TMI Blog2018 (10) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant. Section 36B of the Central Excise Act, 1944 deals with the situation of admissibility of documents and computer print outs as evidence. The procedure has been prescribed under Section 36B of the Act - In this case, the procedure laid down under Sub-sections 2, 3 & 4 of section 36B, has not been followed, in that circumstances, the data gathered from pen drives relied in toto and some of the invoices, are not admissible evidence. Therefore, on this sole ground, the show cause notice is not sustainable. Production capacity - Held that:- As per ER-7 returns, the appellant has shown their production capacity during the impugned period and as per the ER-7 returns it is clear that the maximum production capacity of the appellant is 3500 MT without any break. Admittedly, no factory work on 100% production capacity due to wear and tear. The production capacity on which the impugned order is demanding duty works out to 6430.1705 MT during the impugned period. By no stretch of imagination, such quantity of clandestinely cleared goods by the appellants could be manufactured during the impugned period. Invoices - Held that:- On the one hand it has been alleged that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se are that the appellant/M/s P.S. is engaged in the manufacture of Stainless Steel Pipes Tubes who is registered with the central excise department having their head office at Hisar and also having their trading office at Motia Khan, Delhi. M/s P.S is also having their sister unit namely M/s Sheela Stainless Pvt. Ltd (in short M/s SSPL) having their office at Hisar and engaged in their trading of Iron Steel Products and also having central excise registration as registered dealer. They are also having their sales office located at Motia Khan, Nabi Karim, New Delhi. The offices of the M/s P.S and M/s SSPL located in Delhi were not registered with the central excise department. The head office of M/s P.S and M/s SSPL is located in Hisar and the records of the both were maintained M/s P.S s office at Hisar. On 11.04.2013, a search was conducted at the premises to the M/s P.S and M/s SSPL. The factory of M/s P.S was found working. No variation in stock of inputs as well as finished goods were found in records of the stock maintained in the statutory records and no incriminating documents were recovered during the search of the factory premises of the appellant. Shri Deepak Gupta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of appellant and their buyer. The identity of the person mentioned therein could not be established as per department. It has been mentioned that evidences strongly suggest that amounts collected from persons/party were nothing but sale proceeds of appellant. As per folder Daily Paper amount of ₹ 9,74,60,825/- and as per folder Hisar Paper ₹ 71,52,650/- received. The duty of ₹ 95,95,013/- has been demanded (i.e. ₹ 89,49,777/- on receipt of cash under Delhi Paper and duty of ₹ 6,45,236/- on receipt of cash under Hisar Paper . There is no quantity of impugned goods mentioned in the show cause notice. 5.1 There are 226 entries in excelsheets description in respect of which tally with invoices except gross value. It has been alleged undervaluation and duty of ₹ 28,13,716/- demanded. 6. It has been alleged that in follow up searches conducted on 20.06.2013 at the premises of M/s Vanita Hardware Store, Cuttak, M/s Balkishan Sons, Gwalior and M/s Ravi Steels, Gwalior, it was found appellant had evaded duty on clandestine clearances from 11.04.2013 to 20.06.2013, the duty of ₹ 5,91,977/-. 7. It has been alleged that appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ji)]- Details as per annexure E -Page 171 SCN 679.961 95,52,999/- 3. Duty Evasion after 11.04.2013 to 20.06.2013-Details as per Annexure- J -Page 198 SCN 40.904 5,91,977/- 4. Receipt of cash amounts under Delhi Paper- Details as per Annexure H -Page 187 SCN 89,49,777/- 5. Receipt of cash amounts under Hisar Paper- Details as per Annexure I -Page 189 SCN 6,45,236/- 6. Undervaluation-Details as per Annexure C -page-148 SCN 1277.207 28,13,716/- 7. Total 3822.934 4,72,73,240/- It is his submission that it has been held that the appellants cleared 1824.862 MT of Stainless Steel Pipe without payment of duty of ₹ 2,47,19,535/- against the 578 entries during the period 01.01.2012 to 09.04.2013 and the head office at Hisar was joint office of the M/s P.S and their sales office at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he buyer on whose behalf the order was placed. He further submitted that the adjudicating authority has held that the appellants have developed the modus-operandi of clandestine removal of goods to one set of buyer simultaneous the issue of goodless invoices to another set of buyers of facilitate them to avail inadmissible cenvat credit. The appellants had cleared goods to cover up of invoices simultaneously to convey their mistake they raised cenvatable goodless invoices of near equal quantity. To that effect, he submits that the adjudicating authority erred in holding that the excel sheets is in the name of Delhi Office retrieved from pen drive revealed that there are 198 entries in said excel sheets against which no invoice available in the records. Further, held that appellants against 198 entries during the period 01.01.2012 to 31.03.2012 cleared impugned goods weighing 679.961 MT, without payment of duty of ₹ 95,52,999/-. In fact, the adjudicating authority has failed to appreciate that in the Excelsheets data, the entries are in the name of Vishalji, connotes that these orders were booked through Mr. Vishal Gupta and Shri Vishal Gupta in his statement dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Vanita Hardware Store, Cuttak. He further submits that the adjudicating authority demanded duty of ₹ 95,95,013/- with respect to cash receipts shown in excel sheets under Delhi Paper and Hisar Paper for the period April 2011 to December 2011. It is his submission that the data retrieved from pen drive is neither credible nor admissible as evidence and there is no allegation in the show cause notice that this amount was received on account of clandestine removal of goods or undervaluation in respect of clearances made by the appellants. The show cause notice does not alleges that the cash receipts are of clandestine removal of goods or undervaluation of goods in respect of the clearance made by the appellants. Therefore, the said demand is not sustainable. Further, the adjudicating authority failed to appreciate that Delhi Paper and Hisar Paper represents the trading clearances of appellant s trading unit and M/s SSPL s trading unit. There is nothing brought on records that goods against alleged cash receipts which were clandestinely removed by the M/s P.S. He further submits that there is no variation in stock of inputs and finished goods found during the course of vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ₹ 6,35,149/- have been issued to the appellant but the adjudicating authority has failed to appreciate that it is neither realistic nor practical for the appellant issue goodless invoices to their Delhi Office and to M/s SSPL Delhi as they could not avail any cenvat credit being not registered dealer, moreover, for branch transfer to Delhi, appellant had to loose VAT credit @25% and for sale to SSPL Delhi they had to pay CST @2%, it prima-facie substantiate that the appellant had cleared goods alongwith invoices to their Delhi Location and to M/s SSPL, Delhi. This one hand negates the allegation that the Excelsheets data is a record of dispatch of goods from the factory of the appellant and on the other hand corroborates the stand of the appellant that they cleared goods alongwith invoices. It is his submission that the appellants have issued goodless invoices to unregistered dealer who were not registered with the central excise department, therefore, the allegation of appellant issued goodless invoices to make available cenvat credit to consignee is misconceived, therefore, on the said amount, the demand is not sustainable. It is his submission that on one hand i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the impugned orders are to be confirmed. 8. On careful consideration of submissions of both sides, we find that in this case during the course of investigation neither stock variations were found and nor any incriminating documents were recovered during the search of factory premises of appellants. Only two pen drives were recovered from the possession of Ms. Priyanka Jain in the joint office of the appellant and data has been retrieved and on that basis, the case has been made out against the appellant. Section 36B of the Central Excise Act, 1944 deals with the situation of admissibility of documents and computer print outs as evidence. The Section 36B of CEA, 1944 is extracted herein below:- 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 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring that period shall 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 thereunder 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods were manufactured and how much electricity is used to manufacture such quantity of goods, if it is to be alleged that whatever quantity of goods they have shown cleared as per invoices then the investigation was required to be done with regards how the raw material was procured, how much labour was employed, how much a huge quantity can be manufactured. Moreover, there is no allegation of excess or shortage of raw material/finished goods at the time of search and no incriminating documents were recovered, in that circumstances, Revenue is required to prove their case as per the decision of this Tribunal in the case of Arya Fibers Pvt. Ltd. Vs. Commissioner of Central Excise, Ahmedabad-II 2014 (311) ELT 529 (Tri.-Ahmd.) wherein the paragraph 40 of the said order has observed as under:- 40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearances, certain fundamental criteria have to be established by Revenue which mainly are the following : (i) There should be tangi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. A co-ordinate Bench of this Tribunal has, in another decision, reported in the E.L.T. issue of 5-8-2013 (after hearings in the present appeals were concluded), once again reiterated the same principles, after considering the entire case-law on the subject [Hindustan Machines v. CCE [2013 (294) E.L.T. 43]. Members of Bench having hearing initially differed, the matter was referred to a third Member, who held that clandestine manufacture and clearances were not established by the Revenue. We are not going into it in detail, since the learned Counsels on either side may not have had the opportunity of examining the decision in the light of the facts of the present case. Suffice it to say that the said decision has also tabulated the entire case-law, including most of the decisions cited before us now, considered them, and come to the above conclusion. In yet another decision of a co-ordinate Bench of the Tribunal [Pan Parag India v. CCE, 2013 (291 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. Therefore, on that account also, the demand is not sustainable. 11. With regard to the issue of undervaluation, which the appellant has conceaded and stated that on that account, the duty of ₹ 8,49,099/- is payable, therefore, we are examining the issue in detail. We have seen that as the appellant has shown invoices, the price of the goods and corresponding invoices has been recovered which is having higher price to the same party of the same quantity, in that circumstances, the issue of undervaluation has been proved, therefore, on account of undervaluation, the appellants are liable to pay duty alongwith interest. 11. In view of the above discussion, we pass the following order. (a) as conceaded by the appellants, the demand of ₹ 28,13,716/- on account of undervaluation is confirmed alongwith interest and as the appellants have paid a sum of ₹ 39,50,000/- during the course of investigation itself, therefore, the penalty is reduced to 25% of the duty confirmed. (b) with regard to the rest of demand, i) the data recovered from the pen drive is not admissible as per Section 36B of the Act and ii) the revenue failed to prove the case of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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