TMI Blog2013 (11) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... e distributors and further cash sales by the distributor to their dealers, the ultimate sale price of the product etc. etc. demolishes the Revenues case against the assessee – there are no justifiable reasons to uphold the demand of duty against M/s SBL or to impose any penalty upon them – thus Penalty imposed upon the Managing Director set aside. Information retrieved from laptop admissible or not - Whether the information retrieved from the personal laptop of Shri Kejriwal, which was purchased only 4 months prior to the seizure, at his back by the GEQD after a period of one and a half years can be considered to be a sufficient evidence for confirmation of demand for the entire period of March 2002 to June 2005 – Held that:- Relying upon S. Namasivayam vs. CC, Chennai [2009 (1) TMI 238 - CESTAT, CHENNAI] - Jumbled up retrieved data, without any reference to the decoding of the same etc. by itself cannot be considered to be the relevant evidence, especially when the appellant has disowned the same, attributed the allegation of fabrication and the same being not clear entries in the records - the provisions of Section 36A readwith Section 36B of the Central Excise Act, 1944 are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72/- P -2,16,14,572/- 2. E/2217/2008 M/s Aggarwal Plywood 36,02,428/- 3. E/2199/2008 Shri Jitendra Kejriwal 2,16,14,572/- 4. E/2200/2008 M/s Maghar Singh Timbers Pvt. Ltd. 36,02,428/- 5. E/2201/2008 M/s Purav Plylam 36,02,428/- 6. E/2202/2008 M/s Donear Ply wood 36,02,428/- 7. E/2203/2008 M/s Donear Ply wood 36,02,428/- 8. E/2086/2008 M/s Mangal Murti Plywood 36,02,428/- Vide order-in-original No. 27/Commr./SU/08/CE dated 25/07/2008, the Adjudicating Authority has confirmed demands and imposed penalties as under :- S. No. Appeal No. Party Name Duty Penalty (Rs.) 1. E/2527/2008 M/s Donear Dicor P. Ltd. D - 42,42,439/- P - 42,42,439/- 2. E/2194/2008 Shri Jitendra Kejriwal 42,42,439/- 3. E/2195/2008 M/s Aggarwal Plywood 10,60,610/- 4. E/2196/2008 M/s Purav Plylam 10,60,610/- 5. E/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g at their premises were put under seizure on the belief that the same stands cleared by M/s SBL by paying duty on the same at a value which was much less than the recovered value. However, the goods seized at the premises of the dealers located in Bangalore, Hyderabad, Ludhiana and Rohtak etc. was released provisionally to the owners on execution of bonds and bank guarantees. Alongwith the goods, the officers also seized various alleged incriminating documents including some computer print outs and paper slips etc. from the premises of dealers. 5. Based upon the initial recovery of documents either from the appellant s premises or from the premises of the dealers, Revenue entertained a view that the appellant had under invoiced their final product i.e. veneer and they have been collecting the differential cost of the goods by way of cash, which was further utilized by them for unaccounted purchase of raw materials. Accordingly, further investigations were conducted and statements of various persons were recorded. We shall be dealing with the said statements in the finding portion of the order. 6. During the course of search of the appellant s factory on 28/6/05, various comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of investigations admitting under valuation of the goods received from SBL. Reliance also stand placed on the rate list seized by the visiting officers during the course of search of the factory premises. The Revenue entertained a view that the prices as reflected in the said rate list has to be multiplied by a factor of 4, for coming to the actual amounts collected by the appellant from their dealers. Shri Naresh Goyal, Account Manager of the appellant in his statement 31/7/06 deposed that these rate list are maintained by them based on which goods are billed to their various dealers at the rates mentioned in the rate list. 8. Based upon the above evidences, a show cause notice dated 16/12/05 was issued to various persons proposing confiscation of the goods seized from their premises and the confiscation of the seized currency of Rs. 6 lacs. Subsequently another show cause notice dated 22/3/07 was issued to M/s SBL alongwith the other appellants alleging under valuation of their final product to the extent of 2.5 times approximately and proposing to confirm the demand of duty of Rs. 6.20 crores approximately. The said two show cause notices stand adjudicated by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as sent to GEQD for their examination. After a lapse of period of six months, GEQD gave a report dated 26th December 2006. By drawing our attention to the said report of GEQD, he submits that whereas GEQD has certified the integrity of 5 other computers seized from the factory premises of the appellant and the data retrieved from them, there is no such certification as regards the integrity of the laptop data and the print outs obtained from the said laptop which are running into about 63 number of pages. By drawing our attention to the said print outs, he submits that the same are totally jumbled up and does not lead to any conclusion. He submits that such data was neither retrieved in the presence of the appellant nor the transfer of the data from laptop to the hard disk was done in the presence of the appellant and, as such, the same cannot be held to be the genuine and correct reproduction of the data stored in the laptop. 11.1 He further submits that based upon the said data given by GEQD, Revenue has made a list of some alleged accounting codes which according to the Revenue stands given to every distributor of the appellant. He submits that there is no explanation by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned order. In as much as the laptop was not used in the regular course of business and no regular supply of information in the ordinary course of business was made and stored in the said laptop and as such the same cannot be held to be covered by the provisions of Section 36B of Central Excise Act, 1944. For the above proposition, he relied upon the Tribunal decision in the case of Premier Instruments Controls Ltd. vs. CCE, Coimbatore reported in 2005 (183) E.L.T. 65 (Tri. -Chennai) which has analyzed and interpreted provisions of Section 36B in detail. He has also referred to the Tribunal decisions in the case of Subhnen Decor P. Ltd. vs. CCE, Vapi reported in 2010 (251) E.L.T. 105 (Tri. -Ahmd.), S. Namasivayam vs. CC, Chennai reported in 2009 (240) E.L.T. 255 (Tri. -Chennai) and Brims Product vs. CCE, Patna reported in 2001 (130) E.L.T. 719 (Tri. -Kolkata). 12. As against the above submissions of the learned Senior advocate made on the laptop data, learned advocate Shri Raha appearing for the Revenue has strongly relied upon the provisions of Section 36A and 36B of the Central Excise Act, 1944, which provides that truth of the contents, signature and every other part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dealers premises revealed the various modus of maintenance of data by the appellant. By drawing our attention to the retrieved data, he submitted that figures are maintained according to different codes of transaction, amounts are entered by shifting the decimal places by two to the left, collection of amounts over and above the invoice amounts which have not been entered in the books of account and utilization of the same for expenses which are again not entered in the account books. He submits that the manner of making entries in the personal laptop of Shri Kejriwal stand explained by Shri Parminder Singh, Director of Maghar Singh Timbers Pvt. Ltd. As such, he prays for acceptance of such retrieved computer data, as admissible evidence. 13. We have considered the submissions made by both the sides. The Revenue has strongly relied upon the data retrieved from the seized personal laptop of Shri Jitendra Kejriwal which was purchased 4 months prior to the date of the seizure. It is also not disputed that though the entries made in the said laptop are for the last 4 months period, the Revenue has applied the same for the entire period from March 2002 to June 2005. It stands observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving different code numbers cannot be accepted. Also while decoding the said accounting codes allegedly stored in the data, neither any question is put to the owner of the laptop nor to the distributors to whom the said codes allegedly belonged. No reasoning or explanation stands advanced by the Revenue as to how these alleged codes stand decoded by them and how one code number has been related to a particular distributor. There is no uniformity even in the code numbers. 14.1 We also find force in the appellants contention that when the GEQD report has given a certificate as regards the integrity of the data in respect of 5 computers, from whom the data stand retrieved by them, there is no integrity certificate about the data retrieved from the personal laptop. The arguments of Shri Raha that omission of separate integrity certificate in respect of laptop cannot be construed as a fatal lapse that would render the entire information retrieved from it as a nullity, cannot be appreciated. Admittedly the GEQD report certified the integrity of the digital evidence storage media and it was authenticated by MS hash value. There is no such authentication and integrity certificate in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, the Court shall, - (a) unless the contrary is proved by such person, presume - (i) the truth of the contents of such document; (ii) that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the Court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested; (b) admit the document in evidence, notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence.] SECTION 36B.- Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence. -(1) Notwithstanding anything contained in any other law for the time being in force, - (a) a micro film of a document or the reproduction of the image or images embodied in such micro film (whether enlarged or not); or (b) a facsimile copy of a document; or (c) a statement contained in a document and included in a printed material produced by a compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all 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 statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, (a) identifying the document containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer; (c) dealing with any of the matters to which the conditions?mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it. (5) For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etters, figures or marks or by more than one of the means intended to used or which may be used for the purpose of recording the matter e.g. :- a writing, words printed, lithographed or photographed; a map or a plan, an inscription on a metal plate or a stone or a caricature. Section 36B of the Central Excise Act, which corresponds to Section 65B of the Indian Evidence Act, extends the scope of the term document to :- (a) a micro film of a document or the reproduction of the image or images embodied in such micro film (whether enlarged or not); or (b) a facsimile copy of a document; or (c) a statement contained in a document and included in a printed material produced by a computer (hereinafter referred to as a computer printout), if the conditions mentioned in sub-section (2) and the other provisions contained in this section are satisfied in relation to the statement and the computer in question, Thus the presumption of truth is in respect of documents recovered from a person and the document includes computer printout. In this regard, Section 65B of the Indian Evidence Act, uses a more general term Computer output which is deemed to be a document and computer outpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys era of technological advancement, it is not only possible, but much easy to transfer such datas in the computers in the custody of the other persons or to interfere with such data. It is probably for this reason that such Section 36B applies to computer print outs and not to the data stored in any computer. 17. The Tribunal in the case of S. Namasivayam vs. CC, Chennai reported in 2009 (240) E.L.T. 255 (Tri.-Chennai) has observed that the Revenue s case build on the basis of data contained in the hard disk of the computer, the integrity of which is challenged by the assessee cannot be relied upon, without cross examining GEQD. We further take into consideration the Tribunal s decision in the case of Premier Instruments Controls Ltd. vs. CCE, Coimbatore reported in 2005 (183) E.L.T. 65 (Tri. -Chennai). In para 9 of their decision, the Tribunal has examined the provisions of Section 36B of the Central Excise Act, which dealt with admissibility of computer print outs and has analyzed the conditions as contained in sub-Section (2). It was observed that in as much as the computer was not shown to have been used regularly to store or process information for the purposes of any ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, it can be reasonably concluded that the said decision of the Madras High Court is in the peculiar facts of that case and was relatable only to the issue of cross examination and nowhere opined on the admissibility of computer data contained in the seized computers. 18. Revenue in their written submissions have referred to the compilations of corroborative evidences filed by them. The said compilation refers to a statement showing correlation to the laptop data with ledger and invoices so as to demonstrate the ratio of 2.5% between the transactions value shown in laptop to the invoice value in each transactions. Further, as for the proof of the modus of decimal shifting by two places to the left, sample corroborative evidence from the ledger of SBL relating to lump-sum payment received from dealers without reference to any particular invoice has been tabulated. From the above, Revenue seeks to contend before us that the modus operandi of decimal shifting by two places to the left was deliberately adopted by Shri Kejriwal and the values in the laptop print out sans the decimal were the actual transaction values. They have also submitting that on one hand, the appellant is submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 deponents of inculpatory statements retracted the same during the course of cross examination. Learned Senior advocate has strongly drawn our attention to the statements of majority of the distributors i.e. 14 distributors, who deposed during the course of investigation, that the plywood/ veneer was being received by them at the prices mentioned in the invoices. The Revenue, though recorded the statement of the said -distributors, during the course of investigation, has chosen not to refer to the same or to rely upon the same or to make them a part of the show cause notice or to place them on records. The appellant s contention is that Revenue is expected to refer to the entire material collected by them during the course of investigations, to be fair to the assessee. We fully agree with the above contention of the learned advocate. The entire purpose of the investigation is to find out the correct position. Any material or evidence, which further the assessee s case and demolishes the Revenue s case is not required to be kept out of consideration, with a view to win or lose a case. The exclusion of the statements of 16 distributors by the Revenue from the records of the case, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.L.T. 105 (Tri.-Ahmd.) vide its final order No. A/1897-1917, while dealing with the appellant s contention that the statements, which were favourable to the assessee has not been considered, observed as under :- 7. We also find force in the appellant s contention that the statement of the other dealers, recorded during investigation, who have deposed in favour of the assessee should also be brought on record and cannot be brushed aside on the simple ground that they are not the relied upon documents. The Revenue cannot pick and choose evidences which are in its favour and cannot ignore the evidences collected during investigation, which might support the assessee s case. We also note that no incriminating documents have been recovered from the said appellant s premises and no unaccounted cash has been recovered from the appellant. In this scenario, it was important that the dealers whose statements were recorded should have been offered for cross-examination. We also find force in the appellants contention that the statements of other dealers, recorded during investigation, who have deposed in favour of the assessee should have also been brought on record and cannot be brus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re written as the officers asked him to write like that. By referring to various decisions Shri Raha has submitted that the said retraction as also the result of cross-examination should be rejected and his statement should be accepted as evidence. 24. We note that the said statement of Shri Parminder Singh cannot be made the basis for upholding the charge of under valuation against M/s SBL, in as much we have already noted that all the other statements of distributors recorded during the course of investigations were in favour of the assessee wherein they clarified that no such cash payment were being made by them. Admittedly the products manufactured by M/s SBL and sold by them to various distributors were the same products. It cannot be held that in case of one distributor, the price was two and a half times than the invoice price and the difference was being collected in cash, whereas from other distributors only the invoice price was being collected. The goods being manufactured by the appellant is a common veneer and not custom made items. The same goods cannot be sold to one distributor at a lower price and to other distributor at a high price of two and a half times. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant to their distributors and is alleging recovery of the differential amount in cash, admittedly such distributors would further be recovering the differential cost of the goods from their dealers in cash. No investigation or inquiry stands made at the dealers end except in some cases where Revenue has produced evidence showing more recovery of cash by the distributors to dealers but there is no further evidence showing payment of excess recovery by the distributors to the manufacturer. There is also nothing on record to show as to how the differential cost of the plywood stands recovered by the appellant from their distributors and in turn by the distributor from their dealers. No further investigations stand made at the end of the ultimate retailer, who has sold the goods to the consumer and there is nothing on record to show as to at which price the veneer is ultimately sold by the retailer in the open market. There is also no effort made by the department to reflect upon the fact that there is huge and vast difference in the price recovered by the appellant from their distributors and the price at which the plywood is ultimately sold to the ultimate consumer. In our views ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with the said plea of the appellant. Admittedly, the invoices of other manufacturers placed on record in respect of identical goods show more or less the same price at which the goods were being sold by the appellant. We agree with the learned Advocate that this fact by itself would indicate that either there was no under invoicing by the appellant or there was under invoicing by all the other manufacturers of the veneer. Admittedly no such case had been made out against the other plywood manufacturers and nothing has been brought to our notice. It cannot be said that the entire plywood manufacturing industry was indulging in under invoicing of their goods. This fact itself leads us to conclude that the allegations of under invoicing against the present appellant cannot be sustained. 27. Not only that, we also note that even after making out the present case for the period upto June 2005, the appellant continued to sell their final product at the prices, which were more or less similar to the prices at which the goods were being earlier sold. Except for the minor escalation on account of increase in the manufacturing cost, in the course of normal business, the prices remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other plywood manufacturers, continuation of the sale of their final product at the same price post June, 2005, establishes the case in their favour. Further the failure of the Revenue to investigate the matter, in detail as regards the cost structure of their goods, price factor of the other manufacturers, the availability of any evidence reflecting upon cash receipt by the appellant from the distributors and further cash sales by the distributor to their dealers, the ultimate sale price of the product etc. etc. demolishes the Revenues case against the assessee. We accordingly find no justifiable reasons to uphold the demand of duty against M/s SBL or to impose any penalty upon them. For the same reasons, penalty imposed upon the Managing Director is required to be set aside. We order accordingly. 30. As regards the seizure and confiscation of Rs. 6,00,000/- recovered from the appellant s premises, the appellant has taken a categorical stand that the said cash was withdrawn from the bank of the appellant for the payment of its workers and was in nature of cash in hand for carrying out the daily activities. They have produced the relevant bank statement, which has not been tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is no adverse statements recovered from various CPUs recovered from the premises of the manufacturer; no evidence of payment of higher value to the raw material supplier; that there was recording of the statement of all the other distributors during the course of investigations which were in favour of the assessee; non-reliance on the said exculpatory statements of the distributors; questioning the reliance on the statement of only 4 distributors, who have retracted the same during the course of cross-examination; non-recording of statement of 1500 dealers of around 24 distributors; non-verification of cost of production and absence of any allegation that the value at which goods were sold was less than cost of production; absence of any evidence indicating flowback of cash from the distributors to the manufacturers; absence of any investigations at the end of the retailer; the fact of selling the goods at the same price even after the visit of the officers and non-questioning of the same by the Revenue; the fact of selling of identical goods by the other manufacturers at more or less the same price and reliance on various decisions. We may also refer to the fact that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as not permissible. In the case of Sharon Veneers vs. CCE, Chennai reported in 2002 (146) E.L.T. 655 (Tri. -Chennai), wherein the Tribunal observed as under :- 5. Now we proceed to give our finding in regard to various other allegations levelled against the appellants. Under-valuation. We find that the appellants have argued that out of 40 dealers, statements were? taken from 18 dealers which represented 63.15% of the total sales during the relevant period and merely 3 dealers representing 7.91% of the sales alleged to have given extra payment to the appellant-company and two dealers out of these three representing 7.46% of the sales retracted their statement within a reasonable time. The department sought to place reliance on the statement of one Mr. Parthasarathy of Shankar Mercantile Corporation and during the cross-examination, he has denied having paid any extra consideration to the appellant-company. This position is not controverted by the Revenue. We find that it is for the Revenue to establish with credible evidence the aspect pertaining to under-valuation. The charge that extra payment has been made and extra consideration received, has to be established by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny extra consideration to the appellant-company. The Revenue having obtained statements from 18 persons and relying upon only those statements which are in favour of the Revenue is a one sided approach. Shri Partharasarathy in his statement dated 24-4-91 stated that he was responsible to Shri R.K. Agarwal, Director of Shankar Mercantile Corporation and nowhere in the statement he has stated that he has received any extra consideration from the dealers for the appellant-company. Shri Nagendran of M/s. Shree Sakthi Agencies, during cross-examination clearly stated that he has not paid anything over and above the billed amount to Shri Parthasarathy, who was the employee of M/s. Shankar Mercantle Corporation. 34.1 Similarly, in the case of Somany- Pilkington s Ltd. vs. B.P. Verma (Director, Publications) reported in 1995 (76) E.L.T. 281 (Del.), the Hon ble Delhi High Court in a more or less identical case of under valuation observed as under :- 90. Out of 200 dealers, D.R.I. Officers, recorded the statements of 62 dealers under Section 14 of the Act. Except 5, the other dealers, appear to have denied payment of any extra amount to even Mr. Vyas or plaintiff. In the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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