Clandestine removal demands need tangible corroboration; isolated electronic printouts cannot sustain duty demand without supporting evidence.

Central excise demand based on laptop printouts and deleted electronic files for alleged clandestine manufacture and removal was not sustained where the department failed to produce corroborative evidence of raw material procurement, electricity use, buyers, transporters, or sale proceeds, and the forensic exercise was not shown to have been conducted in the directors' presence. The admitted clearance of 445.590 MT, which was acknowledged by one director and duty-paid on the same date, was treated as established and left undisturbed. On that basis, the demand tied to deleted files was set aside, while the admitted clearance was sustained and the director's penalty was reduced.

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Issues: Whether the demand of central excise duty based on laptop printouts and deleted electronic files could be sustained for alleged clandestine manufacture and removal, and whether the admitted clearance of 445.590 MT with duty already paid required any interference.

Analysis: The laptop data relating to the period 1 July 2011 to 7 July 2011 was found in the presence of one director, compared with statutory records, and the discrepancy regarding 445.590 MT was admitted by him in his statement, with duty paid on the same date. That portion of the evidence was therefore treated as admitted. However, the larger demand based on deleted files for May to July 2011 was not admitted by either director, the forensic exercise was not shown to have been carried out in their presence, and the department led no corroborative evidence of raw material procurement, electricity consumption, buyers, transporters, or flow-back of sale proceeds. In clandestine removal matters, the charge must be proved by reliable and tangible evidence and cannot rest on presumptions or isolated electronic printouts alone.

Conclusion: The demand based on the alleged clandestine clearances reflected in the deleted files was set aside, but the admitted clearance of 445.590 MT and duty already paid thereon was sustained, with the penalty on the director reduced.

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