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2019 (8) TMI 527

..... borative evidence or not - HELD THAT:- 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 evidence of manufacture of the impugned goods. Rather, in the investigation by DGCEI, Chennai, Kochi the consigner/buyer have categorically stated that they have purchased impugned goods from Sri Pankaj who is Director of M/s Puja TMT Plant P.Ltd., which is engaged in manufacture of TMT Bars. Further, in the show cause, it is observed that the impugned goods were manufactured on Job Work by M/s ASTL and were of M/s Samridhi TMT make. In the instant case there is no allegation/evidence of extra consumption of electricity 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 p .....

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..... from the factory premises of BFCL from which nine printouts were taken and kept under [Doc. No. 01/DGCEI/JRU/BFCL/F/08 to Doc. No.09/DGCEI/JRU/BFCL/F/08]. The Doc.08/DGCEI/JRU/BFCL/08 (Annexure-18(i) & Doc.09/DGCEI/JRU/BFCL/08 (Annexure-18(ii) are Sale Register which are made the basis of demand in the instant case. The Doc.06/DGCEI/JRU/BFCL/08 (Annexure-17(i) & Doc.07/DGCEI/JRU/BFCL/F/08 (Annexure-17(ii) are Purchase Registers . Out of seven files in the Laptop, three files were corrupt. The soft copy back-up of the said three corrupt files were extracted with the help of computer expert which contained data for 11-09- 2008 to 15-10-2008 (one and half month). Out of the balance four files, two files were password protected which contained statutory records and the rest two files were un password protected from which 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 tr .....

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..... Vishnu Enterprises, Chennai. The said goods were dispatched trough transporters (i) M/s Balajee Corporation, Ramgarh (ii) M/s New Sriniwas Road Liners, Ramgarh Cantt, (iii) M/s Parmeshwari Road Lines, Ramgarh, (iv) M/s Sri Trimula Road Liners, Ramgarh Cantt , (v) M/s Mahaeswari Road liners, Ramgarh and M/s Devendra Lorry Transport, Barhi. 6. On the basis of information received from the Odisha Sales Tax Authorities, the DGCEI, Kolkata requested DGCEI, Kochi and DGCEI, Chennai to investigate the delivery of the impugned goods at the end of the Consignees. DGCEI, Kochi and DGCEI, Chennai after conducting investigations at the end of said South India buyers vide reports dated 15-12-2009 [Annexure - 25(ii)] and dated 11-01-2010 [Annexure - 25(iii)] reported that the said goods were sold to the said consignees not by the BFCL/GFA, 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 (includin .....

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..... f details of transporter, consignors and consignees in the computerized soft copy prepared by one agent posted at Bihar UP boarder at the check gate of the Commercial Tax Department. However, no adverse material could be found by DGCEI, Ahmadabad and New Delhi in their investigation. DGCEI, Jaipur was requested to carry out follow up actions at the premises of buyers M/s Dhamani Sales Corporation and M/s Ganpati Enterprises. DGCEI, Jaipur submitted its report dated 30-07-2010 along with Panchnama, Seizure list, copy of statement and documents seized from the premises of above said firms. [Annexure-31]. On the basis of materials seized from M/s Damani Sales Corporation evasion of duty of ₹ 12.79 Lacs (on value of ₹ 88.71 Lacs) during April 2008 to May 2008 (two months) is sought to be proved. 10. In the investigation 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/un .....

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..... v Budhia, Sri Hari Krishna Budhia and Sri Satyanand Jha are dismissed for non compliance with the conditions of mandatory pre-deposit of 7.5% under Sec.35F of the Act. 15. The Ld. Advocate for the Appellant Shri Kartik Kurmy submitted that in the instant case that there is absolutely no evidence of manufacture of impugned goods. The investigation carried out by DGCEI, Kolkata/Kochi/Chennai proves that the impugned goods were not manufactured/sold by the Appellants. It is further submitted by him that duty is on manufacture of the excisable goods. No duty can be fastened without evidence of manufacture of impugned goods. He further submitted that as per the report of DGCEI, Kochi and DGCEI Chennai, the buyers at Kochi and Chennai have categorically stated that they never bought any goods from BFCL/GFA but through one Mr. Pankaj 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 Corpo .....

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..... ed 09- 07-2018 passed by Hon ble Chattisgarh High Court in the Tax case No. 54 of 2017 and Ambica International Vs. UOI reported in 2018 (361) E.L.T. 90 (P&H). The Ld. Advocate also submitted that in the impugned order the Ld. Commissioner has not dealt with each and every contention raised by them. He further submitted that the statements of transporters are vague, general and are not linked with any particular entries of alleged clandestine sale under Document No. 08/DGCEI/JRU/BGCL/F/08 and 09/DGCEI/JRU/BGCL/F/08, therefore, are inconclusive. It is submitted by the Ld. Advocate that Statement of Sri Gourav Budhia was recorded at midnight/early morning hours at 3:00 AM 17th-18th of October 2010 and hence cannot be treated as voluntary. Further, Sri Gourav Budhia in his subsequent statement dated 02-02-2009 categorically 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/BG .....

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..... hat investigation conducted by DGCEI, Kolkata, Chennai, Kochi, Jaipur proves that the Appellant has cleared the impugned goods without payment of duty. It is further submitted that the Appellants have not-cooperated in the investigation and knocked the doors of High Court/Supreme Court to delay the investigation. The Ld. DR further submitted that investigation with buyers, transporters proves that the impugned goods were supplied by the Appellants and removed through bogus trading firms of Jharkhand. 18. Heard both the sides and perused the appeal records. We find that investigations carried out by DGCEI Chennai, Kochi, Kolkata and Jaipur does not bring home the charge of clandestine removal against the Appellants. In their reports dated 15-12-2009 and dated 11-01- 2010 DGCEI, Chennai/Kochi has reported that the said goods were 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, del .....

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..... ic 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. Rather the investigations conducted by DGCEI, Chennai, Kochi, Jaipur, Kolkata instead of bolstering department s case, supports the contentions of the Appellants. 19. We find that the defence of the Appellant is fortified by the decisions in the case of Balashree Metals P.Ltd., Vs. UOI as reported in 2017 (345) ELT 187 (Jhar.) where in it is held that - 5.Having heard counsels for both the sides and looking to the facts and circumstances of the case, we, hereby, quash and set aside the Order-in-Original dated 3-3-2016 (Annexure-14 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 corrob .....

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..... that - 12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out 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 .....

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..... ng to the conclusion that without there being clinching evidence much less relevant admissible evidence on record, the adjudicating authority drew an inference of clandestine removal which cannot be sustained in law. We accordingly decide the fifth substantial question of law in the manner that the Tribunal committed perversity in law in coming to the conclusion that there existed relevant and material evidence to draw inference of clandestine removal. We accordingly answer the said question of law as above. 23. In the case of Sharma Chemicals Vs. CCE reported in 2001 (130) ELT 271 (Tri.-Kol.) 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. 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 Tribun .....

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..... ion 36 B of Central Excise Act. The investigation reveals that no such complained has ever been made by the Revenue. Accordingly, the entire investigation which is based on the computer printout is not admissible as the evidence. Therefore the data relied upon based on the print out obtained from laptop is not admissible and has to be discarded. Placing reliance in case Popular Paints and Chemicals Vs. Commissioner of Central Excise and Customs Raipur. The paragraphs which are relevant are as under:- 14. We hold that computer printouts cannot be held to be an admissible evidence unless the conditions as laid in the provisions of Section 36B of the Central Excise Act are fully complied with. A perusal of section 36B would indicate that the Act has prescribed very stringent conditions for computer printouts to be a piece of admissible 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 docum .....

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..... ting in succession over that period; or (c) by different combinations of computers operating in succession over that period; or (d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during 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 there under 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 rela .....

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..... er Section 65B.Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained 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 .....

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..... nic evidence. 18. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65B of the Evidence Act are not complied with, as the law now stands in India." 15.2. Thus, it has been clearly laid down by the Supreme Court that the computer printout can be admitted in evidence only if the same are produced in accordance with the provisions of Section 65B (2) of the Evidence Act. A certificate is also required to accompany the said of computer printouts as prescribed under section 65B(4) of Evidence Act. It has been clearly laid down in para 15 of this judgment that all the safeguards as prescribed in Section 65B (2) & (4), to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. 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 th .....

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