TMI Blog2018 (4) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturing units in question. The pen drives recovered from the premises of an independent trader cannot be held to be proper evidence for arriving at the findings of clandestine removal Revenue has not made any efforts to establish the factum of clandestine manufacture of the goods by the appellants. No investigations stand made by the Revenue as regards procurement of the huge raw material, as also the packaging material and their actual manufacture in the appellant's factory. Statement of neither of their employees or production manager stand recorded. Apart from the fact that the Revenue has failed to establish the allegation of clandestine removal, it is also noted that the appellant have produced on record the Chartered Accountant certificate submitting that the production capacity of both the factories was incapable of producing such huge quantum of excisable goods as alleged by the Revenue. It is well settled law that the onus to prove clandestine activities is on the Revenue and is required to be discharged by producing positive, cogent and justifiable evidences - In the present case, no such evidence being available, the findings of clandestine rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir stocks of the raw-materials or in their final products. As per the Id. Counsel some documents were seized by the Officers but they are neither mentioned in the Panchnamas nor are relied upon in the Show Cause Notice. The Officers also put to search the sales depots of M/S TEFPL M/S RCI as also other dealers under the name of M/S Rubber Complex India M/S BES Traders on the same date. The stock found at the said premises not entered in their records was put under seizure and various other documents along with some Kaccha Slips and Electronic records like Laptops, Disc Drives Pen Drives were seized from the said premises. 4. On the basis of the said Kaccha Parchies as also some post-dated cheques seized from the residence of Shri Harsh Sachdeva, whose premises was also put to search on 26/10/2013 itself, Revenue conducted further enquiries from the persons mentioned in the said Kaccha Parchies. However, out of the large number of Kaccha Parchies, statements of only I l persons mentioned in the said Kaccha Parchies were recorded. The persons so contacted by the Revenue deposed that they used to procure Footwear Soles from M/S TEFPL M/S RCI on the strength of post-dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner is impugned before us. 8. The Id. Advocate Sh. A. K. Prasad, appearing for the appellants raised the following grounds:- A. The whole case of the department, including the demand, is based on the print outs allegedly taken from the pen-drives seized from the premises ofM/s.BES Traders on 26.10.2013. As per Annexure 'A' to RUD-I, out of the 4 pen drives seized, two were of H? Brand, one of Kingston Brand and one was unbranded. However, as per RUD-26 (page-944), which is the panchnama drawn on 11.8.2014, at the time of unsealing of the seized/sealed pen-drives and taking printouts there-from, it is seen that print outs were taken from pen drives other than the seized ones. This shows that the seized pen-drives were substituted/replaced and print outs taken from the substituted pen drives. B. The two panchas who had witnessed the seizure of the pen drives from the premises of M/s.BES Traders on 26.10.2013, were allowed to be cross examined by the adjudicating authority. Panch NO. l, Shri Narinder Singh, did not appear. However, it is to be noted that this panch was not from the locality in Agra, as is required by law, but was a resident of New Delhi. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese premises. I. In this background, if the department wanted to prove that IWs.BES Traders were a 'dummy' unit of the appellants, a show casue notice should have been issued to them in this regard. Though the show cause notice dated 22.4.2014 records Shri Surinder Khanna as a co-noticees, he has not been made a co noticee in the main show cause notices dt.23.2.2014. On this ground itself the show cause notice dated 23.2.2015 needs to be quashed. J. M]s.BES traders furnished adequate evidence before the adjudicating authority that they were selling goods not only of the appellants but also of other supplier. But this was ignored. K. To prove clandestine clearance only inculpatory statements or print outs taken from pen-drives is not enough. It is now established that to prove clandestine clearance the department should produce clinching evidence regarding the following:- i) Discrepancy in stocks, both of finished and/or raw materials. The panchnamas drawn by the departmental officers at the two factory premises on 26.10.2013 (which are not RUDs in the proceedings) show that no discrepancies were found in stocks. ii) The department should establish procurem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, ratio should have been taken as 4:1 in respect of these goods. N. Cum-duty benefit should have been given. O. Combined penalties have been imposed on Shri Harsh Sachdeva and Shri Nitin Sachdeva for their roles as Director TFEPL and Partner of RCI. Since the alleged evasion is in respect of two companies, combined penalties cannot be imposed. P. No duty has been demanded on the basis of kachcha parchies and post dated cheques seized from the residential premises of Shri Harsh Sachdeva. Demands have also not been raised on the basis of kachcha slips seized from the premises of M/s.BES traders. Once these print outs are held to be not admissible as evidence, the demand does not survive the department cannot seek to demand or recover duty on the basis of any other evidence. Q. The show cause notice dated 23.03.2015 stiffers from the vice of non-joinder of 'necessary parties'. Since M/s.BES Traders were proposed to be declared as 'dummy' of Appellants 1 and 2, they were required to be made notice to the show cause notice. As per the case of the department some unaccounted and non-duty paid goods had also been sold form the premises of BES Traders and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as nobody discloses his financial dealings with the other persons. As regards the appellant's contention that print outs recovered from the pen drives by Ws.BES cannot relied upon inasmuch as the make of the pen drive which were seized is different from the make of the pen drive from which the print outs were taken, he submits that said print outs were taken before Shri Harsh Sachdeva and Shri Nitin Sachdeva, who never objected to the same. He also submits that at the time of taking out the print outs the independent witnesses were available and as such appellant cannot object to the same. As regards the evidentiary value of the print outs in terms of the provisions of section 36B(2) and 36B(4) of the Central Excise Act, he submits that the said issue has been discussed in detail by the adjudicating authority and reiterates the same findings. Ld.AR further submits that there are statements on record indicating that the appellants are indulging in clandestine activities. The retraction of statement of Shri Harsh Sachdeva and Shri Nitin Sachdeva by alleging undue pressure and coercion upon them cannot be appreciated inasmuch as they have not produced any evidence to sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observing that in similar trade or business, no one shares his financial records with any other person, who is also in same business. In the present case, Shri. Surinder Khanna has not only given the financial records, but also given affidavit. This shows that Shri Surinder Khanna is well-wisher of the notices, who actually control the business of M/s.BES Traders. We find that the said reasoning of the adjudicating authority cannot be appreciated. Admittedly the documents speaks much louder than the oral evidences. Admittedly M/s.BES Traders is in the name of Shri Surinder Khanna and all the financial records, which stand produced by them, are being maintained in the name of M/s.BES Traders. Based upon the retracted statement of Shri Sachdeva as also of some of the employees, it cannot be concluded that M/s.BES Traders is not the proprietory unit of Shri Surinder Khanna. It is also to be noted here very importantly that Shri Surinder Khanna was never examined during the course of investigations and his statements were never recorded inspite of the fact of M/s.BES Traders being the proprietory unit of Shri Surinder Khanna having come to the knowledge of the investigating officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating documents, which stand relied upon in the show cause notices were recovered from their premises. The entire case of the Revenue is based upon the prints outs seized from the premises ofM/s.BES, which is a third party premises. It is well settled law that the documents recovered from the premises of the third parties are required to be dealt with, with a caution and requires further corroboration in the shape of the evidences directly related to the manufacturing units in question. Reference can be made to the Tribunal decision in the case of Rama Shyam Papers Ltd. vs. CCE, Lucknow reported as 2004 (168) ELT 494 (Tri. Del.) wherein it was observed that the records seized from third party premises cannot be made the sole basis for upholding the findings of the clandestine removal, even if it is proved that the assessee was having business relationship with that party. Similarly in the majority decision of the Tribunal in the case of Kuber Tobacco Products Ltd. v. CCE, delhi [2013 (290) ELT 545 (Tri.-Del.)], it was observed that documents not recovered from factory, office or residential premises of the assessee company require a link between such documents and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Ambica Organics vs. CCE C, Surat-l -2016 (334) ELT 97 (Tri. Ahmd) referred to the evidentiary value of the print outs of data obtained from a USB device and held that reliance on such material is impermissible in view of non fulfilling the condition contained in sub-section (ii) of Section 36B of the Central Excise Rules. The said order of the Tribunal stands upheld by the Hon'ble Gujarat High Court when the appeal filed by the revenue was rejected reported as Commissioner vs. Ambica Organics -2016 (334) ELT A67 (Guj.). While arriving at the above decision of the Ambica Organics, the Tribunal relied upon many precedent decisions holding that such print outs without satisfying the procedure as detailed in Section 36B of the Central Excise Act can have no evidentiary value. To the same effect is the Tribunal decision in the case of Premier Instruments Controls Ltd. vs. CCE, Coimbatore -2005 (183) ELT 65 (Tri. Chennai) wherein it was held that print outs of personal computer of companies officer does not fulfill the statutory conditions laid down under Section 36B(2) of the Central Excise Act, 1944 and demand is on the said basis cannot be sustained. Inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f visit of the Officers, either in the shape of raw material or the packing goods or the final products. If a manufacturer is indulging in any clandestine activities at such a huge level, there are bound to be discrepancies in the stocks available at the time of surprise visit of the Officers. 17. Further, the Revenue has also not been able to produce any evidence to show as to how the cash of more than ₹ 36 crores worth of alleged sale of unaccounted goods was managed by the appellant, there is no trail of any such financial dealing available on record. As already observed, it is well settled law that the onus to prove clandestine activities is on the Revenue and is required to be discharged by producing positive, cogent and justifiable evidences. In the present case, no such evidence being available, we are of the view that the findings of clandestine removal cannot be upheld against the two manufacturing units. Accordingly, the demand raised against them is set aside alongwith setting aside of penalties imposed upon them. 18. Further, we note that the adjudicating authority has imposed common penalties on both the Directors. Having held that the clandestine removal f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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