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2015 (3) TMI 825 - CESTAT AHMEDABAD

2015 (3) TMI 825 - CESTAT AHMEDABAD - 2016 (334) E.L.T. 97 (Tri. - Ahmd.) - Clandestine removal of goods - Clearance of goods without issuance of bills - Excess stock found lying in the factory - Confiscation of seized goods - Release of goods on issuance of bank guarantee - Held that:- entire case was made out on the basis of statements of the buyers and the computer printout. Commissioner (Appeals) already held that the evidentiary value of the statements is weak. It is also noted that the sta .....

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So, the imposition of penalties are not warranted. - demand of duty along with interest and penalties on the appellants cannot be sustained. Accordingly, the impugned orders are set aside - Decided in favour of assessee. - Appeal No. E/1049-1051/2009 - Order No. A/10197-10199/2015 - Dated:- 4-3-2015 - Hon ble Mr. P. K. Das,J. For the Appellant : Shri J.C. Patel, Shri Rahul Gajera - Advocates For the Respondent : Shri K. Sivakumar, Addl. Commissioner (AR) ORDER Per: P.K. Das 1. These appeals are .....

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the Central Excise Preventive Officers visited the appellant s factory and conducted stock verification and found excess stock of the finished goods valued at ₹ 83,248.00, which was seized by the Central Excise officers. The Central Excise Officers also found a data storage in electronic form in the USB drive and obtained a print out from the USB drive with the help of computer expert. On the basis of the said print out, it was ascertained that the appellants during the period 01.04.2005 .....

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imposition of penalty and also confiscation of the goods. The Adjudicating authority confirmed the demand of Central Excise duty of ₹ 23,78,329.00 alongwith interest and also imposed penalty of equal amount of duty on the goods cleared clandestinely and also confiscated the seized goods, released on bond backed by bank guarantee of ₹ 21,000.00 and appropriated towards fine in lieu of confiscation of the goods. It has also imposed personal penalties of ₹ 1 lakh each on the two p .....

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ected the USB drive to a computer in the appellant s office and on the basis of print out contained in the USB drive, as claimed, it was ascertained the clearance value during the material period, over and above of ₹ 1 Crore. He submits that both the partners of the appellant firm disowned the contents of the print out in their statement. It is submitted that the data was not stored in the computer and it was retrieved from the USB drive. It is submitted that in the present case, the Centr .....

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LT A 101 f) M/s Indo Green Textile Pvt.Ltd. Vs CCE 2007 (212) ELT 343 (T) 5. It is also submitted that the Adjudicating authority denied the cross examination of the 30 persons. The statements of the 30 persons were pre-drafted computer statements. The Commissioner (Appeals) allowed cross examination of only 4 persons which were randomly selected. After considering the nature and contents of the statements and the cross examination, the Commissioner (Appeals) has observed that the evidentiary va .....

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anufacture, clearance, purchase of huge quantity of raw materials, transport documents etc for alleged clandestine removal of goods. Relied on the decision of the Tribunal in the case of M/s Arya Fibres Pvt.Ltd. and others Vs Commissioner of Central Excise, Ahmedabad-II, - 2014-TIOL-15-CESTAT-AHM. The learned Advocate also filed the written submissions along with the case laws. 6. On the other hand, learned Authorised Representative for the Revenue reiterates the findings of the Commissioner (Ap .....

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on perusal of the records, I find that the Central Excise officers while visiting the factory of the appellant, recovered a USB drive in the appellant s premises. The USB drive was connected with computer and a printout was taken by the computer expert accompanied with the Central Excise officers. The print out gives the details of the certain sales (date-wise) commencing from 01.04.2005. The delivery challans for various chemicals for the month of December 2005 and January 2006 were found and s .....

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nts of the print out with the statements of 30 persons viz. buyers, transporters etc. The appellants requested for cross examination of 30 persons which was rejected by the Adjudicating authority. The appellants contended that the statements are pre-drafted computer statements and it cannot be voluntary nature. After considering the submissions of the appellant, the Commissioner (Appeals) allowed the cross examination of 4 persons randomly selected. Three of them stated that they were made to si .....

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buyers (randomly selected) deposed before me. Three of them stated before me that they were made to sign a pre-drafted statement on a promise that no action shall be taken against them. One of them stated that his statement was voluntary. In the statements it has been recorded that these person stated that they received the textile auxiliary chemicals without invoice and against cash payments. Statement of these 30 persons (most of them Processors) are against their own interest as it makes the .....

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ese thirty statements is considerably weakened. However, the solid evidence in the form of electronic records (USB Drive) and the computer print out from the same are sufficient to nail the appellant. 9. The Commissioner (Appeals) observed that the evidence in the form of electronic record (USB drive) the computer print out are strong evidence to establish the clandestine removal of the goods. It is seen that the said print out of the data in the USB drive contained the details of raw material a .....

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the goods cannot be upheld based on the print out of the data contained in the USB drive without following the requirement of condition of Section 36B of the Central Excise Act, 1944. Section 36B of the said Act provides admissibility of microfilms, facsimile copies of documents and computer printouts as documents and as evidence. Clause (c) of Section 36B (1) states that the statement contained in a document and included in a computer print out would be an evidence if the condition mentioned i .....

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puter during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement of the kind from which the information so contained is derived; (c) throughout the material .....

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n this behalf by a person occupying the responsible official position in relation to the operation of the relevant device or the management of the relevant activity (whichever is appropriate) shall be evidence in any matter stated in the certificate and for the purpose of the sub-section, which shall be sufficient for a matter to be stated to the best of the knowledge and the belief of the persons stating it. In the present case, the data was not stored in the computer. It is stated that the com .....

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ection 36B (4) is also to substantiate the veracity of truth in the operation of electronic media. In the case of M/s Premier Instrument & Controls Ltd. (supra), the Tribunal has held that the print out of the personal computer of the company s officer, had not fulfilled the statutory condition laid down under Section 36B (2) of the Act and the demand is not sustainable. The relevant portion of the said decision is reproduced below:- 9. On the demand of duty on waste and scrap, again the? ap .....

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the computer print-outs. The statements of others, recorded in this case, did not disclose any additional fact. Therefore, apparently, what is contained in the computer print-out is the only basis of the demand of duty on waste and scrap. The question now arises as to whether these print-outs are admissible as evidence, in this case. Ld. Sr. Counsel has pointed out that the computer print-outs did not satisfy the statutory conditions. He has referred to the relevant provisions of Section 36B of .....

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der :- 2. The conditions referred to in sub-section (1) in respect of the computer print-out shall be the following, namely :- (a) the computer print-out containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; (b) during the said period, there was regularly supplied to .....

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n contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities. Ld. Sr. Counsel has argued that the above conditions were not fulfilled in respect of the computer print-out taken from the personal computer of Shri Sampath Kumar. It appears from the statement of Shri Sampath Kumar and the averments in the memorandum of appeal that it is an admitted fact that Shri Sampath Kumar was the person having lawful control over .....

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roperly. The above provision also casts a burden on that party who wants to rely on the computer print-out, to show that the information contained in the print-out had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. We have considered the Tribunal s decision in International Computer Ribbon Corporation v. CCE, Chennai (supra). In that case, as in the instant case, computer print-outs .....

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