M/s. Indroyal Furniture Co. Pvt. Ltd., Shri Madhusoodanan Versus Commissioner of GST & Central Excise, Tirunelveli
Central Excise
2019 (1) TMI 770 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 14-1-2019
Appeal Nos. E/342 & 343/2010 – Final Order No. 40059-40060/2019
Central Excise
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
Shri M. Karthikeyan, Advocate for the Appellant
Shri B. Balamurugan, AC (AR) for the Respondent
ORDER
Per Bench
The appellants are manufacturers of furniture and are holding central excise registration issued by the Tenkasi range, Tirunelveli Commissionerate. Upon gathering specific intelligence that appellants were indulging in suppression of production and clandestine removal of excise goods simultaneous search operations were conducted on 11.9.2007 at various places including the factory premises, head office as well as sales outlets and residential premises of directors and manage
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keyan 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 that data retrieved from the computer cannot be admitted in evidence.
2.1 Entire demand of duty has been made based only on the computer print outs retrieved during investigation. The requirements of the Section 36B which are to be complied with for the purpose of relying on such Computer printouts have not been satisfied in this case. The Commissioner in Para 72 of the impugned order has categorically held that the conditions prescribed under the above Section has not been complied with and hence the computer print outs cannot be of evidentiary value.
2.2 Statements were recorded from various persons and
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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) Vijayachamundeswari Textiles – CESTAT, Chennai, Final Order No.42823-42825/2017 dated 26.07.2017
2.3 Other documentary evidences such as personal diary maintained by Shri Sashangan, Loading List, etc. also does not establish the serious charge of clandestine manufacture and sale of certain furniture for cash alone can be made out from it. From the balance sheet of the appellant which is available for all the three years in dispute, it is very clear that the appellant is engaged in trading of furniture also and such sales on cash basis have been wrongly reckoned as sale of manufactured items without payment of
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ntire 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 outs as evidence, the statement recorded would support the computer print outs and therefore the computer print outs are not stand alone document. The print outs have been corroborated by the statements. Thus computer print outs are reliable and acceptable in evidence. Other documents viz. diary, loading list and material inward register were also recovered. These showed that appellants had purchased unaccounted wood which was used for manufacture of furniture which was cleared clandestinely. All these facts are admitted in the statements of the employees. Shri V. Arun, who is the accountant of the appel
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e 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 of Shri V. Arun, Accountant. Thus, the statements of these two employees would support the computer print outs. The allegation of clandestine removal is forcefully established by the department. The demand, interest and the penalties imposed therefore require no interference.
4. Heard both sides.
5. The allegation is that the appellant has clandestinely manufactured and cleared furniture and thus evaded excise duty.
5.1 The main evidence relied by the department is the data / computer print outs retrieved from the computers which was used in head office / factory etc. These computers were seized from the pr
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(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 the rules made thereunder and shall be admissible in any proceedings thereunder, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
(2) The conditions referred to in sub-section (1) in respect of a computer print out shall be the following, namely :-
(a) the computer print out containing the statement was produced 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
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rly 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 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 particul
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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 directly or (with or without human intervention) by means of any appropriate equipment.
Explanation. – For the purposes of this section, –
(a) “computer” means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and
(b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process.”
5.3 The mahazars dated 11.9.2007 and 17.9.2007 prepared at the appellant premises and office of DGCEI
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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 observed as under:-
“In this case, it is apparent that the data contained in the computer was fed by Shri Arun from March 2006 and earlier two employees, who were no more in service maintained the computers. No statements were recorded from the said employees concerning the data and the computer print outs. Even the statement dated 27.9.2007 recorded from Shri Arun was silent as to whether the conditions stipulated in sub-section (2) as said above were complied with. In the absence of the conditions being complied with it would be difficult to admit the computer print o
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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 alleged to have signed the computer print outs when it was taken out by the DGCEI at their office. So also the buyers from whom statements were recorded and relied upon by the department have filed affidavit wherein they have deposed that they had no knowledge of the computer ledger extracts shown to them and they were forced to give statements before the investigation officers. Thus, they have disowned their entire depositions made during the investigations. From the above discussions, we find that the statements cannot be considered as standalone documents to prove th
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