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TMI Blog2024 (3) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... e Duty demand of Rs.19,94,41,968/- (including Cesses) along with interest and equal amount of duty as penalty, on the ground that the Appellant has clandestinely removed 47658 M.T. of Pig Iron without payment of duty. The Ld. Commissioner has further imposed penalty of Rs.2,00,00,000/- on Shri Hemant Goyal, Director under Rule 26 of the Central Excise Rules, 2002. 1.1 Aggrieved against the confirmation of the above said demands both the appellants filed separate appeals. As the impugned order confirming the above said demand of duty and penalty is common, both the appeals are taken up together for decision by a common order. 2. The facts of the case are that the Appellant is engaged in the manufacture of "Pig Iron" falling under Chapter 72, at their factory located in Jamshedpur. The Appellant is also engaged in the trading of Iron & Steel materials etc., from their corporate/registered office situated at 26, Ramlal Mukherjee Lane, Salkia, Howrah, West Bengal which is registered under the Central Excise Act, 1944 as a "dealer". 2.1. On 26.09.2015, the officers of the DGCEI, Jamshedpur, conducted searches at five places including the factory, office, Registered Office premises, O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is accompanied with it. The appellant submits that the 'pen drives' are floating devices and hence cannot be related to any particular computer. Electronic evidences cannot be used as evidence unless it is accompanied by certificate as mandated under Section 36B(4) which is missing in the instant case and the burden is squarely on the Department. Accordingly, they contended that they are irrelevant materials and cannot be admitted into evidence. (iii) In support of this claim, the Appellant relied on the following decisions :- i. CCE Vs. Shivam Steel Corporation [(2023) 2 Centax 259 (Ori.)] ii. Shivam Steel Corporation Vs Commr. of C.Ex. & Cus., BBSR-II [2016 (339) E.L.T. 310 (Tri-Kolkata)] iii. Super Smelters Ltd. Vs. Commr. of Cus., C.Ex. and S.Tax, Durgapur [2020 (371) E.L.T. 751 (Tri.-Kolkata)] iv. Jai Balaji Industries Ltd., Vs. CCE [2023-VIL-771-CESTAT-KOL-CE] v. Prinik Steels Pvt. Ltd. Vs. CCE [(2023) 12 TMI 299-CESTAT-Kolkata] (iv) The oral statement of witnesses were not tested in accordance with Section 9D of the Central excise Act i.e. examination in chief of the witnesses by the adjudicating authority and allowing cross examination of them. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and 23829 MT of Coke would be required. But, in the instant case there is not a single evidence of out of account purchase of single tonne of the said raw materials (Iron Ore/Sinter/Pellet, Coke) and Fluxes (Dolomite, Lime Stone, Quartz) was found available. There is no evidence of extra use of labour and extra payment of wages out of account; There is no evidence of any extra use of electricity etc. There is no acceptance of sellers of raw materials. No enquiries were conducted with the raw material suppliers. There is no evidence of transportation of raw material. The appellants also placed reliance on the decision in the case of M/s. Continental Cement Company Vs. Union of India [2014 (309) E.L.T. 411 (All.)] in support of their claim that the Revenue is required to prove their charge of clandestine removal by means of tangible and sufficient evidence. (ix) In view of the above contentions, the appellant submits that to substantiate the main charge of clandestine removal of huge 47658 MT of finished goods, there is absolutely no tangible, cogent, corroborative evidence on record. No demand can be raised on the basis of "private records" without any tangible, cogent and affir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statements cannot be relied upon since the provisions of Section 9D of the Central Excise Act, 1944 are not followed. They also stated that clandestine removal cannot be confirmed on the basis of statements alone. There must be positive evidences like admission of clandestine removal, purchase and consumption of unaccounted raw materials, discrepancy between recorded stock and physical stock, seizure of any goods en route, consumption of excess electricity, actual clandestine removal of finished goods without payment of duty, mode of removal, evidence of transporters and buyers of the clandestinely removed goods and flow back of funds pertaining to clandestine removals. They stated that the demands confirmed in the impugned order without any of the above mentioned evidences are not sustainable. 7. Thus, we observe that the issues to be decided in this appeal are as under: (i) Whether the computer printouts taken from the pen drives recovered during the search can be relied upon as evidence to demand duty? (ii) Whether the conditions mentioned in Section 36B has been followed in this case or not, to rely upon the computer printouts as evidence? (iii) Whether the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; (b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived; (c) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that 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 reproduced or is derived from information supplied to the computer in the ordinary course of the said activities. . . . (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) id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o thus the demand is not sustainable and liable to be set aside." 7.7. We observe that the decision is squarely applicable in this case. As the department has not followed the mandate under section 36B, the data recovered from the print outs available in the computer sheets cannot be relied upon to work out the duty liability on the allegation of clandestine removal. Accordingly, the answer to the question numbers (i) and (ii) raised at paragraph 7 (supra) are in the negative. 8. (iii) Whether the procedure as set out in Section 9D of the Central Excise Act, 1944 was followed in this case or not? If not followed, then whether the statements recorded under Section 14 of the Central Excise Act, 1944 can be relied upon to demand duty? 8.1. The Appellant submits that the statement recorded by a Gazetted officer is relevant in an adjudication proceeding only if the procedure prescribed under Section 9D of the Central Excise Act is followed. For the sake of ready reference the said Section is reproduced below: "9D. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted in evidence in the interests of justice. 14. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the Gazetted Central Excise officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory." 8.4. We observe that the adjudicating authority has not followed the procedure prescribed under Section 9D, accordingly, we hold that the statements cannot be relied upon to confirm the demands. Thus, the answer to question number (iii) raised at paragraph 7 (supra) is in the negative. 9. (iv) Whether the demands confirmed in the impugned order on clandestine clearance of finished goods is sustainable in the absence of any evidence of procurement of the major raw materials or sale of the finished goods clandestinely? 9.1. Regarding the allegations of clandestin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out. 15. In view of the above, we are of the opinion that when there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible. No purchase of raw material out side the books have been proved. 16. In the light of the above discussions and considering the totality of the case, we are satisfied that no case is made out for extra so called clandestine sale of the Portland Cement to the said parties. We are satisfied that the first appellate authority has rightly deleted the addition and cancel the penalties. Hence we hereby set aside the impugned order passed by the Tribunal and restore the order passed by the first appellate authority, along with the reasons mentioned herein. 17. In the result, all the appeals filed by the appellants are hereby allowed." 9.3. The Appellant also cited the decision of M/s. Jai Balaji Industries Vs. Commissioner of Cus., C.Ex. & S.T., Durgapur [2021 (378) E.L.T. 674 (Tri-Kolkata)]. The relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut taken under coercion. Accordingly, it is submitted that the depositions made during investigation in his statement cannot be relied upon; thus, the penalty levied on him is not sustainable. 10.2 From the above discussion, we find that the allegation of clandestine removal against the appellant-company is not sustainable. Accordingly, the role of Director of the appellant-company in the alleged clandestine clearance is not established. We also observe that no benefit of the alleged illegal activities have accrued to the Director. Therefore, we hold that the penalty imposed on the Director of the appellant under Rule 26 of the Central Excise Rules, 2002 is not sustainable and the same is set aside. Thus, the answer to question no. (v) at paragraph 7 (supra) is in the negative. 11. In view of the above discussion, we answer the questions raised at paragraph 7 of this Order as under: - (i) The computer print-outs taken from the pen drives recovered during the search cannot be relied upon as evidence to demand duty. (ii) As the conditions mentioned in Section 36B has not been followed in this case, the computer printouts cannot be relied upon as evidence, to demand duty. (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X
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