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TMI Blog2024 (10) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... he order also confirms the demand of central excise duty on the castings articles found short in the factory premises of Trikoot Iron & Steel. The order also directs for confiscation of MT End cutting and MT Miss-roll (TMT), with an option to the appellant to redeem the same on payment of redemption fine. 2. Trikoot Iron & Steel is engaged in the manufacture of MS Girders, Rounds, TMT Bars, MS Ingots, Castings. On 04.07.2013 the Directorate General of Central Excise Intelligence DGI, pursuant to an intelligence, conducted simultaneous searches at the factory premises of Trikoot Iron & Steel at Muzaffar Nagar, the office premises of Trikoot Iron & Steel at New Delhi, and the residential premises of Vaibhav Goel, Director of Trikoot Iron & Steel. During the search of the residential premises of the Director some loose slips, hard disks and pen-drives were seized. Printouts were also taken from the seized hard disk No. WD5000AZRX. During the course of search of the factory premises on 04.07.2013, the officers found shortage of 450.625 MTTMT Bar, 268.340MT Griders and 140.18 MT Casting Articles, having total value of Rs. 7009000/-. The officers also found excess of 7.710 MT of End Cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y found excess (MT) Value (Rs.) Duty involved (Rs. @ 12.36% 1. End cuttings (+)7.710 2,15,880/- 26682.77 2. Miss-rolls (TMT) (+)577.615 1,61,73,220/- 1999009.99 3. MS Ingots (+)438.805 1,31,64,150/- 1627088.94 Excess 2,95,53,250/- 3652781.70 (emphasis supplied) 6. The aforesaid show cause notice refers to a Panchnama dated 04.07.2013 drawn at the residential premises of the Director. The relevant portion of the Panchnama is reproduced below:- "xxxxxxxxx. While this entire episode was going on, the officers found Shri Vaibav Goel removed a hard disc from his kitchen and tried to throw it away. xxxxxxxxx. The officers during the search found that three computer monitors installed in a room, on the first floor of rear side of the house above the dog house, in which some documents and 07 pen-drive were also found. One Shri Mohit Vaish who introduced himself as accountant, who was also available there. However, no CPU was found in the said room. On being asked Shri Mohit informed that there is a one desktop computer connected with the CPU, which is installed in the kitchen of the said premises and these monitors are working as extension of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the one pen-drive took a lot of time and printed started mal-functioning, the other hard discs and pen drive could not be scrutinized. Therefore, the officers discontinued the process of taking printouts on the spot and seized the said three Hard disks and seven pen drive properly. The said hard discs were separately sealed with paper seals and pendrives were sealed in a small card board box by the officer in the presence of we the panchas, Shri Mohit Vaish and Shri Vaibhav Goel duly signed by all concerned and we the panchas. Details of seized hard discs and pen drives are mentioned in Annexure-A of this panchnama. Since, the CPU and printer were specially configured to run the said hard discs, the officers also sealed the CPU (without hard disc) and the printer as detailed in Annexure-A. The officers also resumed some documents related to their enquiry as detailed in Annexure-A to the panchanama. xxxxxxxxxxx" No other documents/articles/things taken in to the possession by the officers except the documents/articles mentioned at Annexure-A" (emphasis supplied) 7. The relevant portion of Annexure-A referred to in the Panchnama is reproduced below: "Details of documents re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2013 and identified by Shri Mohit Vaish). After that the hard drives and pen drives were attached with the above mentioned CPU one by one. By using the CPU and printer resumed from the residence of Shri Vaibhav Goel, Director, the office took printouts of the data stored in the harddrive No. WD5000AZRX and Toshiba 4 GB pendrive white colour (mentioned at S.No. 1 & 7 above respectively). All the printouts were dully signed by Shri Mohit Vaish in our presence. These printouts were placed in different box files and those details are as under: xxxxxxxxxxxx The officers also examined other hard drives and pendrives (S.No. 2 to 6 and 8 to 10 as mentioned above) but as no relevant data was found in these drives, no printouts was taken from these hard drives. Shri Mohit Vaish confirmed that the printouts taken today are related to accounted and unaccounted sale & purchase by M/s. Trikoot Iron & Steel Casting Ltd." (emphasis supplied) 9. Another show cause notice dated 10.02.2015 was issued to Trikoot Iron & Steel, amongst others, invoking the extended period of limitation under section 11A (4) of the Central Excise Act. The relevant portion of the show cause notice is reproduced be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods cleared clandestinely by them during the aforesaid period." (emphasis supplied) 10. The main submissions made by the appellant in response to the show cause notice are: (i) The Panchnama proceedings were conducted under threat, coercion and use of physical force. The same are in violation of the principles laid down for conduct of such proceedings and are not truthful. There are also apparent inconsistencies in the proceedings recorded in the Panchnamas. Hence, the Panchnamas and the documents said to have been resumed cannot be relied upon against the noticee. The proceedings at the residential premises of the Director of the Noticee were conducted by use of physical force and the records allegedly resumed were not shown to Vaibhav Goel, who was present at the time of search. The signatures were obtained under coercion and threat. The details of records/electronic devices allegedly resumed have not been properly recorded in the Panchnama. It is not clear as to from where the loose sheets allegedly resumed were recovered and whether these pertain to the unit of the noticee or not. There is no proof or discussion in the show cause notice as to who is the maker/writer of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these papers is doubtful, is again not tenable as discussing a resumed or seized document in the body of panchnama is not a legal requirement. xxxxxxxxxx 40.8 The Noticee has contended that the panchnama records the serial numbers of the Seagate and the Simmtronics hard drives, whereas in the case of hard drive WD5000AZRX, only the model number is recorded not its serial number. This contention is not relevant as the panchnama dated 15.7.2013 (RUD41) regarding taking the printouts clearly states that the printouts were taken from hard drive No. WD5000AZRX and Toshiba 4 GB pen drive white colour (sl. No. 1 and 7 of panchnama). The panchnama dated 15.7.2013 was drawn in presence of independent witnesses and Sh. Mohit Vaish, Accountant of M/s TISCL, who was also instrumental in entering the data in these devices, and they had verified the paper seals and found them intact before they were opened. Thereby any doubt on the genuineness of these devices, which is based on presumptions, is unfounded. The reliance placed on the judgment of the Hon'ble CESTAT-Mumbai in the case of Jitendra Kumar Ghishulal Jain v. CC (Prev.), Mumbai, 1998 (103) E.L.T. 591 (Tribunal) is not correct as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sk hidden in a corner lying near the dog house. The officers also found two hard disks from the cupboard of the kitchen of the said premises. The officers connected the hard disk found in the corner near dog house with the CPU installed in the kitchen. On scrutiny of the data, it was found that there was a program in MSDOS and it was informed by Shri Mohit Vaish, Accountant present at the residence of the Directors of M/s TISCL, that the said software was a financial software in which accounted for and unaccounted for sales, purchase and cash transaction details of M/s TISCL were captured by them. He revealed the password as 'ingot'. Shri Mohit Vaish opened the said software and showed the details. Shri Mohit Vaish configured the printer and printouts were taken from the hard disk (No. WD5000AZRX, Sl. No. 14 of Annexure-A of panchnama dated 04.07.2013) and pendrive (Toshiba 4GB, Sl. No. 20 of Annexure-A of panchnama dated 04.07.2013) which contain both accounted for and unaccounted for transactions of M/s TISCL. The entire proceeding were recorded under Panchnama dated 04.07.2013. The printouts of this data, obtained from the hard disk and some of the pen drives recovered d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment to establish the admissibility of the documents; (ii) The Panchnama does not mention the vital details of the recovery of hard disc and pen drives; (iii) The conditions stipulated in section 36B of the Central Excise Act have not been observed in recovering the electronic records/documents. The printouts, therefore, could not have been taken into consideration; (iv) The requirement of issuance of a certificate under section 36B of the Central Excise Act has not been satisfied; (v) The adjudicating authority could not itself have examined the conditions stipulated in section 36B of the Central Excise Act to record a finding regarding compliance of the said section; and (vi) The entire records on which the department is placing reliance to prove clandestine removal of products is the electronic record, which record is neither admissible in evidence nor can be examined for this purpose. 13. Learned authorized representative appearing for the department, however, supported the impugned order and contended that the adjudicating authority committed no illegality in relying upon the electronic records. Learned authorized representative submitted that the adjudicating auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (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 (c) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combination 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) giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; Such statements are called oral evidence; (2) all documents including electronic records produced for the inspection of the Court; such documents are called documentary evidence." 18. Section 36B of the Central Excise Act deals with cases where any document is required to be produced as an evidence in proceedings under the Central Excise Act and the Rules framed thereunder. Such certificate should be signed by a person occupying a responsible position in relation to the operation of the device in question or the management of the relevant activities. In such a case it shall be evidence of any matter which is stated therein. It specifically mandates production of a certificate: (i) identifying the document containing the statement and describing the manner in which it was produced; (ii) 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, (iii) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate. 19. The Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly 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. 14. 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) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Mos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in this case. The speeches, songs and announcements were recorded using other instruments and by feeding them into a computer, CDs were made therefrom which were produced in court, without due certification. Those CDs cannot be admitted in evidence since the mandatory requirements of Section 65B of the Evidence Act are not satisfied. It is clarified that notwithstanding what we have stated herein in the preceding paragraphs on the secondary evidence on electronic record with reference to Sections 59, 65A and 65B of the Evidence Act, if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act, the same is admissible in evidence, without compliance of the conditions in Section 65B of the Evidence Act." (emphasis supplied) 21. The aforesaid judgment of Supreme Court in Anvar P. V. was followed by the Supreme Court in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & others , though with a slight modification. The Supreme Court held that if the original device is not produced, then electronic record can be produced in accordance with section 65B (1) of the Evidence Act together with the requisite certificate under section 65B (4). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence would be admissible. The deeming fiction is for the reason that "document" as defined by Section 3 of the Evidence Act does not include electronic records. 22. Section 65B(2) then refers to the conditions that must be satisfied in respect of a computer output, and states that the test for being included in conditions 65B(2(a)) to 65(2(d)) is that the computer be regularly used to store or process information for purposes of activities regularly carried on in the period in question. The conditions mentioned in subsections 2(a) to 2(d) must be satisfied cumulatively. 23. Under Sub-section (4), a certificate is to be produced that identifies the electronic record containing the statement and describes the manner in which it is produced, or gives particulars of the device involved in the production of the electronic record to show that the electronic record was produced by a computer, by either a person occupying a responsible official position in relation to the operation of the relevant device; or a person who is in the management of "relevant activities" - whichever is appropriate. What is also of importance is that it shall be sufficient for such matter to be stated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where "the computer", as defined, happens to be a part of a "computer system" or "computer network" (as defined in the Information Technology Act, 2000) and it becomes impossible to physically bring such network or system to the Court, then the only means of proving information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). This being the case, it is necessary to clarify what is contained in the last sentence in paragraph 24 of Anvar P.V. (supra) which reads as "...if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act...". This may more appropriately be read without the words "under Section 62 of the Evidence Act,...". With this minor clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to be revisited. xxxxxxxxxxxx 72. The reference is thus answered by stating that: (a) Anvar P.V. (supra), as clarified by us hereinabove, is the law declared by this Court on Section 65B of the Evidence Act. The judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c record, should be framed as indicated earlier, after considering the report of the Committee constituted by the Chief Justice's Conference in April, 2016." (emphasis supplied) 22. It transpires from the aforesaid two judgments of the Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar that: (i) Any documentary evidence by way of an electronic record under the Evidence Act can be proved only in accordance with the procedure prescribed under section 65B of the Evidence Act. The purpose of this provision is to sanctify secondary evidence in electronic form generated by a computer; (ii) 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) of section 65 of the Evidence Act are satisfied, without further proof or production of the original; (iii) In view of the provisions of section 65(4) of the Evidence Act, a certificate must accompany the electronic record like computer printout, compact disc, video compact disc or pen drive, pertaining to which a statement is sought to be given i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that a printout generated from the personal computer that has been seized cannot be admitted in evidence unless the statutory conditions laid down in section 36B of the Central Excise Act are complied with. The decisions also hold that if the data is not stored in the computer but officers take out a printout from the hard disk drive by connecting it to the computer, then a certificate under section 36B of the Central Excise Act is mandatory. 27. The contentions advanced by learned counsel for the appellant and the learned authorized representative appearing for the department have to be examined in the light of the aforesaid observations. 28. What transpires from the two Panchnamas dated 04.07.2013 and 15.07.2013 is:- (i) The officers found that Vaibhav Goel "removed a hard disc from his kitchen and tried to throw it away"; (ii) During the search, the officers found "three computer monitors installed in a room on the first floor of rear side of the house above the dog house in which some docum ents and seven pen-drives were also found"; (iii) However, no CPU was found in the said room. On being asked, Mohit Vaish, Accountant informed that there is "one desktop comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Toshiba 4GB pen drive were taken; (xv) The other hard drives and pen drives did not contain any relevant data and so printouts were not taken. 29. It is not in dispute that the hard disk from which the printouts were subsequently taken was not found installed in the CPU. The Panchnama drawn on 04.07.2013 records that the officers found that Vaibhav Goel had removed a hard disc from his kitchen and had tried to throw it away. The panchnama does not mention that any officer had seen Vaibhav Goel actually remove the hard disc from the CPU. It only records that Vaibhav Goel had removed a hard disc from the kitchen and had tried to throw it away. At a different place, the panchnama records that the officers conducted a thorough search of the entire residential premises and found one hard disc hidden in a corner lying near the dog house. What needs to be noticed is that if Vaibhav Goel had thrown the hard disk, it would not have been found hidden in a corner of a room near the dog house. The seven pen drives were also recovered from a room on the first floor of the rear side of the house. In the said room three computer monitor were also installed without a CPU. The officers were in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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