Anees Vs State Govt. of NCT (Supreme Court of India)
Summary: The CESTAT Kolkata, in Narsingh Ispat Limited Vs Commissioner, CGST and Central Excise, set aside a Central Excise duty demand of ₹19,94,41,968, along with interest and penalties, arising from allegations of clandestine manufacture and removal of 47,658 MT of pig iron during the period from 1 April 2014 to 26 September 2015. The proceedings originated from searches conducted by DGCEI officers on 26 September 2015 at the company’s factory, registered office and associated premises. The Department relied primarily on computer printouts, pen drives, private records and statements recorded during the investigation. The adjudicating authority confirmed the duty demand with an equivalent penalty and imposed a separate penalty of ₹2 crore on Shri Hemant Goyal, Director, under Rule 26 of the Central Excise Rules, 2002. Both appellants challenged the order before the Tribunal.
The Tribunal examined the admissibility of electronic records under Section 36B of the Central Excise Act, 1944. It observed that the Department had failed to establish compliance with the statutory conditions governing computer-generated evidence. The persons responsible for making the entries in the computer records had not been identified, and the mandatory certificate prescribed under Section 36B(4) had not been obtained. Consequently, the computer printouts recovered from the pen drives could not be treated as reliable evidence of clandestine clearance. The Tribunal relied on the decisions in Shivam Steel Corporation Vs Commissioner of Central Excise & Customs [2016 (339) ELT 310 (Tri.-Kolkata)] and Super Smelters Ltd. Vs Commissioner of Customs, Central Excise & Service Tax [2020 (371) ELT 751 (Tri.-Kolkata)], which recognised the necessity of complying with Section 36B before relying on electronic records in excise proceedings.
Regarding witness statements, the Tribunal held that the adjudicating authority had not followed the mandatory procedure prescribed under Section 9D of the Central Excise Act, 1944. The statements recorded under Section 14 could not automatically be admitted as substantive evidence without satisfying the statutory requirements. Where the circumstances specified in Section 9D(1)(a) were absent, the persons making the statements were required to be examined as witnesses, followed by a determination regarding their admissibility in the interests of justice. Relying on G-Tech Industries Vs Union of India [2016 (339) ELT 209 (P&H)] and Ambica International Vs Union of India [2016-TIOL-1238-HC-P&H-CX], the Tribunal concluded that non-compliance with Section 9D rendered the statements unsuitable for sustaining the disputed duty demand.
On the substantive allegation of clandestine removal, the Tribunal found that the Revenue had failed to produce positive, tangible and corroborative evidence establishing unaccounted manufacture or clearance of pig iron. There was no satisfactory evidence of purchases and consumption of unaccounted raw materials, excess electricity consumption, clandestine transportation, identification of buyers, actual removal of finished goods or receipt of unaccounted sale proceeds. The Tribunal emphasised that clandestine removal is a serious allegation that cannot be established merely through assumptions, presumptions, private records or uncorroborated statements. It relied on Continental Cement Company Vs Union of India [2014 (309) ELT 411 (All.)] and Jai Balaji Industries Ltd. Vs Commissioner of Customs, Central Excise & Service Tax [2021 (378) ELT 674 (Tri.-Kolkata)], which required sufficient independent evidence to substantiate allegations of clandestine manufacture and clearance.
Cases Discussed
- Shambhu Nath Mehra Vs State of Ajmer (AIR 1956 SC 404) – Section 106 of the Evidence Act does not relieve the prosecution of its primary burden of proving guilt.
- Prakash Chand Vs State (Delhi Administration) [(1979) 3 SCC 90] – An accused’s conduct in pointing out the location of incriminating material may be admissible under Section 8 independently of Section 27.
- Madan Singh Vs State of Rajasthan [1979 SCC (Cri) 56] – Recovery evidence may be accepted on the investigating officer’s credible testimony despite hostile panch witnesses.
- Sharad Birdhichand Sarda Vs State of Maharashtra [(1984) 4 SCC 116] – Circumstantial evidence must establish a complete chain consistent with guilt and inconsistent with innocence.
- Kikar Singh Vs State of Rajasthan (AIR 1993 SC 2426) – Use of deadly weapons against an unarmed person may establish undue advantage, excluding Exception 4 to Section 300 IPC.
- State of Rajasthan Vs Ani alias Hanif & Others (AIR 1997 SC 1023) – Trial judges possess powers to question witnesses to ascertain the truth and clarify material evidence.
- State of West Bengal Vs Mir Mohammad Omar & Others [(2000) 8 SCC 382] – Once foundational facts are proved, failure to explain facts within special knowledge may justify an adverse inference.
- Ram Gulam Chaudhary & Others Vs State of Bihar [(2001) 8 SCC 311] – Section 106 applies where the accused fails to explain circumstances exclusively within their knowledge after the prosecution establishes relevant facts.
- Mohd. Aslam Vs State of Maharashtra [(2001) 9 SCC 362] – Hostility of independent witnesses does not necessarily invalidate otherwise reliable recovery evidence.
- Dhirajbhai Gorakhbhai Nayak Vs State of Gujarat [2003 (5) Supreme 223] – Exception 4 to Section 300 IPC requires absence of premeditation and undue advantage.
- Parkash Chand Vs State of Himachal Pradesh [(2004) 11 SCC 381] – The applicability of Exception 4 depends on the circumstances of the sudden fight and the offender’s conduct.
- Anter Singh Vs State of Rajasthan [(2004) 10 SCC 657] – Hostile panch witnesses do not automatically invalidate recovery evidence supported by reliable testimony.
- Zahira Habibulla H. Sheikh & Another Vs State of Gujarat & Others [(2004) 4 SCC 158] – Courts must actively safeguard fair trials and use statutory powers to discover the truth.
- A.N. Venkatesh & Another Vs State of Karnataka [(2005) 7 SCC 714] – Conduct relating to discovery may remain relevant under Section 8 even where disclosure evidence is inadmissible under Section 27.
- State (NCT of Delhi) Vs Navjot Sandhu alias Afsan Guru [(2005) 11 SCC 600] – Distinguished the admissibility of conduct under Section 8 from discovery statements under Section 27.
- Trimukh Maroti Kirkan Vs State of Maharashtra [(2006) 10 SCC 681] – Where murder occurs inside a matrimonial home, failure to explain the circumstances may become a strong incriminating factor after foundational facts are established.
- Byvarapu Raju Vs State of Andhra Pradesh & Another [(2007) 11 SCC 218] – Exception 4 to Section 300 IPC requires a sudden fight without undue advantage or cruel conduct.
- Hawa Singh & Another Vs State of Haryana [SLP (Crl.) No. 1515/2008, decided on 15 January 2009] – Considered the requirements governing the benefit of Exception 4 to Section 300 IPC.
- Vishal Singh Vs State of Rajasthan [2009 Cri LJ 2243] – Explained the cumulative conditions necessary to invoke Exception 4 to Section 300 IPC.
- Manu Sao Vs State of Bihar [(2010) 12 SCC 310] – A false explanation may constitute an additional link in an otherwise established chain of circumstantial evidence.
- Tulshiram Sahadu Suryawanshi & Another Vs State of Maharashtra [(2012) 10 SCC 373] – Section 106 permits an inference concerning specially known facts but does not displace the prosecution’s burden.
- Munna Kumar Upadhyay alias Munna Upadhyaya Vs State of Andhra Pradesh [(2012) 6 SCC 174] – False answers under Section 313 CrPC may justify adverse inferences when supported by other incriminating evidence.
- Nagendra Sah Vs State of Bihar [(2021) 10 SCC 725] – Failure to explain specially known facts cannot cure an incomplete chain of circumstantial evidence.
- Balvir Singh Vs State of Uttarakhand [2023 SCC OnLine SC 1261] – The prosecution retains the burden of proof notwithstanding the accused’s failure to produce explanatory evidence.
