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2024 (1) TMI 82 - CESTAT CHENNAIClandestine Removal - complete violation of principles of natural justice - Admissibility of evidences - complete relied upon documents not supplied to appellants - cross-examination of witnesses not carried upon - levy of penalty on appellant - HELD THAT:- The fact that department has failed to establish that Section 36B was complied while taking the printouts from the hard disk attains significance. It is brought out from evidence that the department has seized the hard disk and taken the print outs by themselves. These print outs were filed as ‘Made-up file’ with 293 pages. These print outs are the foundation for initiating the investigation. Only after taking the printouts the hard disk has been sent to the DGCEI. In the case of M/S U.P. BONE MILLS (P) LTD., SHRI AAY AGARWAL AND SHRI JAVED RANA VERSUS COMMISSIONER, CENTRAL GST, DEHRADUN [2022 (9) TMI 1210 - CESTAT NEW DELHI] it was held that on failure to follow the mandatory procedure prescribed under Section 36B of Central Excise Act, 1944, the electronic evidence cannot be accepted in evidence. Besides, the evidence of the printouts from the hard disk, the other evidence relied by department are the documents seized from Third parties like the Buyers of finished products, Transporters of goods, Suppliers of raw materials etc. Some of these documents are again, pen driver and computer printouts. The department has recorded statements from persons who are running these establishments. But none of them have been examined by the adjudicating authority as required under Section 9D of Central Excise Act, 1944. The appellant has requested for cross examination and the same has not been complied - without examining these persons / witnesses in evidence under summons, third party statements or third party documents cannot be admitted in evidence. In the case of REYNOLDS PETRO CHEM LTD VERSUS C.C.E. & S.T. -SURAT-I [2022 (7) TMI 656 - CESTAT AHMEDABAD] similar issue was considered and the Tribunal held that the burden of proof to establish the allegations in the SCN is on the department. The seized from the premises of third parties cannot be used without corroboration, and that the presumption under Section 36A would not be applicable unless these persons from whose custody the documents have been seized are made parties to the proceedings. In the present case, the computer hard disk seized from the appellant’s factory is the basis for the investigation. The evidences placed on record cannot be relied or admitted in evidence due to non-compliance of mandatory provisions of law. In such circumstances, it is held that the confirmation of duty demand and the penalties imposed require to be set aside. Levy of huge penalty of Rs.50 lakhs on appellant - HELD THAT:- The department has not produced any evidence to show that Shri P. Ganesh has made any personal gain from the alleged clandestine clearances. He was a salaried person. Again, there is no proposal in the SCN to confiscate the goods - There are no evidence led by the department, to hold that the appellant has connived or actively involved in any of the allegations raised in the SCN - the penalty imposed on the appellant is not justified. The same requires to be set aside. The impugned order is set aside. The appeals are allowed.
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