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2019 (4) TMI 1680 - AT - Central ExciseClandestine removal - demand based on the data retrieved from the various Pendrives and the computers recovered either from the residential premises of the Director of M/s.Meenu Paper Mills or their residential premises of their employees, read with statements of various persons recorded during the course of investigations - HELD THAT:- Not only the witnesses were not from the locality, the same witnesses were used on different dates at different places. There is no explanation given by the Revenue on the aspect as to why the same very witness (not only one, but number of them were used as witnesses repeatedly) were associated in different raids at different places and on different dates & timings. This fact admittedly leads to the doubts about the fairness of the searches and the consequent seizures made by the Revenue. Such non-observance of procedure and repeated calling of the same very witnesses is fatal to the prosecution case and casts serious doubt against the Revenue. It is not understood as to why two Pendrive seized from the residence of Shri Manish Kapoor, Director and Shri Ravinder Kumar were not put under seal, whereas all the other electronic devices recovered from the residence of other employees were properly sealed. It may not be out of place to mention here that incriminating data was recovered from the electronic devices seized from the premises of the Director & his accountant and the Revenue’s entire case is based upon the data retrieved from the said two unsealed Pendrive recovered from the residence of Shri Manish Kapoor and Shri Ravinder Kumar. That also the data retrieved from the Pendrive allegedly recovered from the residence of Shri Manish Kapoor on two different dates show two different informations. These facts admittedly lead to the doubt about correctness of the data so recovered from the said two Pendrives. Admittedly identical type of electronic equipments including the Pendrive are available in the market. The appellants have strongly contended that whereas the seized Laptop and harddiscs have reflected the unique number for identification, the Pendrive seized from the Director’s residence has not reflected the product code number of the said Pendrives. As such there is a serious doubt about the data allegedly retrieved from said Pendrive. It is also seen that the Pendrive 16GB Sandisk recovered from the residence of the Director was opened in the office of the Chief Commissioner, Noida on two different dates i.e. on 03.12.2014 as also on 15.02.2016 and data was retrieved from therein. However, the data retrieved on two different dates is not exactly similar and the retrieved data on 15.02.2016 contains some additional information, which has not been shown in the first retrieved data on 03.12.2014. This fact itself raises doubt about the data having been tampered at some point of time. The question is as to whether such tampered data can be held to be appropriate and legal evidence so as to hold against the assessee. Inasmuch as in the present case also we find that the print outs relied upon by the Revenue have neither been taken in a proper manner, nor adhered to the conditions of the Section 36A and 36B of Central Excise Act nor has been retrieved in a proper manner, the authenticity of the same is doubtful and as such the same cannot be relied upon for upholding the charges and findings of clandestine removal. The applicability of procedural requirement under Section 65B(4) of Evidence Act of furnishing certificate is to be applied only when such electronic evidence is produced by a person, who is in a position to produce such certificate being in control of the said device. In a case where electronic evidence is produced by a party, who was not in possession of a device, applicability of section 63 and 65 of the Evidence Act could not be held to be excluded. The statements recorded during investigation, which have not been tested on the touchstone of cross-examination and examination in chief in terms of the provisions of section 9D of Central Excise Act, cannot be referred to and relied upon as an admissible evidence in the adjudication proceedings. The result of the same would be that the said statements have to be taken out of the consideration and no reliance can be placed upon the same. The Revenue’s entire case is based upon the print outs retrieved from the seized electronic documents, which have already been discussed by us in the preceding paragraphs and have been found to be of doubtful nature, read with the statements of various persons recorded during investigations, which have not been tested by the tool of cross-examination, and as such are not admissible, we note that nothing remains as an evidence so as to uphold the charges of clandestine removal. It is a well settled law that clandestine removal allegations are required to be based upon legal, positive and sufficient evidences so as to inspire confidence in the Revenue’s allegations or to at least show the evidences, which may tilt the case in favour of the Revenue on the principle of preponderance of probabilities. The clandestine allegations, being in the nature of quasi-criminal proceedings, cannot be upheld on the basis of assumptions and presumptions and require sufficient evidences. If the computer print out and statements are kept out of consideration, as discussed in the previous para as not being admissible evidences, there is virtually no other evidence produced by the Revenue to establish the charges of clandestine removal. It is well settled law that allegations and findings of clandestine removal are required to be upheld on the basis of sufficient and tangible evidences and not merely on the basis of assumptions and presumptions. The Hon’ble Allahabad High Court in the case of M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA & OTHERS [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] has observed that clinching evidences as regards purchase of raw materials, use of extra electricity, sale of final products, transportation, payment, realization of sale proceeds, mode and flow back of funds are required to be produced by the Revenue to establish the charge of clandestine removal, which cannot be confirmed based on presumptions and assumptions. The impugned order of Commissioner upholding the allegations of clandestine removal against M/s.Meenu Paper Mills Pvt.Ltd. are unsustainable and accordingly set aside the demand confirmed against them along with setting aside of personal penalty. Inasmuch as the appeal of M/s.Meenu Paper Mills Pvt.Ltd. stands allowed, the penalties imposed upon the other appellants who are either the Director, Proprietor or partner or the raw material supplier or the alleged buyers are also set aside and their appeal are allowed. Appeal allowed - decided in favor of appellant.
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