CX - Entire case was made out on basis of pre-drafted statements of buyers and computer printouts - Investigating officers have failed to comply with conditions of S.36B of CEA, 1944 - there is no adequate material available on record to establish clandestine removal of goods-appeals allowed: CESTAT
By TIOL News Service
AHMEDABAD, APR 28, 2015: ON 11/12.02.2006, the Central Excise Preventive Officers visited the appellant's factory and conducted stock verification and found excess stock of the finished goods valued at Rs.83,248/-, which was seized by the Central Excise officers. The Officers also found a data storage in electronic form in the USB drive and obtained a print out from the USB drive with the help of a computer expert. On the basis of the said print out, it was ascertained that the appellants during the period 01.04.2005 to 08.02.2006, cleared the goods valued at Rs.2,40,37,556/- and had not paid duty after exceeding the aggregate value of clearance of Rs.1 Crore.
Statements of the partners of the firm and 30 persons, mostly, who had purchased the impugned goods were recorded and they admitted the fact of purchasing of goods from the appellant without bills.
A SCDN was issued and a CE duty demand of Rs.23,78,329/- came to be confirmed along with penalties and interest.
As the Commissioner (A) upheld this order the appellant is before the CESTAT.
It is submitted that the entire case was made out on the basis of print out of USB drive and 30 statements of various persons, mostly claimed as purchaser of goods. It is further submitted that one Shri Nitin Shah, claimed to be computer expert, accompanying the Central Excise officers had connected the USB drive to a computer in the appellant's office and on the basis of print out contained in the USB drive, as claimed, it was ascertained that the clearance value during the material period was over and above of Rs.1Crore; that both the partners of the appellant firm disowned the contents of the print out in their statements; that the data was not stored in the computer and it was retrieved from the USB drive; that the CE officers have not followed the procedure envisioned u/s 36B of the CEA, 1944 and, therefore, the print out of USB drive has no evidentiary value. Reliance is placed on the decisions in Premier Instruments & Controls Pvt. Ltd. Vs CCE - 2005-TIOL-61-CESTAT-MAD; M/s Harsinghar Gutka Pvt. Ltd. Vs CCE - 2009-TIOL-2503-CESTAT-DEL.
The appellant further mentioned that the Adjudicating authority had denied the cross examination of the 30 persons; the statements of the 30 persons were pre-drafted computer statements; that the Commissioner (Appeals) allowed cross examination of only 4 persons which were randomly selected. After considering the nature and contents of the statements and the cross examination, the Commissioner (Appeals) had also observed that the evidentiary value of the 30 statements is weak. It is also submitted that there is no evidence of manufacture, clearance, purchase of huge quantity of raw materials, transport documents etc. for alleged clandestine removal of goods. M/s Arya Fibres Pvt. Ltd. and others vs Commissioner of Central Excise, Ahmedabad-II, - 2014-TIOL-15-CESTAT-AHM relied upon.
The AR while reiterating the finding of the lower authorities submitted that the Commissioner (Appeals) had clearly observed that the evidence in the form of electronic record in USB drive is sufficient to establish the clandestine removal of the goods; that the USB drive was found at the appellant's premises and, therefore, the appellant cannot dis-own the contents of the print out.
The Bench after extracting the findings of the Commissioner (A), the provisions of s.36B of CEA, 1944 and the decision in M/s Premier Instrument & Controls Ltd. (supra) inter alia observed -
"…Taking into consideration the overall facts and circumstances of the case, I find that the entire case was made out on the basis of statements of the buyers and the computer printout. Commissioner (Appeals) already held that the evidentiary value of the statements is weak. It is also noted that the statements of the 30 persons were mostly similarly pre-drafted. The investigating officers failed to comply with the conditions of Section 36B of the Act in respect of relying upon this computer print out. There is no adequate material available on record to establish the clandestine removal of goods. Therefore, the demand of duty solely on the basis of these materials cannot be sustained. Hence, as the clearance value was within the SSI exemption, the confiscation of the goods cannot be sustained. So, the imposition of penalties are not warranted."
The order was set aside and the appeals were allowed.
(See 2015-TIOL-745-CESTAT-AHM)
