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2019 (7) TMI 101

n the basis of Bills of Entry - suppression of production - demand based on various pen drives - presence of corroborative evidences or not. The demands of ₹ 1,76,98,647/- and ₹ 11,62,356/- has been confirmed against the Appellant on account of goods allegedly cleared through M/s Parnami Transport and M/s TCC Carriers - personal pen drive of Shri Sukhdev alias Saral Patidar, diary of Shri Ritesh Gupta, loading challans of M/s Parnami Transport and personal diary of Shri Sunil Atri of TCC Carriers have been relied upon - HELD THAT:- The Appellant has challenged the manner of taking the data from pen drive as well as the data of the pen drive itself. The Pen drive data is said to be record of clandestine clearance and the same has been taken from the office computer, but we find that no computer has been identified from which such data was copied. There is no source computer on which such data/ record of alleged clandestine clearances was being maintained by the Appellant concern M/s KLMPL. It leads to serious doubt about the credibility of such data found in pen drive - There is no findings as to on whose instructions such data was maintained by him. Shri Shri Sukhdev al .....

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data of the pen drive is not admissible as evidence. Some of the demand are confirmed against the Appellant on the basis of data found in personal pen drive of Shri Shailesh Yadav, employee of anodizer/ processor M/s KI. Shri Yadav was also working for M/s Sunshine Marketing - demand on the ground that no invoices towards clearances were found at M/s KI, whereas their records show the receipt of material - HELD THAT:- There is no acceptance on the part of the owner of M/s KI, that the data maintained in the pen drive belongs to their concern. It is also a fact that Shri Shailesh Yadav was also working for M/s Sunshine Marketing, as also stated by Shri Dinesh Mittal, partner of M/s Sunshine Marketing. M/s Sunshine Marketing were engaged in anodizing and were undertaking such activity on behalf of other suppliers in addition to M/s KLMPL. Further, even if the data found in the pen drive of Shri Shailesh Yadav is matching with the pen drive data of Shri Sukhdev Patidar, it cannot be a conclusive ground to hold that the goods were clandestinely cleared by M/s KLMPL to M/s KI. It is an accepted fact from the show cause notice that in premises of M/s KI, the goods were also being receiv .....

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of M/S HINDUSTAN MACHINES AND OTHERS VERSUS CCE, DELHI [2013 (5) TMI 543 - CESTAT NEW DELHI] it was held that the internal records maintained by a worker in his private capacity is not sufficient to alleged clandestine removal. The show cause notice has relied upon the statement of driver of vehicle no. MP-09-KA-4616 Shri Raghuvir Maurya, that he was transporting goods from the Appellant factory to premises of M/s KI. However as pointed out by the ld. Counsel no record of such clearance has been brought on record. Merely on the basis of statement of Shri Raghuvir Maurya, it cannot be said that the goods were transported clandestinely through such vehicle and therefore there is no ground to demand duty. Demand of ₹ 21,24,217/- on the ground that the Appellant had availed credit of duty on the basis of bills of entries of the goods, i.e. Aluminum Scrap, shown to have been purchased on high sea sale basis from M/s Moongad Aluminium and also on the basis of invoices issued by M/s Satya Sales Corporation, Mumbai - HELD THAT:- The allegation of clandestine production vis-à-vis allegation of non-receipt of raw material is contrary to each other. The payment against the purcha .....

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nd final product, clandestine removal of goods with reference to entry of vehicles in the factory premises, loading of goods, transporters documents such as LRs, statements of drivers, entries at check-posts and the receipt of goods by the consignees, amount received from the consignees, statement of consignees admitting receipt as well as receipt of sale proceeds by the consignor and its disposal. Demand not sustainable - appeal allowed - decided in favor of appellant. - Excise Appeals Nos.50684, 50783, 50784, 50785, 50878 and 50879 of 2017(DB) - FINAL ORDERS NOS.50825-50830/2019 - 1-7-2019 - SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) AND BIJAY KUMAR, MEMBER (TECHNICAL) APPEARANCE: Shri Manish Saharan and Shri Rohit Choudhary, Advocates for the appellants. Shri R.K. Mishra, Authorised Representative for the respondent. ANIL CHOUDHARY: The present appeals has been filed by M/s Kuchhal Light Metals Pvt. Ltd, (KLMPL) M/s H.M. Enterprises, Shri Manohar Sharma, Shri Sukhdev alias Saral Patidar, Shri Ritesh Gupta (M.D) and M/s Kuchhal International (KI) against Order-in-Original No. 65-66/COMMR/CEX/IND/2017 dated 23.01.2017 passed by the Commissioner of Central Excise, Indore. 2. The brief .....

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Demand of ₹ 7,47,242/- was confirmed on account of clearances made to M/s Sunshine Marketing as found from the records of M/s KI and pen drive of Shri Sukhdev Patidar and Shailesh Yadav of M/s KI and diary of Shri Ritesh Gupta, Managing Director of the Appellant company. (vi) Demand of ₹ 2,58,667/- and ₹ 3,04,357/- was confirmed on the ground that goods were cleared to M/s Hardware Stores and M/s H.M. Enterprises without payment of duty, as found from seized pen drives of Shri Sukhdev Patidar and Shailesh Yadav. (vii) Demand of ₹ 80,9315/- was confirmed on the ground that they have cleared aluminum logs and chips without payment of duty. (viii) Demand of ₹ 21,24,217/- was made on ground of availment of cenvat credit on the basis of Bills of Entry and invoices, without receipt of goods in factory. Further, demand of ₹ 1,53,163/- pertaining to show cause notice dt 31.05.2013 was also confirmed on the ground that M/s KLMPL has cleared goods involving duty of ₹ 1,06,164/- to M/s. KI, goods involving duty of ₹ 23,606/- to M/s Sunshine Marketing and goods involving duty of ₹ 23,393/- to M/s Baser Sales. Also goods seized from premise .....

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ner of M/s Parnami Transport and statement dt 24.12.2013 of Shri Jitendra Bhoj, authorized signatory of M/s TCC Carriers. The investigations were initiated against M/s KLMPL on the basis of anonymous complaint, wherein photocopies of 37 invoices were forwarded, stating the same to have been issued by M/s KLMPL. 7. He submits that the demand of ₹ 1,76,98,647/-made on the basis of pendrive data of Shri Sukhdev alias Saral Patidar by co-relating the same with the loading challans of M/s Parnami Transport and few entries in the diary of Shri Ritesh Gupta is not sustainable for the reason that the data found in pen drive seized from Shri Patidar is not a reliable piece of evidence. For relying upon the alleged decoded data of pen drive, the procedures for retrieval of data from electronic device was not followed. In terms of Section 36 B of the Central Excise Act, sub-section (2) for admissibility of a document reproduced from computer, the conditions to be followed are: (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 documents as may be appropriate for the purpose o .....

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o such data was available in the office computers of M/s KLMPL. Not a single computer on which such data was maintained was found. The Show cause notice states, that the data of pen drive was maintained in abbreviations like SCORE BOARD OUT, ABCD, KHEL, ABG, BALLS, PLAY, SIZE, SCORE BOARD IN, DRS etc. which were said to have been deciphered to Aluminium section, date, name of buyer, quantity, number of bundles, vehicle number, transporter name, raw material inward and details of Aluminium dross respectively. However it is not known as to how the investigating officer deciphered the terms unless and until somebody gave tips to him. The show cause notice does not spell out as to how the so-called codes in pen drive were decoded by the officer, because it is apparent that without someone s involvement, the abbreviations /code cannot be easily decoded, as has been mentioned in the notice. Clearly, the person in whose pen drive the data was located, should have been questioned which was not done. Shri Ritesh Gupta, Managing Director, in his statement has clearly stated that the data does not belong to them nor he has instructed any person to maintain such data. He never directed Shri Su .....

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h is very surprising. No reason has been given for the transporter to write the name Ritesh as consignee. Even if it is assumed that the said reference is to M/s KLMPL or any consignment allegedly transported by them to Delhi clandestinely, the loading challans name of consignee cannot be treated as challans of consignor and it is just an assumption to cast liability on M/s KLMPL. Further, no GR has been issued in respect of these consignments as said to be confessed by the transporter Shri Rajan Chugh of M/s Parnami Transport, in his statement dated 22.3.2013. According to Shri Chugh a person of the party used to go along with the goods in the truck, and therefore record of delivery of goods is not at all required. Such statement has got no evidentiary value, but just an attempt to involve the appellant in fictitious case. He submits that in para-28 of the Show Cause Notice it has been attempted to co-relate Score Board Out details with the transport documents in the search conducted on 4.12.2012 at the transporter s premises whereby loading challans were seized. However as admitted in the show cause notice 32 challans mentioned in data contained in Score Board Out were not availa .....

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adjudicating authority has also relied upon the 37 photocopies of invoices said to have been given by the anonymous complainant. However no copy of such invoice was ever recovered from the factory or office premises of the Appellant or from the directors. There is no corroboration of any duplicate / bogus invoices, which clearly shows that the photocopies of invoices were fabricated. No investigation at the alleged buyers end was conducted, as apparent from the show cause notice. He relies upon the judgments in case of Shree Nakoda Ispat 2017 (348) E.L.T. 313, J. Yashoda (2012) ELT 458 (SC), and Premiere Instruments 2005 (183) ELT 65 (Tri.). He submits that the starting point of investigation was photocopies of 37 invoices. However neither the source of such photocopy is known nor any acknowledgment of buyers is there. There is no corroborating evidence from the Appellant premises, which can show that the invoices were issued by the Appellant. Thus the demand is not sustainable as on the basis of photocopies, source of which is not known, and without any corroborative evidence, it cannot be said that the Appellant made any clandestine clearances. He relies upon the Tribunal judgmen .....

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Question No. 11, that he was saving data in his personal pen drive and no data was stored on computer by company. The data maintained in pen drive was entered by Shri Yadav himself without any direction or involvement of the Appellant or M/s KI. It is coupled with the fact that Shri Yadav was also working on behalf of M/s Sunshine Marketing in his personal capacity, as apparent from his statement. Shri Dinesh Mittal, partner of M/s Sunshine Marketing has clearly stated that they did not direct Shri Yadav to maintain any such data. The allegation of removal is also based upon the register, in which entries were found to have been made by Shri Shailesh Yadav. However, it is apparent from the statement of Shri Ritesh Gupta, director of M/s KLMPL that he has refused the authenticity of such data. No entry of alleged clandestinely removed goods were found in the books of M/s Sunshine Marketing.There is no evidence of transportation of goods. He draws our attention to the statement dt 02.12.2013 of Shri Mazher Hussein, proprietor of M/s Hardware Stores to whom the goods has been shown to have been cleared, wherein he has clearly stated that they were purchasing aluminum section from the .....

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ting, as found from records of M/s KI and pen drive of Shri Shailesh Yadav, the details of same are available. The Ld. Counsel submits that the pen drive of Shri Shailesh Yadav is itself not reliable. Also there are no evidence of transportation of such goods or receipt of consideration. 12. In case of demand of ₹ 3,04,357/- on the alleged clearances made to M/s H.M. Enterprises, he submits that the demands are based on the documents seized from the premises of M/s KI and the pen drive of Shri Shailesh Yadav. The said clearances were made under invoice of M/s KI to M/s HM Enterprises. M/s KI was undertaking job work activity of various entities including the Appellant, and, therefore, it cannot be said that the clearances by M/s Kucchal International to M/s HM Enterprises, were for goods manufactured by the Appellant. There are no corroborative evidence to show that the goods were cleared to M/s HM Enterprises by the Appellant. 13. In case of demand of ₹ 8,09,315/-, he submits that the demands were made on the ground that M/s KLMPL had cleared aluminum dross and chips to various buyers, and found from the pen drive of Shri Sukhdev alias Saral Patidar as corroboration of .....

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KI, and two different dealers namely M/s Sunshine Marketing and M/s Baser sales. The demand has arisen due to non accountal of goods at the jobworkers/ processor premises, i.e at the anodizers premises and dealer s premises. No investigation was carried out at the Appellant s (KLMPL) end, and the entire allegation is based upon records of aforesaid persons. The irregularity done at third party end cannot be interpreted as clandestine clearance of goods by Appellant. If M/s Sanmati Fabricator could not produce the invoices of goods found at their premises, it cannot be assumed that the goods were cleared by Appellant. The show cause notice itself states that M/s KI is also dealing with the goods supplied by Aluminium Traders and perhaps the material receipt report is maintained consignment wise, even with indication of type of profile. The show cause notice has mentioned that material receipt report on a particular date is compared with the invoice issued on that particular date by the manufacturer and the difference is assumed as clandestine removal. This is illogical as it is not necessary that removal on a particular date by the manufacturer is received in the premises of anodize .....

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s of unsystematic entries, the demand of central excise duty cannot be made against the Appellant. Further no investigation were made at the end of Appellant. Thus the allegation of clandestine removal of 2680.85 Kgs (1323.45 + 325 + 1032.40) is not sustainable. A demand on 4642.9 kg of Aluminium profile at jobworker M/s KI is based upon records of M/s KI only. The inference is based upon the opening stock plus goods received minus finished goods dispatched. It is only an assumption that the accounted goods are duty paid and non accounted goods are non duty paid cleared by the Appellant. No verification of invoices were conducted either at the jobworker s end or from the Appellant. That even the stock verification was done on the basis of eye estimation, which clearly shows that the allegations are devoid of any reasoning and the confiscation of goods and demand of duty is not sustainable. Reliance based on pen drive of Shri Yadav in isolation cannot be a reliable piece of evidence as the same was maintained by Shri Yadav in his own capacity. Records found of M/s KI are not binding upon the Appellant. Moreover, there are no evidences of transportation of such goods from the Appella .....

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goods transported through M/s TCC Carriers, the data of pen drive is corroborated with the personal diary of Shri Atri, owner of M/s TCC Carriers, which shows that the goods were transported by the said transport company. The diary of Shri Ritesh Gupta also has entries of clearance of goods and receipts of consideration. Queries were also made from the buyers, some of them stated that the goods were received. In case of demands other than above, pertaining to clearances made to buyers other than Delhi, he submits that the pen drive of Shri Sukh Dev Patidar contained the details of such clearances, which shows that the goods were cleared clandestinely by the Appellant. As regards remaining demands, he submits that the pen drive of Shri Shailesh Yadav, employee of M/s KI contains the data of receipt of goods from M/s KLMPL and subsequent clearance to various other firms which were also recorded in various records seized from the premises of M/s KI, and as per the statement of Shri Shailesh Yadav as well as partners of M/s Sunshine, who have been using the premises of M/s KI. 17. In case of demand on Aluminum dross etc., he submits that the clearance details of the same are appearing .....

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been identified from which such data was copied. There is no source computer on which such data/ record of alleged clandestine clearances was being maintained by the Appellant concern M/s KLMPL. It leads to serious doubt about the credibility of such data found in pen drive. It is coupled with the fact that Shri Sukhdev alias Saral Patidar is his statement has stated that the pen drive is his own. There is no findings as to on whose instructions such data was maintained by him. Shri Shri Sukhdev alias Saral Patidar has never clarified as to for what purpose the data was copied by him in his pen drive, nor has he said as to from which computer such data was copied. In such facts, the data found in the pen drive is not a reliable piece of evidence. The Managing Director of Appellant concern, Shri Ritesh Gupta, in his statement has denied the data to be pertaining to the Appellant concern as well as stated that such data was not maintained under his instruction or directions. The data of the pen drive is said to have been corroborated with loading challans of M/s Parnami Transport and diary of Shri Ritesh Gupta. However we find that the reliability of loading challan is questionable a .....

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single person who used to accompany such goods. Thus, the evidences relied upon by the Revenue are incomplete and do not have any evidentiary value. In absence of any buyer of the goods or transportation evidence, money receipts, we are of the view that the demands based upon alleged clandestine removal of goods, cannot be sustained. 20. In case of demand of duty of goods said to be transported through TCC Carriers, we find that reliance has been placed only upon the pen drive of Shri Sukh Dev alias Saral Patidar and personal diary of Shri Sunil Atri of M/s TCC Carriers. We have held that pen drive is not reliable as it is not even known as to from where such data was generated/ copied/ prepared on Pen drive. The pen drive and personal diary of Shri Atri of M/s TCC Carriers are third party documents and do not show any connection with the Appellant for the alleged clandestine clearances. Therefore, we do not find any reason to demand duty on such alleged clearances. Though we have discarded the evidentiary value of the pen drive, diary of Shri Ritesh Gupta and other evidences relied upon by the Department, we, however, also find that the Revenue has not followed the procedure presc .....

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ontained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions under Section 65B(2). Following are the specified conditions under Section 65B(2) of the Evidence Act : (i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating pr .....

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ar. The ratio laid down by the Apex Court will thus be squarely applicable to the provision of Section 36B of the Central Excise Act, 1944 and any reliance placed on the computerized printouts, without following statutory procedures and conditions of Section 36B, are not acceptable as evidence. It is observed that none of the statements recorded by the investigation convey that the entries made in the documents recovered from the residence of Shri Sanatan Maity are actually manufactured and cleared clandestinely by either Appellant No. 1 or Appellant No. 2. The conclusions arrived at by the adjudicating authority are based on his own analysis. 7.2 In Para 6.4 of the Order-in-Original dated 29-5-2009, in the case of Appellant No. 2, it is observed by the adjudicating authority that since an amount of ₹ 1,88,00,000/- was received by Appellant No. 2 from Sunderlal , therefore, the remaining amount of ₹ 3,04,21,230/- appears to be attributable to the sale proceeds of M.S. Ingots clandestinely received by Appellant No. 1. The findings of the adjudicating authority are thus clearly based on presumptions, assumptions and surmises when the computerized documents relied upon by .....

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disengage the truth from the falsehood of the statement of a person. The person may speak partly true and partly false. The grain can be separated from the chaff but in the instant case, except for the statement of Shri R.K. Gupta, there is no corroboration by the Revenue during the investigation. The part of the statement of Shri R.K. Gupta is in favour of the Revenue and part of it not. If the statement of Shri R.K. Gupta is to be believed then it has to be believed in entirety. The scrutiny of the statement of Shri R.K. Gupta reveals that he has stated that about 50% of the transactions were bogus and the transactions where Tempo Nos., were same as in the purchase invoices of the same date, the transactions were genuine and actual delivery of goods took place and further, the transactions were genuine where material supplied was less than 6 tons. 8.3 In the present proceedings there is no confessional statement recorded during investigation that appellants have indulged in any clandestine manufacture and clearance of goods based on documents recovered from the residential premises of Shri Sanatan Maity. There is also no evidence on record as to from where the raw materials for .....

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e forums that for establishing the fact of clandestine removal, there need to be sufficient evidence on record leading to conclusive proof of production of goods, their removal from the factory by any mode of transportation and clandestine clearance to the buyers. Mere doubts, howsoever strong cannot take the place of evidence required to be produced by the Revenue. The onus to establish such clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by production of sufficient evidences. Again, it is to be proved by the Revenue that the raw materials required for production of huge quantity of final product were obtained by the assessee in a manner which is not in its regular course of its business. It stands held by the Tribunal in the case of Mohan Steels Ltd. reported in 2004 (177) E.L.T. 668 (Tri.), that duty demand cannot be confirmed unless it is shown that the manufacturer had procured all the raw materials required to manufacture the goods. There is a long list of decisions and reference to refer to all of them may not be necessary as it is a settled law. Similarly, the Tribunal in various cases, as detaile .....

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Entries even if relevant are only corroborative evidences and required independent evidence as to trusthworthiness of those entries necessary to fasten liability. The entries made in the diaries though admissible u/s 34 of the Evidence Act, 1872, truthfulness thereof is not proved by any independent evidence. Relying on the above observations made by Apex Court to the facts of the present case, we find that the entire cases of the Revenue is made on the basis of 719 invoices of doubtful nature, the trustworthiness of which do not stand established by the Revenue by any admissible independent evidences. Similarly, in the case of Ratna Fireworks reported in 2005 (192) ELT 382 (Tri.), it was observed that though mathematical procedure is not required to establish the clandestine removal but that does not mean a fact could be proved without sufficient evidence. The Hon ble Supreme Court in the case of Anjlus Dung Dung v. State of Jharkhand reported in (2005) 9 SCC 765 observed that suspicious however strong cannot take place of proof. 9. In view of the above observations and the settled proposition of law appeals filed by the appellants are required to be allowed, except to the extent .....

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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 computer expert accompanied with the Central Excise officers had taken the printout from the USB drive by connecting to the computer. The officers had not obtained any certificate as required under Section 36B of the said Act. It is also noted that none of the conditions under Section 36B(2) of the Act, 1944 was observed. In such situation, it is difficult to accept the printout as an evidence to support the clandestine removal of the goods. It is noted that the requirement of certificate under Section 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 printout 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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o affect the production of the document or the accuracy of the contents; and (d) the information 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 printout 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 the use of the computer. The computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the company. It was also not shown that information of the kind contained in the computer printout was regularly supplied by the Company to the personal computer of Shri Sampath Kumar in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, .....

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erest and penalties on the appellants cannot be sustained. Accordingly, the impugned orders are set aside. All the appeals filed by the appellants are allowed . 26. The above judgment was upheld by the Hon ble High Court of Gujarat as reported in Ambika Organics 2016 (334) ELT A67. Similar views has been taken by the CESTAT in case of Premium Packaging Pvt Ltd V/s CCE - 2005 (184) ELT 165 (CESTAT). In view of the aforesaid judgment which are exactly on point of admissibility of data as evidence and proving charges of clandestine removal on the basis of statements, we are of the view that the data of pen drive relied upon by the revenue is not a reliable piece of evidence. Further the charges of clandestine removal are not adduced by any corroborative evidences. The revenue has also relied upon the diary seized from Shri Ritesh Gupta on the ground that it contains the details of clandestine clearance of goods. We find that though the show cause notice has named 9 alleged buyers of goods, and even contended that they had received the goods, but we find that the show cause does not rely upon either the records or the statements of such alleged buyers. The outcome of investigation is n .....

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cern on the ground that no invoices towards clearances were found at M/s KI, whereas their records show the receipt of material. A demand of ₹ 3,24,240/- has been made on the basis of pen drive of Shri Shailesh Yadav alleging that the goods were cleared by the Appellant to M/s KI and from there to M/s Sunshine Marketing. We find from the statement dated 4.12.2012 of Shri Shailesh Yadav that he was saving data in his personal pen drive and no data was fed or stored on computer by M/s KI. There is no acceptance on the part of the owner of M/s KI, that the data maintained in the pen drive belongs to their concern. It is also a fact that Shri Shailesh Yadav was also working for M/s Sunshine Marketing, as also stated by Shri Dinesh Mittal, partner of M/s Sunshine Marketing. M/s Sunshine Marketing were engaged in anodizing and were undertaking such activity on behalf of other suppliers in addition to M/s KLMPL. Further, even if the data found in the pen drive of Shri Shailesh Yadav is matching with the pen drive data of Shri Sukhdev Patidar, it cannot be a conclusive ground to hold that the goods were clandestinely cleared by M/s KLMPL to M/s KI. It is an accepted fact from the sho .....

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at the details of such clearances to M/s H.M. Enterprises were found from the documents seized from the premises of M/s Kuchchal International and the pen drive of Shri Shailesh Yadav. Further reliance has been placed upon statement of Shri Parvez Hasan, Partner of M/s H. M. Enterprises. We find that M/s KI were undertaking job work activity of various entities including the Appellant and the clearances were made to M/s H.M. Enterprises by M/s KI under invoice. The charges of clandestine removal are based upon the pen drive of Shri Shailesh Yadav employee of M/s KI, who was also working for M/s Sunshine. The Pen drive of Shri Shailesh Yadav is his personal pen drive and were not maintained by him under the instruction of Appellant. Nor the same is corroborated with any records of Appellant firm to show that the same were clandestine removed goods. In such case, it cannot be concluded that the clearances by M/s Kuchchal International to M/s H.M. Enterprises were of goods manufactured by the Appellant and cleared clandestinely without payment of duty. Further we find from the statement of Shri Parvez Hasan, Partner of M/s H.M. Enterprises, when he was shown the printouts of data from .....

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Sunshine marketing has shown receipt of such stocks and disposal thereof. The pen drive of Shri Shailesh Yadav and the records relied upon are third party documents without any corroboration and the same cannot be relied upon to fasten the duty liability against the Appellant. We find that on the basis of third party records, the demand cannot be confirmed against Appellant concern. We find that M/s Sunshine was receiving goods from other parties also viz. M/s Vimsar, M/s Ravi Enterprises, M/s Hindustan Marketing amongst others. In absence of any corroborative evidence of removal of goods from the Appellant (KLMPL) factory, it cannot be said that the records of M/s Sunshine Marketing or pen drive of Shri Shailesh Yadav point to removal of goods without payment of duty by KLMPL. 30. We find that the charges are mainly based upon the pen drive of Shri Shailesh Yadav employee of M/s KI and who was also maintaining records/ stock of M/s Sunshine Marketing. In case where the demands are based upon the pen drive and such records are third party records and in absence of any affirmation by the Appellant, it cannot be concluded that the Appellant has removed the goods without payment of d .....

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without payment of duty. The other transporters have not been produced for the purpose of cross-examination nor the statements of drivers who might have actually carried the goods, had been recorded. Moreover no statement of any of the recipients of the goods had been brought on record. Thus the statements of the transporters have remained uncorroborated and also suffers from the short coming of being not being cross-examined by the Appellants. It has been the settled law that the liability cannot be fastened on an assessee on the strength of documents seized from the possession of third party. There should be some corroborative evidence/material. The Tribunal has in the case of Emmtex Synthetics Ltd., supra, when the charge of clandestine removal was made against the Appellants therein out of yarn received from a third party based on the diary, loose documents and packing slips allegedly recovered from Shri B.M. Gupta, Vice President of the Supplier Company, held that no presumption on the basis of uncorroborated, uncross-examined evidence of B.M. Gupta and the alleged entries made by him in the private diary, loose sheets, charts, packing slips could be drawn about the receipt o .....

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e not produced for being cross-examined. Moreover, there is no corroboration of their statements with regard to the Trucks by which the goods were allegedly removed or the persons who received the goods. The Truck driver Shri Shiv Bahadur Yadav has also not been cross-examined and cleaner Shri Rakesh Kumar had deposed that the Bills/Invoices are supposed to be with the Driver and he being cleaner had no knowledge. 10. The confirmation of duty in respect of 149 consignments is also based on the records seized from the premises of M/s. Chitra Traders and not on the basis of any record seized from the premises of the Appellant-company. The Revenue has not been able to adduce any corroborative evidence to show the movement of goods from the premises of the Appellant-company to the premises of M/s. Chitra Traders or the Customers whom the goods were sent directly to as per the direction of Chitra Traders. No inquiry has also been made into these Customers who ultimately received the goods. There is no substance in the reasoning given by the Commissioner in the impugned order to the effect that as the party did not challenge the fact of their business association with M/s. Chitra Traders .....

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d to challenge the findings of the Commissioner (A). The appeal is based on the existence of material which the first appellate authority had found to be unreliable as evidence. The appeal proceeds on the basis that denial of ownership of the Day Book seized from respondents was no ground to discard it as evidence. That the entries in the Day Book matched with the entries in the registers maintained by M/s. Kothari Trading Corporation was adequate circumstance which established excess realization by the respondents and evasion. We find that charge of evasion cannot be found solely on the basis of records of third party. Records of M/s. Kothari Trading Corporation cannot be relied on to find evasion by the respondents. The Day Book cannot be relied on as the author of its contents could not be identified and his statement obtained. Revenue has not been able to establish receipt of excess amounts against clearances of yarn by the respondents with any reliable evidence. The Commissioner (A) also had found that the Day Book and the records of the broker did not match in entirety. He had found discrepancies in important respects between the entries in the Day Book and the records of the .....

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learance has been brought on record. Merely on the basis of statement of Shri Raghuvir Maurya, it cannot be said that the goods were transported clandestinely through such vehicle and therefore there is no ground to demand duty. An invoice no. 179 dt. 07.10.2011 is alleged to have been issued twice by the Appellant i.e. once to M/s Lucky Aluminum, Bhopal and again to M/s Sunshine Marketing. The same was shown to Shri Ritesh Gupta who in his statement stated that duty shall be paid for such abnormality. However we find that Shri Ritesh Gupta in his statement refused to accept the same on the ground that he has not authorized any person to issue such invoice and it may be a case of robbery from his factory. He also undertook to pay duty if found that goods were cleared twice. We find that there is no admission in his statement that the goods were cleared. The department also did not undertake any interest to verify whether the goods against both the invoice were actually cleared or not by way of investigation at the buyers end. In such case we do not find any reason to demand duty. Coming to the charges of clandestine removal it is trite law that the same cannot be upheld merely on t .....

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oduction which was cleared clandestinely. WE find that no physical verification of electric consumption was undertaken at the factory. Moreover the Hon ble Allahabad High Court in case of CCE Meerut Vs. R.A. Castings Pvt. Ltd. 2011 ELT 337 (All.) has held as under: 3. Being aggrieved by the impugned orders, the respondents filed appeals before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The Tribunal observed that it is settled principle of law that the electricity consumption cannot be the only factor or basis for determining the duty liability, that too on imaginary basis, especially when Rules 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. The Tribunal further observed that no experiment have been conducted in the factories of the appellants for devising the consumption norms of electricity for producing on .....

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ed credit of duty on the basis of bills of entries of the goods, i.e. Aluminum Scrap, shown to have been purchased on high sea sale basis from M/s Moongad Aluminium and also on the basis of invoices issued by M/s Satya Sales Corporation, Mumbai. The show cause notice and the impugned order has contended that the said goods were received in the factory of Mungad Aluminium, as evident from the deposition of CHA and transporters and which is also corroborated by gate passes issued by CONCOR, which reflects the picture of delivering the imported goods at Indore, and not at Appellant s factory at Pithampur. We find that it is a fact on record that the goods were purchased by the Appellant on high sea sales basis, for which payment was made through bank. If the goods were not directly delivered to the Appellant s factory, it cannot be concluded that the goods have not been received in their factory. The bills of entry are in the name of the Appellant. Further no record of the Appellant or of M/s Mungad Aluminum has been relied upon to show that the imported scraps were not received in the Appellant s factory and were instead received at the factory of M/s Mungad Aluminum. No disposal of .....

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ve of Shri Saral Patidar, the authenticity of which itself is highly doubtful, the same cannot be a reason to deny credit to the Appellant. The invoice issued by M/s Satya Sales Corporation is a valid invoice issued in the name of the Appellant and in absence of any significant evidence, the credit available to the Appellant cannot be denied on the basis of irregularity committed by the supplier. Further in case of cenvat demand no diversion of goods by M/s Moongad Aluminium or M/s Satya Sales Corporation, has been shown. Hence there cannot be any demand against M/s KLMPL. 34. In case of demand of ₹ 1,53,163/-, we find that the demand has been made against the Appellant on the ground that they have cleared the goods to M/s Kuchchal International, M/s Sunshine Marketing and M/s Baser Sales Corpn. Further, the quantity of goods, i.e. aluminum Section & profiles, were ordered to be confiscated. We find that the demand has been made on the basis of alleged receipt of goods at the job workers / processors premises, i.e. anodizers or dealers premises. However, no investigation has been conducted at the Appellant s end or their factory and the demand is based on the records of s .....

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the Appellant. Since no invoice could be produced by M/s Sanmati Fabricators, the same are clandestinely removed by the Appellant. We find from the statement of Shri Rakesh Baser, partner of M/s Baser Sales Corporation, who is said to be original buyer, who sent the goods for anodizing to M/s M/s Sanmati Fabricators, the goods shown to have been supplied by M/s KLMPL in the record of M/s Sanmati Fabricators has never been bought by them and confirmed that since last 4 / 5 years, he has no transaction with the Appellant. He has further stated that it is not known as to why M/s M/s Sanmati Fabricators in their record had shown that the goods were received from M/s KLMPL. Similarly, the Appellant has also denied supplying the goods to M/s M/s Sanmati Fabricators or any sales to M/s Baser Sales Corpn in their respective statements. In such case, the allegation of clandestine removal on the strength of entry appearing in the record of M/s Sanmati Fabricators, which is a third party, cannot be sustained. Similarly, in case of goods found at M/s Kuchchal International, were shown to have been received by M/s Sunshine Marketing from the Appellant. On the ground that in respect of Invoice N .....

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ices, whereas one more consignment of the party weighing 661.69 kg was not accounted for without any reason. It shows that the investigations were not conducted properly. We also find that the stock taking was done on eye estimation, as has been admitted in the concerned panchnama. In such case, we do not find any reason to sustain the demand. The charges of clandestine removal must be proved with independent / cogent / clear and tangible evidence in the form of receipt of raw material, utilization of such raw material for clandestine manufacture of finished goods, manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing materials used, discrepancy in raw material and final product, clandestine removal of goods with reference to entry of vehicles in the factory premises, loading of goods, transporters documents such as LRs, statements of drivers, entries at check-posts and the receipt of goods by the consignees, amount received from the consignees, statement of consignees admitting receipt as well as receipt of sale proceeds by the consignor and its disposal. None of the above instances has bee .....

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