TMI Blog2023 (9) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... huge amount of cash in respect of provisions of services involved. However not a single rupee of unaccounted cash was found during the search conducted by revenue in the business premises of the appellants. In the present matter appellants disputed the finding of the Ld. Commissioner on the ground that Ld. Commissioner has relied upon the statements of persons but these statements are not admissible as evidence because the mandatory procedure laid down under Section 9D of the Central Excise Act as made applicable in relation to service tax by virtue of Section 83 of the Finance Act 1994 is not complied. In the present matter it is admitted facts that Statements recorded during investigation in the present matter, whose makers are not examination-in-chief before the adjudicating authority, would have to be eschewed from evidence, and it will not be permissible for Ld. Adjudicating Authority to rely on the said evidences. Therefore, none of the said statements were admissible evidence in the present case. Section 36B(2) provides the conditions in respect of computer printouts. In the present matter the computer was not shown to have been used regularly to store or process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of computing service tax leviable on the same. Based on intelligence search was conducted at the business premises of the appellants and certain pen drives and other electronic data were discovered and retrieved. During the search it was found that appellants were raising invoices for the service provided to their clients, for a certain parts of actual taxable value and consideration received was being accounted in their regular Tally account. It was also found that part of taxable value of such services being recovered by appellant in cash from their clients and this cash amount was not being entered into their regular books of accounts but was entered in a separate .xls sheets. All such .xls files were stored either in pen-drives of key persons or on Google Drives of such key persons. The printout of said .xls file was taken and seized under panchanama dated 19/20.08.2019 along with the pen-drives and other electronic data wherein such .xls files were stored. Statements of key persons of the Appellants were recorded and they conformed the above modus Operandi. Accordingly, the show cause notices proceedings initiated by the Department which culminated in the impugned adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 to 17/2016 decided on 14.12.2022. (iii) Arjun Panditrao Khotkar vs. Kailas K. Gorantyal - (2020) 7 Supreme Court Cases 1 (iv) Anvar P.V. vs. P.K. Basheer Others (2014) 10 Supreme Court cases 1 6. He also submits that Learned Commissioner has confirmed the service tax demand on the basis that two Accounts Manager of the appellants and Partner/ Director of the Appellants have stated before the investigating officers when their statements were recorded that the computer printout were for receiving cash from the clients, and thus receiving cash for the taxable services was admitted by these persons. The Learned Commissioner also relied upon statement of one client who has stated before the investigating officer that certain cash payment was made by him. But these statements are not admissible as evidence because the mandatory procedure laid down under Section 9D of the Central Excise Act (as made applicable in relation to service tax by virtue of Section 83 of the Finance Act, 1994) is not complied with by the Adjudicating authority. The statements recorded by the investigating officers are therefore of no evidentiary value, and no service tax demand is sustainable on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) S.M. Energy Teknik Electronics Ltd. Vs. Commissioner, Vadodara 2015 (328) ELT 443 (Tri. Ahmd.) (iv) Mahesh Silk Mills Vs. Commissioner of Central Excise -2014 (304) ELT 703 (Tri. Ahmd.) (v) Commissioner Vs. Mahesh Silk Mills -2015(319) ELT (A52) Gujarat High Court. (vi) Arya Fibers Pvt. Limited Vs. Commissioner, Ahmedabad -2014 (311) ELT 529 (Tri. Ahmd) 9. He further submits that a case of clandestine activities has to be established by the revenue by leading cogent, reliable and independent evidence. Such case cannot be made out only on statements recorded by the investigating officers. The customers /buyers who are alleged to have paid cash must be located, statements of such persons must be recorded for proving cash payment by them, the amount of cash transactions should also be established as actually received by the assessee, and such evidences has to be brought on record. In absence of such evidence, a case of clandestine activities is not acceptable. 10. He also submits that the figures and details of excel sheets were actually the details of estimates given to the clients. The Appellants have explained in the adjudication that first estimate were p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue has proceeded in confirmation of the service tax demand on the basis of .xls Sheets recovered from Pen Drive seized from the appellants premises. The entire case of Revenue in the present matter is based on said .xls sheets and Statement of employee, partner and director of the Appellants. However, it is seen that apart from recording the statements of persons in the present matter no independent investigation has been carried out by the department. We observed that Department has not brought out any independent facts or evidence as who is the service receivers, whether the cash receipts shown in the xls. Files pertaining to the service component only or otherwise and no corroborative evidence produced in support of details mentioned in the said xls. files. In the present matter allegation of the revenue are that appellants collected the huge amount of cash in respect of provisions of services involved. However not a single rupee of unaccounted cash was found during the search conducted by revenue in the business premises of the appellants. We also noticed that during the investigation statements of 2 to 3 customers only recorded by the revenue. The customer Shri Hardik Takkar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vishrut Puri has negotiated the deal with the appellant. Further in his statement Shri Suvrat M Puri is also not sure whether any cash was paid by Shri Vishrut Puri to appellant or not. Such statement cannot be relied upon as there is no confirmation from any statement recorded that such customers have paid any cash to the appellant and the person who actually has entered into agreement with the appellant is no more alive. We also find that in the present matter two invoices of customers Shri Sunny Arora and Shri Manojkumar Agarwal that are reproduced in impugned order, however statements of such customers were not recorded by the revenue. We find that the department has not substantiated the allegation about service provided in cash as mentioned in the disputed Excel Sheets. Further more than 100 names and address of the clients appeared in the disputed Excel Sheet but department failed to further enquiries in the form of statements and other records from such persons whose names appearing in Excel Sheets. 14. We also find that the pendrive data is not substantial evidence and no evidence of extra receipt has been produced in the form of persons from whom such extra considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provision of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. The above Section deals expressly with the circumstances in which a statement recorded before a gazetted officer of Central Excise (under Section 14 of the Act) can be treated as relevant for the purposes of proving the truth of the contents thereof. Reliance is placed on the ruling of the Hon ble Punjab Haryana High Court in the case of Jindal Drugs (Infra),2016 (340) E.L.T. 67 (P H) wherein the Hon ble High Court laid down the detailed procedure, inter alia, providing for cross-examination of the witness of the Revenue by the Adjudicating Authority and thereafter, if the Adjudicating Authority is satisfied that the statement of the witness is admissible in evidence than the Adjudicating Authority is obligated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross-examination, and cross-examination has to precede re-examination. 18. In the present matter it is admitted facts that Statements recorded during investigation in the present matter, whose makers are not examination-in-chief before the adjudicating authority, would have to be eschewed from evidence, and it will not be permissible for Ld. Adjudicating Authority to rely on the said evidences. Therefore, we hold that none of the said statements were admissible evidence in the present case. 19. We also find that the case of the Revenue is based on the Excel Sheet printout found in the Pen Drive / Google Drive, with regard to reliance on the computerized print out appellants herein has objected the mode of reliance for which they argued that as per Section36B of the Central Excise Act, without following the prescribed procedure the said Excel Sheets document cannot be relied upon. The said Section36B is reproduced here below : Section 36B. Admissibility of micro films, facsimile copies of documents and computer printouts 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 doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binations 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 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. We find that none of these conditions was satisfied by the Revenue in this case. In the present case, the data was not stored in the computer but the officers had taken the printout from the USB drive by connecting to the computer. The officers had not obtained any certificate as required under Section36B 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 allegations of the revenue. It is noted that the requirement of certificate under Section36B(4) is also to substantiate the veracity of truth in the operation of electronic media. We also agree with the contention of the appellants that at the time of sealing and de-sealing of the external data storage device as well as the time of obtaining printouts there from, a certificate should have been obtained as per the provision of Section36B of the Act. No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellants was obtained by the department, the credibility of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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