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2019 (8) TMI 527

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..... ctricity more particularly, when the process of manufacture of MS Ingots/Silico Manganese are power intensive. Further, there is no evidence of extra use of labour/payment of any extra wages, shortage/excess of raw materials or finished goods. The excess stock of finished goods stood explained and accepted by the department. The allegation/findings on purchase of raw materials is not specific and there is no quantification of raw materials purchased out of accounts based on Purchase Register. It is well settled that charge of clandestine removal is a serious charge and must be proved by adducing tangible, cogent and affirmative evidence which are completely lacking in the instant case. In the case of SHARMA CHEMICALS VERSUS COMMISSIONER OF C. EX., CALCUTTA-II [2000 (12) TMI 161 - CEGAT, KOLKATA] this Tribunal has held that the noting in private records may raise suspicion but for confirming charge of clandestine removal, there must be corroborative evidence in the form of installed capacity, raw materials, utilization, labour employed, power consumed, goods actually manufactured and packed etc. Reliance on the data contained in laptop computer and print out taken for that has to be .....

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..... the said nine print outs [Doc. No. 01/DGCEI/JRU/BFCL/F/08 to Doc. No.09/DGCEI/JRU/BFCL/F/08] were taken. In the course of investigation, statements were recorded from Sri Satya Nanda Jha on dated 19-05-2009 and 09-06-2009 u/s 14 of the Act when he was shown one Writing Pad [i.e. Annexure 38(i) (Doc.No.32/DGCEI/JRU/BFCL/F/08) seized from BFCL] containing cash transactions/cash transfer. An extract of the said Writing Pad is prepared by the officers of the DGCEI and placed under Annexure 38(ii) of the Show Cause Notice titled as Cash Transfer Statement alleging that it contains details of flow back of fund to the Appellants. From the seized laptop certain individual ledgers of vendors of BFCL/GFA were also printed and kept under Doc. No. 02/DGCEI/JRU/BFCL/F/08,Doc.No.03/DGCEI/JRU/BFCL/F/08 and Doc.NO.05/DGCEI/JRU/BFCL/F/08. On the day of search, physical stock of raw materials were taken and no discrepancy of any kind were noticed. Physical stocks of finished goods were also taken and excess stock were detected which were due to not recording production for 2/3 days, hence were allowed to be accounted for in the RG-1/DSA and no demand thereon is raised. In the course of investigation .....

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..... , but by some Traders/manufacturer of Jharkhand i.e. (i) M/s Konark Ispat Udyog, Bokaro, (ii) M/s Sai Trading Co., Koderma, (iii) M/s Mahamayaa Ispat, Bokaro, (iv) M/s Ispat India, Koderma, (v) H.P. Enterprises and (vi) M/s Puja TMT Pvt. Ltd, Bokaro (which is a manufacturer of TMT Rods) and those Consignees have made payment for the value of the goods (including duties etc.) to the said Consignors through proper banking channels. It is also reported by DGCEI, Chennai/Kochi that the Appellants herein are in no way concerned with the manufacture, delivery, dispatch of the goods or receipts of the payment from the said consignees. 7. Thereupon, further inquiries were conducted with the Jharkhand Sales Tax Authorities in respect of the aforesaid Traders of Jharkhand i.e. (i) M/s Konark Ispat Udyog, Bokaro, (ii) M/s Sai Trading Co., Koderma, (iii) M/s Mahamayaa Ispat, Bokaro, (iv) M/s Ispat India, Koderma. No enquires were conducted with M/s H.P. Enterprises. The Jharkhand Sales Tax Authorities were requested to provide copies of the Sales Tax Returns filled by the said traders for verification. The Sales Tax Authorities provided copies of returns filed by the said traders i.e (i) M/s K .....

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..... on carried out by DGCEI, Kolkata it was revealed that the impugned goods were manufactured by other manufacturers i.e. M/s Samriddhi Ispat Pvt. Ltd., M/s Puja TMT Plant Pvt. Ltd. and on job work basis by M/s ASTL. 11. A Show Cause Notice dated 24-09-2012 was issued by Ld. Addl. Director General, DGCEI, Kolkata alleging that the BFCL has clandestinely removed/undervalued 42,851.569 MT of their final products i.e. M.S Ingots/TMT Bars/Miss Rolls/Mill Scale/end Cutting/Risers without payment of duty during the period 1st Setember 2007 to 15th October 2008. In the show cause notice it is further alleged against M/s GFA that it has resorted to clandestine removal/undervaluation of 9488.635 M.T. of final products i.e. Silico Manganese during the said period. Accordingly, M/s BFCL is required to show cause why Central Excise duty amounting to ₹ 22,74,84,876/- should not demanded along with interest and why penalty U/s 11AC/Rule 25 should not be imposed upon them for their purported contraventions of Rule 4,6,8,10,11,12 of the said Rules and Sec.4 read with Rule 6 of the Central Excise valuation (Determination of price of excisable goods) Rule, 2000. M/s GFA is also required to show c .....

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..... j who is director of M/s Puja TMT Plant P.Ltd., and which is a manufacturer of TMT Bars and further they have purchased from other five traders of Jharkhand through said Sri Pankaj. Therefore, enquiry by DGCEI, Kochi and Chennai demolishes the case of the department. Further, in course of enquiry by DGCEI, Jaipur, one Sri Govind Damani of M/s Damani Sales Corporation, buyer, also stated that they have bought goods from one M/s Maa Durga Trading Co which deals in goods of BFCL make and payment of which were made through banking channels to said M/s Maa Durga Trading Co. and all purchases from BFCL made directly by them are made on payment of duty. Hence, the investigation carried out by DGCEI no way proves that the impugned goods were manufactured and supplied by the Appellant. He added that manufacture of TMT Rod/Ingot (BFCL) and Silico Manganese (GFA) are power intensive process. In the instant case there is no allegation/evidence of any excess consumption of electricity. Further, no investigations were carried out with suppliers of raw materials. It is submitted that more than 48,000 MT of raw materials would be required for the manufacture of alleged quantity of 42000 MT of fini .....

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..... disowned the Laptop and the data stored therein. The Ld. Advocate relied on the Ramlila Maidan Incident Vs UOI reported in (2012) 5 SCC 1 wherein it is held that sleep is a biological necessity and not allowing a person to have it amounts to metting out third degree torture. He further submitted that the so called Sale Register i.e. Document No. 08/DGCEI/JRU/BGCL/F/08 and 09/DGCEI/JRU/ BGCL/F/08 are extraneous materials and were never seized under any panchanama. The Pancha s did not put their signature as a witness on the Laptop Printouts . Further, one Pancha, simultaneously attended panchnama proceeding at two places hiding his identity and hence, it cannot be said that the Laptop printouts were taken in his presence (Panchnama on 16/17-10-2008). The Printouts under Document No. 08/DGCEI/JRU/BGCL/F/08 and 09/DGCEI/JRU/BGCL/F/08 and other computer printouts are not admissible in evidence as it does not satisfy test of Sec.36B of the Central Excise Act, 1944. The Ld. Advocate contended that in the instant case the allegations are framed on the basis of assumption and presumption and unauthenticated private records/Loose Sheets and there is no tangible, cogent, affirmative corrobor .....

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..... re sold to the said consignees not by the BFCL/GFA, but by some Traders/manufacturer of Jharkhand and those Consignees have made payment for the value of the goods (including duties etc.) to the said Consignors, through proper banking channels. It is also reported by DGCEI, Chennai/Kochi that the Appellants herein were no way concerned with the manufacture, delivery, dispatch of the goods or receipts of the payment from the said consignees. Further, enquiries conducted with Traders in Jharkhand does not bring home the charge as out of five trading firms, summonses issued to only two traders i.e. M/s Kanak Ispat Udyog, Bokaro and M/s Sai Trading Company could not be served while no enquiry is conducted with M/s H.P.Enterprises and no investigations were carried out with M/s Ispat India and M/s Mahamaya Ispat even though the said traders acknowledged summon served on them. In these circumstances, the department has failed to conclusively prove that the said traders were bogus. We find considerable force in the contentions of the Ld. Advocate for the Appellants that the levy under the Central Excise Act,1944, is on manufacture of excisable goods and in the instant case there is no evi .....

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..... 4 to the memo of this writ petition) mainly for the following facts and reasons : X x x X x x vi. Several decisions have been given by the Tribunals which have been confirmed by the High Courts that electricity consumption alone if adopted as a basis of the demand, the same is not tenable. The respondents can take the electricity consumption pattern as a corroborative piece of evidence, but, in absence of substantive proofs like - (a) Details about the purchase of the raw material within the manufacturing units and no entries are made in the books of account or in the statutory records. (b) Manufacturing of finished product with the help of the aforesaid raw material, which is not mentioned in the statutory records. (c) Quantity of the manufacturing with reference to the capacity of production by the noticee unit. (d) Quantity of the packing material used. (e) The total number of the employees employed and the payment made to them. In this case, statements of the labourers ought to have been reduced in writing, by the department which ought to refer that over and above of the salary paid by the noticee, some other type of remunerations, in cash or kind have been paid by the noticee .....

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..... ut finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 21. In the case of UOI Vs. M.S.S. Foods Products Ltd., reported in 2011 (264) ELT 165 it is held as under - Para-12. Under the Excise Act, the excise duty is leviable on manufactured or production of excisable goods, therefore, for levying the excise duty, it is necessary to establish that the excisable goods was produced or manufactured by the assessee concerned and for attracting Section 11-A, it is necessary to establish that the excisable goods was clandestinely removed without payment of excise duty, which the revenue in the present case has failed to establish. The excise duty cannot be levied merely on the basis of assumption or presumption. 22. In the case of Hi-Tech Abrasive Ltd. Vs. CCE cited supra it is held that - Para-12.2. We have gone through the detailed order passed by the adjudicating authority and we find that so far as the demand of challenge in the present case is concerned it rested only on two materials. One was the so called statement of the Director which the adjudicating authority and the Customs, Excise and Service Tax Appellate Tribunal receiv .....

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..... mployed, power consumed, goods actually manufactured and packed etc. The relevant portion of the said judgment is set out below- 14. the relevant case laws on the point. In the case of Gurpreet Before we part, we Rubber Industries v. Collector of Central Excise reported in would like to discuss some of 1996 (82) E.L.T. 347 (Tri.) = 1996 (12) RLT 569, the Tribunal has set aside the demand of duty based upon the entries in a private note-book (diary) of an honorary worker in the appellant firm holding that except the said diary, there was no other evidence such as installed capacity of the factory, raw materials, utilisation, labour employed, power consumed, goods actually manufactured and packed etc., to prove the alleged clandestine production of the goods and removal of the same from the factory. Subsequently, the Tribunal in the case of Kothari Products v. C.C. Ex. reported in 1999 (31) RLT 67, observed that it cannot be concluded that the note-book is an authenticated private record of production so as to raise a demand based on the figures indicated therein. At the most, it may raise a doubt, but that cannot take the place of proof. Even though there may be certain element of t .....

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..... issible evidence. The Ld. Counsel for the appellants has invited our attention particular to provisions of Section 36B(2) and (4) of the Central Excise Act. For the better appreciation of facts, it is relevant to cite Section 36B of Central Excise Act is as below: - 36B. Admissibility of microfilms, 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 microfilm of a document or the reproduction of the image or images embodied in such microfilm (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 computer (hereinafter referred to as a "computer printout"), if the conditions mentioned in sub-section (2) and the other provisions contained in this section are satisfied in relation to the statement and the computer in question, shall be deemed to be also a document for the purposes of this Act and the rules made thereunder and shall be admissible in any proceedings there under, without further proof or production of the original, as evidence of any conten .....

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..... 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 person stating it. (5) For the purposes of this section,- (a) information shall be taken to be supplied to a computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment; (b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those act .....

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..... fied 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 properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. 15. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied: (a) T .....

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..... Electronic records being more susceptible to tempering, alteration, transposition, excision etc without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. We may add here that the provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act are pari materia. 15.3 It is evident from the appeal that the investigation officers while seizing has failed to take safeguards as mandated under section 36B of Central Excise Act. Further the cloning process of the hard-disks and retrieval of the data is admissible for want of cross examination of, Sh. Vipul Saxena, who has done cloning of the data from the computer system. We, therefore, hold that the computer printouts cannot held to admissible evidence in terms of Section 36B (2) & (4) of the Central Excise Act in the case at hand. 15.4. It is an admitted position that the computer printouts were produced in the Office of M/s Omnicorp, N.Delhi behind the back of the appellants. The appellants were never associated with the retrieval of the computer printouts. This Tribunal in the case of Modern Laboratories Vs CCE Indore reported in 2017 (358) ELT 1179 (Tri) = .....

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