and reasons : X x x X x x vi. Several decisions have been given by the Tribunals which have been confirmed by the High Courts that electricity consumption alone if adopted as a basis of the demand, the same is not tenable. The respondents can take the electricity consumption pattern as a corroborative piece of evidence, but, in absence of substantive proofs like - (a) Details about the purchase of the raw material within the manufacturing units and no entries are made in the books of account or in the statutory records. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found 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. 21. In the case of UOI Vs. M.S.S. Foods Products Ltd., reported in 2011 (264) ELT 165 it is held as under Para-12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns reported in 2014 (309) E.L.T. 411 and 2017 (345) E.L.T. 187 rendered by the High Court of Allahabad and High Court of Jharkhand, respectively. X xx xx x x xx 12.3 therefore, coming to the conclusion that without there being clinching evidence much less relevant admissible evidence on record, the adjudicating authority drew an inference of clandestine removal which cannot be sustained in law. We accordingly decide the fifth substantial question of law in the manner that the Tribunal committed perversity in law in coming to the conclusion that there existed relevant and material evidence to draw inference of clandestine removal. We accordingly answer the said question of law as above. 23. In the case of Sharma Chemicals Vs. CCE reported in 2001 (130) ELT 271 (Tri.-Kol.) this Tribunal has held that the noting in private records may raise suspicion but for confirming charge of clandestine removal, there must be corroborative evidence in the form of installed capacity, raw materials, utilization, labour employed, power consumed, goods actually manufactured and packed etc. The relevant portion of the said judgment is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture and removal. As such, applying the ratio of the above decisions, the demand against the appellants cannot be sustained. 24. Further, We also find that reliance on the data contained in laptop computer and print out taken for that has to be in conformity with the conditions laid down under Section 36 B of Central Excise Act. The investigation reveals that no such complained has ever been made by the Revenue. Accordingly, the entire investigation which is based on the computer printout is not admissible as the evidence. Therefore the data relied upon based on the print out obtained from laptop is not admissible and has to be discarded. Placing reliance in case Popular Paints and Chemicals Vs. Commissioner of Central Excise and Customs Raipur. The paragraphs which are relevant are as under:- 14. We hold that computer printouts cannot be held to be an admissible evidence unless the conditions as laid in the provisions of Section 36B of the Central Excise Act are fully complied with. A perusal of section 36B would indicate that the Act has prescribed very stringent conditions for computer printouts to be a piece of admissible evidence. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 (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 there under where it is desired to give a state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory provisions of Section 36B- (2) (4) of the Central Excise Act, in so far as there are serious irregularities about the manner of sealing of the computers as pointed out hereinabove and one computer not sealed at all. The provisions of Section 36B(4) have also not been fully complied with. The Ld. Counsel has strongly relied upon the law laid down on the admissibility of electronics records by the Supreme Court in the case of Anwar P.V. Vs. P.K. Basheer reported in MANU/S/0834/2014 wherein in paragraphs 13 to 17 it has been held as under:- 13. Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure prescribed under Section 65B.Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken 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 tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. 17. Only if the electronic record is duly produced in terms of section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A - opinion of examiner of electronic evidence. 18. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65B of the Evidence Act are not complied with, as the law now stands in India. 15.2. Thus, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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