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TMI Blog2021 (1) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The facts of the case in brief are that the Appellant No. 1 is engaged in the manufacture and sale of laminated spring leaves classifiable under Chapter 73 of the Central Excise Tariff Act from its factory-cum-office premises situated at Ratakhandi, Odisha. The Appellant No. 2 besides being a Partner of the Appellant No. 1 is also a Proprietor of M/s. Radhagopi Auto Industries and a Director in M/s. Maa Bhagwati Rerolling Mills Pvt. Ltd. On 3-08-2012, Officers of DGCEI conducted simultaneous search operations at the factory-cum-office premises of Appellant No.1, residence of Appellant No. 2 and the offices of the other business concerns related to Appellant No. 2. Pursuant to the search proceedings, DGCEI officials seized 1 Laptop and 4 Pen drives from the residence of Appellant No. 2 in presence of wife and nephew of the Appellant No. 2. The Appellant No. 2 was thereafter, summoned to appear at the factory premises of the Appellant No. 1 wherein Panchnama proceedings were concluded at 6 P.M. on the same day. The data available on 4 Pen drives was partly printed before conclusion of search proceedings and the signature of the Appellant No. 2 was obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [2020 (372) ELT 632 (Guj.)] - para 8 However, in the instant case, the department has proceeded to confirm the charge of clandestine manufacture and clearance purely on the basis of pen drive printouts and statements of Appellant No. 2 (which were retracted subsequently) without conducting any independent investigation and/or adducing any clinching evidence in support of the said charge. B. Computer Print outs relied upon in the order dated 22 July 2016 are not admissible as an evidence in as much as, (i) the requirements of Section 36B(2) & (4) of Central Excise Act, 1944 were not complied with. Reference in this regard has been placed on the following decisions: * Bihar Foundary& Castings Ltd. vs. CCE, Ranchi [2019 (8) TMI 527 - CESTAT Kolkata] - Para 24; * Popular Paints and Chemicals vs. CCE, Raipur [2018 (8) TMI 473 - CESTAT New Delhi] - Para 15.2 * Premium Packaging Pvt. Ltd. vs. CCE, Kanpur [2005 (184) ELT 165 (Tri. - Del.) - Para 5 (ii) The computer printouts save and except 35 pages were taken after conclusion of panchnama proceedings. In majority of the printouts the time is after 6 p.m. i.e. after conclusion of panchnama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. (ii) Search in the factory of the Appellant No. 1 was carried out in the absence of panchas and were called only subsequently to sign the panchnama. Request for cross Examination of Panchas was also not allowed to prove the same. Reference is invited to the panchnama dated 03-082012 drawn at the factory of the Appellant 2 wherein it has been mentioned that the panchas arrived at 5:00 p.m. whereas the search began at 3:00 p.m. Reference in this regard is invited to the Tribunal's decision in the case of Modern Laboratories vs. CCE, Indore [2017 (358) ELT 1179 (Tri. - Del.)] - Para 16 and Para 19; E. Statement of Appellant No.2 could not be relied upon for the following reasons, (i) the same stood retracted vide affidavit dt. 11-01-2016. It is a trite law that delay in retraction cannot be a ground for disregarding the same. Reliance in this regard is placed on the decision of Parle Beverages Pvt. Ltd. vs. CCE, Bombay [1998 (98) E.L.T. 585 (S.C.)] - Para 1, wherein it has been held that delay in filing of affidavit cannot be a ground for completely bruishing aside the same. (ii) The statements of Appellant No.2 was contradictory which stands a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been done in the presence of the persons before whom the pen drives were sealed and signatures should have been obtained on the paper seal/sticker as provided in the Circular dated 1st December 2015 so as to allay any possibilities of tampering. It is also forthcoming from the case records that most of the printouts from the Pen drives were taken after conclusion of Panchnama proceedings. There is considerable force in the contention of the Appellants that the computer printouts relied upon to uphold the charge of clandestine clearance were not obtained in conformity with the mandatory conditions and safeguards laid down in Section 36B(2) & (4) of the Central Excise Act, as these were not produced by a computer which was being used regularly to store or process the information during the period in dispute and Certificate referred to Section 36B(4) of the Central Excise Act was also not obtained. The decision of the Tribunal in the case of Popular Paints reported (supra) fully supports the contentions of the Appellants on this point and the relevant paras 14 to 15.5 of the said decision have been extracted below. "14. We hold that computer pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, if not, then any respect in which it was not operating properly or was out of operation during that part of period was not such as to affect the production of the document or the accuracy of the contents; and (d) the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of the said activities. (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether- (a) by a combination of computers operating over that period; or (b) by different computers operating 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computer printouts in the facts at hand do not fulfill the mandatory provisions of Section 36B(2) & (4) of the Central Excise Act, in so far as there are serious irregularities about the manner of sealing of the computers as pointed out hereinabove and one computer not sealed at all. The provisions of Section 36B(4) have also not been fully complied with. The learned Counsel has strongly relied upon the law laid down on the admissibility of electronics records by the Supreme Court in the case of Anwar P.V. Vs. P.K. Basheer reported in MANU/S/0834/2014 wherein in paragraphs 13 to 17 it has been held as under:- "13. Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure prescribed under 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 pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken 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 tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. 17. Only if the electronic record is duly produced in terms of section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A - opinion of examiner of electronic 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 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mier Instruments & Controls Ltd V/S CCE Coimbatore - 2005 (183) ELT 65 (T) (iii) Jayshree Vypasa Ltd. Vs. CCE Rajkote-2015(327) ELT 380 (T) (iv) AgarvanshiAluminium Ltd Vs CCE NhavaSheva- 2014 (2909) ELT 83 (T) (v )Final Order No A/ 70518-12/2018- Ex (DB) dated 07.03.2018 in the case of Trela Footwear & Others Vs CCE Agra." Even the statement of Appellant No. 2 could not be admitted as evidence being not in accordance with the procedure prescribed under clause (b) of section 9D(1)of the Central Excise Act. This contention of the Appellant is duly supported by the decision of the Punjab and Haryana High Court in the Ambika International Case (supra). 7. We also find from the case records that the printouts from the Pen drives are neither co-relatable with the central excise invoices raised by the Appellant during the relevant period nor corroborated by any independent evidence establishing clandestine manufacture or clearance. No efforts have been made by the investigating agencies to establish the existence of any unaccounted manufacturing activity in the form of unaccounted raw material, shortage of stock, shortage of raw material/finished goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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