2019 (1) TMI 770 – CESTAT CHENNAI – TMI – Clandestine removal – demand based on data / computer print outs retrieved from the computers which was used in head office / factory etc. – Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence – Section 36B of the Central Excise Act, 1944 – Held that:- The mahazars dated 11.9.2007 and 17.9.2007 prepared at the appellant premises and office of DGCEI respectively would show that employees of the appellant viz. Ashok Kumar, Anil Kumar, Selvaraj were present. They have endorsed signature in the mahazar. The question is whether such endorsement of signature would fulfill the condition required in sub-section (4) of Section 36B. Any statement / print out taken out of the computer would be admissible in evidence only if it is supported by a certificate as required under sub-section (4) of Section 36B. There is no such certificate stating that it is prepared as per the requirement of Section
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be admissible as evidence.
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The statements cannot be considered as standalone documents to prove the allegations in the show cause notice. The evidence put forth is too flimsy to establish a serious charge of clandestine manufacture and clandestine clearance of goods. Though the department need not establish clandestine clearance with mathematical precision, the evidence should establish a probability of such clandestine clearance. On appreciating the facts of the present case, the Commissioner himself having found that the main evidence relied for quantification of duty i.e. computer print outs being not admissible in evidence, the demand could not have been confirmed.
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The department has miserably failed to establish the allegations raised in the show cause notice – appeal allowed – decided in favor of appellant. – Appeal Nos. E/342 & 343/2010 – Final Order No. 40059-40060/2019 – Dated:- 14-1-2019 – Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar,
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ence gathered, show cause notice was issued to the appellant proposing to demand excise duty of ₹ 68,77,758/- for the period 2004 – 05 to 2007 – 08 (upto August 2007) along with interest and also for imposing penalties. The amount already paid by the appellant was sought to be appropriated. After due process of law, the Commissioner vide the order impugned herein confirmed the demand along with interest and also imposed equal penalty besides separate penalty on the Director of the company. Aggrieved, the appellants are now before the Tribunal. 2. On behalf of the appellant, ld. counsel Shri M. Karthikeyan appeared and argued the matter. He submitted that the evidence relied upon by the department is the statements recorded during investigation. Though computer documents were recovered at the time of search, the procedure prescribed under Section 36B of Central Excise Act, 1944 was not complied by the department and the Commissioner himself after analyzing the provision has held t
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hri Ashok Kumar and Shri V Vasant Selvaraj who have been permitted to cross examination have retracted their depositions. Shri V Arun from whom statement was recorded and relied upon in the impugned proceedings was not made available for cross examination also. The three buyers from whom statements have been recorded and relied upon in this proceedings have filed affidavits wherein they have deposed that they had no knowledge about the computer ledger extracts shown to them based on which confirmation was taken by the investigation forcibly and they disowned the entire depositions made in such statements and they had purchased furniture s from the appellant only under the cover of invoices. The following decisions are relied upon in support of their contention based on Section 9D. a) Jindal Drugs Pvt. Ltd Vs. Union of India, reported in 2016 (340) E.L.T. 67 (P & H). b) Shiv Shakthi Earthmovers – 2018-TIOL-258-Ces-Chd c) Ambica International Vs. UOI – 2016 TIOL 1238 HC P&H d) Vi
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ally permissible evidences and they lack evidentiary value as held by the adjudicating authority. The statements recorded and relied upon are not admissible as evidence in the absence of examination in terms of Section 9D. The other documents relied upon by the department are also not capable of proving the charge of clandestine manufacture. It has been time and again reiterated by various judicial pronouncements that the charge of clandestine removal has to be proved with cogent evidences and the demand cannot be confirmed on the basis of presumptions and assumptions. Hence, it is humbly prayed that the entire demand of duty with consequential interest and penalties (both on the appellant and the co-appellant) may be set aside with consequential relief. 3. The ld. AR Shri B. Balamurugan supported the findings in the impugned order. He adverted to para 72 of the impugned order and submitted that though the Commissioner has recorded that it would be difficult to admit the computer print
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. Though department has taken reasonable efforts to acquire presence of the witness before the investigating authority, the witness has not appeared. On such circumstance, the statement given by the witness has to be accepted in toto. The statement of Shri V. Arun would throw light on the contents of the computer print outs which evidences the charges alleged in show cause notice. The file title II Stock 2005 – 06 recovered from factory which is Annexure B13 contains reports showing alleged unaccounted clearances for the year 2005 – 06 and 2006 – 07. The details contained in such documents tallied with the details contained in the print outs which is Annexure 20 and relevant for the year 2005 – 06 which is the basis for quantification of demand for such year. So also V.G. Sashankan who is the Manager (Stores & Dispatch) has stated that he has maintained two private diaries for cash receipts and payments. It is deposed by him that the signature of the receipt of the amount is that o
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computers and seized under mahazar dated 17.9.2007. 5.2 Section 36B of the Central Excise Act, 1944 envisages conditions for admissibility of such date retrieved from computer. The said provision is reproduced as under:- SECTION[36B. Admissibility of micro films, facsimile copies of documents and computer print outs 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 document or the reproduction of the image or images embodied in such micro film (whether enlarged or not); or (b) a facsimile copy of a document; or (c) a statement contained in a document and included in a printed material produced by a computer (hereinafter referred to as a computer print out ), if the conditions mentioned in sub-section (2) and the other provisions contained in this section are satisfied in relation to the statement and the computer in question, shall be deemed to be also a document for the purposes of this Act and
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ting 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. (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 c
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the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it. (5) For the purposes of this section, – (a) information shall be taken to be supplied to a computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment; (b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities; (c) a document shall be taken to have been produced by a computer whether it was produced by it
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er sub-section (4) of Section 36B. There is no such certificate stating that it is prepared as per the requirement of Section 36B. Further, though all the persons who have endorsed signature in the mahazar dated 17.9.2007 at the office of DGCEI were present at the appellant s premises on 11.9.2007 at the time of search, instead of retrieving the data from the appellant premises itself, the computers as a whole have been seized and taken to the office of DGCEI. Further, on 27.9.2007, 27.8.2008, 26.9.2007 also print outs were taken. Para 45 of show cause notice says that the quantification of duty has been based on the print outs from the computers seized as per mahazar from factory and Head office. Then it becomes highly necessary on the part of department to establish that the provisions of Section 36B has been complied. 5.4 In para 72 of the impugned order, the Commissioner has addressed this issue of the requirement to comply with the provisions of Section 36B of the Act ibid and has
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support the computer print outs and therefore the evidence of clandestine manufacture and clearance is established. The statements of persons have to be subjected to examination-in-chief as well as cross-examination as per the provision under section 9D of Act in order to be admissible as evidence. This principle is settled in the decisions relied upon by the ld. counsel namely Jindal Drugs Pvt. Ltd. (supra), Shiv Shakthi Earthmovers (supra) and Ambica International (supra). It is also seen that Shri V.Arun who is said to have been accountant of the appellant-company did not appear for cross-examination. Though it is alleged that V. Arun was maintaining the accounts, his statement or certificate as to feeding of the data in the computer has not been obtained by the department. It is brought out that the witnesses namely Shri V.G. Sashankan, Shri Ashok Kumar and Shri V. Vasant Selvaraj whose cross-examination was conducted have retracted from their depositions. These are the persons all
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