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Ashutosh Metal Industries Versus Commissioner of Central Excise & Service Tax., Delhi

2017 (3) TMI 926 - CESTAT NEW DELHI

Clandestine removal - natural justice - the authorities failed to offer all the witnesses for cross examination by the appellants - Held that: - ld. Commissioner could not rely on the statements of these witnesses without providing them for cross-examination - reliance was placed in the decision of the case of G. Tech Industries vs. UOI [2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT], where it was pointed out that Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of ev .....

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asi judicial proceedings should be such that the charges get established on the basis of preponderance of probability. The standard of evidences need not be as high as in criminal proceedings, where the charges are required to be established beyond reasonable doubts - in the present case the allegation of clandestine manufacture and clearance has not been substantiated by any tangible evidences, The Revenue has failed to produce any corroborative evidence in the form of purchase of raw materials .....

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ces - appeal allowed - decided in favor of appellant. - E/2713/2009-CU [DB] - A/50477/2017-EX[DB] - Dated:- 25-1-2017 - MR. (DR.) SATISH CHANDRA, PRESIDENT & MR. V. PADMANABHAN, MEMBER (TECHNICAL) Appearance: Shri J.P. Kaushik, Advocate for the Appellant Shri G.R. Singh, Advocate for the Respondent Per V. Padmanabhan The present appeal is directed against the Order-in-Original No. 19/2009 dated 30.03.2009, passed by Commissioner of Central Excise, New Delhi. 2. Brief facts of the case are th .....

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5,01,335.08 2,55,68,089.30 2 SHIVA 07.5.05 to 16.9.05 35,02,87,889.00 30,11,41,582.70 4,81,82, 653.23 9,63,653.07 4.91,46,306.30 3 ATM 17.9.05 to 21.9.05 77,80,242.00 66,88,653.71 10,70, 184.59 21,403.70 10,91,588.29 4 ATM 22.9.05 to 12.11.05 5,16,58, 179.00 4,44,10,401. 47 71,05, 664.25 1,42,113.28 72,47,777.53 TOTAL 59,19,61,613.30 50,89,07,851.88 8,14,25,256.29 16,28,505.13 8,30,53,761.42 Consequently the duty demand of ₹ 8,30,53,761/- has been confirmed for the period 02.3.2005 to 12.1 .....

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. It has also been contended that the authority could not have relied upon the documents recovered from the possession of the third party namely, Smt. Janaki Sharma, who is nowhere concerned with the business of the appellants. Her statement dated 18.11.2005 was retracted immediately on the day following the day on which statement was recorded. And in that connection, attention was drawn to copy of her letter dated 19.11.2005. As per the show cause notice itself the total daily production from t .....

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onear Décor Pvt. Limited vs. CCE, Rohtak as reported in [2010 (259) ELT 437(Tri-Del)], Hilton Tobaccos Limited vs. CCE Hyderabad-I - [2005 (183) ELT 378 (Tri-Bang)], T.G.L. Poshak Corpn. vs. CCE Hyderabad - [2002 (140) ELT 187 (Tri-Chennai)] and P V Verghese vs. CEGAT 2008 (232) ELT 420. 3. With the above background, we have heard Shri J.P. Kaushik, ld. Counsel appearing for the appellant and Shri G.R. Singh, ld. DR for the Revenue. 4. Ld. Counsel for the appellant argued the case elabora .....

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the certificate as stipulated in sub-section 4 of section 36B has not been produced. RUD- 8 and 9 are extracts of RUD-1 and 2 and this plea equally applies to RUD -8 and 9. Reliance in this regard is placed on the judgments in Shivani Steel Corporation -2016 (339) ELT 310 (Tri. Kol.) and Jindal Nickel & Alloys Limited - 2012 (279) ELT 134 (Tri. Del.). (b) Computer hard disk and pen drive were seized on 18.11.2005 from residence of Smt. Janski Sharma. Printouts were taken on 18.11.2005. But a .....

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f printer, how the printouts could be taken on 18.11.2005? Moreover, Shri J.K. Aggarwal in his statement dated 20.07.2006 had stated that the appellants had no connection with RUD-1, 2 and 3. It appears that the computer printouts were prepared/ forged by the investigating officer at a later stage and not at the time of search as Smt. Janki Sharma had no printer at her residence. The printouts were also not taken in the presence of Smt. Janki Sharma or in presence of Shri. J.K. Aggarwal. (d) The .....

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is, therefore, obvious that RUD-1 and 2 did not belong to the appellants as also stated by Shri J.K. Aggarwal in his statements dated 20.07.2007 and ought not to have been admitted as evidence against the appellants. (e) The Ld. Commissioner has accepted in Para 41 of the order the facts mentioned in Para 2 of the show cause notice i.e. the appellants could produce 5MT of ingots in a day and worked 10 to 15 days in a month. For the period from 17.09.2005 to 12.11.2005 covered by RUD-3 the produc .....

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ntents of RUD-1, 2 and 3 could be easily verified by locating them and by making investigation at their end. No such effort was made by the investigating officer and as such the contents of RUD-1, 2 and 3 remained uncorroborated with independent evidence and rendered them inadmissible in evidence. (g) Not only the alleged production of such huge quantity of ingots, wire rods and wires allegedly sold by the appellants, is impossible keeping in view of the production capacity, but also is not corr .....

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porting the raw material to the factory; (b) statements of the appellants staff which would have received the raw material or issued it for manufacture; (c) statements of employees who have used such raw material in the production of the finished goods; (d) statement of the alleged suppliers of raw materials; (e) evidence of payment of purchase price to the suppliers of raw material and receipt of purchase price by the suppliers. (iii) Similarly in respect of sale of the alleged production of th .....

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Cement Co. - 2014 (309) ELT 411 (All.). The statements of Smt. Janki Sharma and others ought not to have been relied upon by the ld. Commissioner for the following reasons:- (i) Smt. Janki Sharma retracted her statement dated 18.11.2005 vide her letter dated 19.11.2005 to Addl. Director General, DGCEI. (ii) During her cross-examination on 10.02.2009 (page 133137 of Appeal) she deposed that search on 18.11.2005 was not conducted properly, there was no recovery of RUD-1, 2 and 3, she did not work .....

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hought by the ld. Commissioner are misplaced and not proper. He ought to have kept her statements which were retracted and contradicted during cross-examination, out of the consideration. (v) The impugned order also relied on the statements of and S/Sh. Hrishikesh Dubey, Kashiram Puri, R.S. Aggarwal and Manish Sethi. The appellants had requested for their crossexamination vide letter dated 13.10.2008 (page 168 of Appeal). No reasons are given for not offering S/Sh. Manish Sethi, Hrishikesh Dubey .....

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anish Sethi also retracted his statement dated 18.01.2006 vide his letter dated 02.02.2006. His retracted statement could not have been relied upon by the ld. Commissioner. (vii) It is well settled legal position that the department has to establish clandestine removal by bringing on record positive and concrete evidence and the charge cannot be based on suspicion, assumptions and presumptions. In this case, the department has not been able to produce positive and concrete evidence to establish .....

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did not seek to cross examine all the witnesses but they wanted to cross examine only two witnesses and that is apparent from their letter dated 01.11.2008. He further submitted that the appellants have sought for cross examination of Smt. Janaki Sharma and Shri R.S. Aggarwal as referred to in letter from the appellant as confirmed by two of the employees of the appellants themselves namely, Hrishikesh Dubey, Accountant and Manish Sethi, part time accountant of the appellants. The fact that Smt. .....

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ound. After about two months on 18.11.2005, the officers searched the residence of one Smt. Janki Sharma said to be an employee of M/s. Kaycee Electricals and following was recovered at the time of search:- (i) Several loose slips were found which were placed in a file and marked 1-56 - (RUD-I) (ii) One pen-drive of Kingston brand of 512MB, one Hard disk drive, Seagat brand of 80GB capacity. Printouts were taken of the contents from the above equipments. The data generated from the pen drive per .....

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tements of Shri R.S. Aggarwal and Shri Manish Sethi. On the basis of the above details, the demand of Central Excise duty was proposed in the show cause notice to ₹ 9,66,08,135/-, which was finally confirmed in the impugned order to the extent of ₹ 8,30,53,761/-, after extending the benefit of cum-duty price. Such demand of Central Excise was confirmed and has been assailed in the present appeal. 7. The first ground on which the evidence has been assailed is that RUD-1 and 2 which ar .....

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mputer 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 regular supply to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived; (c) throughout the material .....

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the form of prints taken out from the pen-drive as well as from the hard-disk recovered at the residence of Smt. Janki Sharma. Smt. Janki Sharma in her initial statement dated 18.11.2005, at the time of search, admitted that these printouts are out of Kachchi Parchis given to her by proprietor Shri J.K. Aggarwal and are related to sale of goods made by the appellant clandestinely. However, it is on record that she has retracted her statement immediately thereafter on the next day. At the time o .....

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n before the adjudicating authority has further disowned the printouts and has also submitted that there was no printer at her house at the time of search. This also raises serious doubt how the printouts were taken in the presence of Smt. Janki Sharma and Shri J.K. Aggarwal, proprietor. In the light of the above, it clearly emerges that the conditions under Section 36B(2) have not been satisfied for the admissibility of evidence in the form of computer printouts, in RUD-1 and 2. 8. The impugned .....

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70,000/- per MT for ingots and considering the sale value of invoices as per RUD-1 and 2, i.e. ₹ 25,23,192/-, the quantity of ingots involved works out to 3132MTs. In the light of the production capacity estimated by the Commissioner as 600MT, the quantum of ingots for which the demand has been raised at 3132MTs appears to be inflated and unreasonable. On the same lines, for the period 17.09.2005 to 12.11.2005, covered by RUD-3, the production capacity was worked out as 135MTs whereas, the .....

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is that the impugned order also relied on the statement of Shri Hrishikesh Dubey, Shri Kashiram Puri, Shri R.S. Aggarwal and Shri Manish Sethi. Though they had requested to the adjudicating authority for cross-examination of all these witnesses vide their letter dated 13.10.2008, the adjudicating authority has not made these witnesses available for cross-examination. The appellant has submitted that ld. Commissioner could not rely on the statements of these witnesses without providing them for .....

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company has not been established. She has also retracted her statement given at the time of search, promptly. The computer printouts also did not satisfy the conditions prescribed under Section 36B of the Central Excise Act, 1944. Such computer printouts are not eligible to be used as evidence. 11. It is settled law that documents recovered from a third party can be used against the manufacturer to prove clandestine removal only when these are supported with corroborative evidences. The Revenue .....

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dences. For clandestine clearance of such huge quantities of finished products, corresponding quantity of raw-materials ought to have been procured by the appellant. The finished products allegedly have been cleared to various customers. In fact, in the computer printouts recovered, names of several buyers have been indicated. However, we note that Revenue has failed to undertake proper investigation even for the procurement of raw materials without entering in their books, nor carried out any i .....

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the transportation of raw materials as well as finished products. The total quantum of alleged clandestine production and clearance also show an over estimation, keeping in view the production capacity estimated by the Commissioner himself in the impugned order. 12. It is true that the evidence which is required to be produced in quasi judicial proceedings should be such that the charges get established on the basis of preponderance of probability. The standard of evidences need not be as high .....

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