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2022 (5) TMI 1164 - AT - Central ExciseClandestine removal - prints out taken from the Hard Disk recovered in the premises of the alleged secret office (claimed to be a third party premises or godown) - admissible evidence or not - reliability on statements - third party evidences - quantification of duty evaded - levy of penalty - violation of procedure laid down under Section 100(3) Cr PC. - HELD THAT:- There were some procedural irregularities in the conduct of the Panchnama proceedings. The investigating agency was required to use panchas whose credentials cannot be questioned. Repeated use of the same Panch witnesses all around different places by the same agency, give scope for avoidable allegations while casting doubts on the proceedings initiated by using them. The Panchnama drawn at the premises of Cadbury / bournvita also suffers from the infirmities that none of the responsible persons of the said owners of the godown were present during the proceedings and it is not clear as to on whom search warrant was served - it can be held that the proceedings are in contravention of the provisions of CRPC, we are in agreement with the Authorised Representative that in matters involving evasion of taxes, it would be sufficient if the documents recovered during the search do otherwise constitute reliable evidence. However, under the circumstances, the evidence put forth requires to be weighed in the facts and circumstances of the case and in juxtaposition with the corroborative evidence. Whether or not the recovery of printouts from the hard disc found in alleged secret office of the appellants from the possession of Shri Vicky Kumar, an employee of the appellants, the appellants have vehemently submitted that the hard disc in question was not established to belong to them or established to be used with a computer which was in use by the staff of the appellants in course of regular business; the printouts taken from the said hard disc and recovery of documents thereof is in clear violation of the provisions of Section 36B of Central Excise Act, 1944. The appellants claim that the impugned order has failed to appreciate and ensure due compliance to the procedures and the requirements stipulated under the said Section; during the course of Panchnama proceedings in the so-called secret office, none of the representatives of the owners of the premises i.e., Cadbury / Bournvita were present and they were not even questioned as to how the premises were permitted to be used or permitted to be used by the appellants; moreover, it was not identified as to which computer the said hard disc belonged to and as to what kind of data is being stored in the hard disc in the day-to-day conduct of business of the appellant. The argument of the learned Commissioner is not correct. It is not for the appellant-noticees to disprove the clandestine removal and evasion. It is for the investigating agency to gather evidence and it is for the adjudicating authority to appreciate the evidence and confirm the demand of tax. It is found that as submitted by the appellants, charge of suppression of production and clandestine removal is a serious charge which is required to be established by production of sufficient tangible and positive corroborative evidence of clandestine manufacture and clearance and not merely on the basis of inferences and assumptions - In the instant case of the appellant the entire demand of duty has been raised on the basis of legally inadmissible computer printouts retrieved from external hard disc, private unauthenticated diaries, loose sheets or third-party private documents recovered through illegal Panchnama proceedings. Not even single evidence has been brought on record to show clandestine removal, conclusively establishing at least by way of sample transaction. We also find that no commensurate discrepancy in the finished stocks and raw material was found. The discrepancies found, adopting a method of averaging, were nominal and explainable. The allegation is about clandestine removal of a huge quantity of 26799.732 MT valued at Rs 97.13 Cr. To prove evasion of such magnitude, the department should have established the purchase of raw material, consumption of electricity, deployment of labour, arrangement of transportation, receipt at the customers’ end and financial transactions. Receipt of money in respect of not even a single transaction in the hands of the appellants has been proved with evidence - the investigation and consequentially the allegation of clandestine removal, suffers from infirmities, the demand needs to be seen on the basis of corroborated evidence alone. It is now settled principle that cases of this nature need not be proved with mathematical precision. At the same time, a single piece of evidence cannot be accepted to encompass the whole gamut of transactions. A word of caution must be added here that while the principle of preponderance probability demands us to believe that under the given facts and circumstances, the alleged tax evasion must have occurred. However, the principle ends here. Issues like quantification of duty evaded, requires concrete reliable dependable data. Reliance on principle of preponderance of probability, no way confers a License to demand duty on the basis of assumptions/presumptions/ vague imputations. While accepting the fact that there are reasons to believe that there was evasion of duty on the part of the appellants, it is found that the quantification of such duty evaded should be sustainable on the evidence available and needs to be arrived in a logical, rational and legally appropriate manner. In the absence of any corroborative evidence, it would be difficult to uphold the charges levelled on assumption and presumption. Hon’ble Supreme Court held in OUDH SUGAR MILLS LTD. VERSUS UNION OF INDIA [1962 (3) TMI 75 - SUPREME COURT] findings based on such assumption and presumption without any tangible evidence, is vitiated by error of law. The impugned order does not survive the scrutiny of law and therefore, needs to be set aside - Appeal allowed.
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