Electronic evidence and untested statements cannot prove clandestine removal without statutory safeguards and cross-examination.

Doubtful electronic records and untested witness statements could not sustain a clandestine removal demand. The Tribunal held that computer printouts and retrieved CPU data were unreliable because the statutory certificate and expert opinion for electronic evidence were absent, so the alleged repeated invoice generation was not proved. It further held that statements of the authorised signatory and transporters could not be used against the assessee without cross-examination, as fairness and natural justice required their production. On the remaining evidence, clandestine removal and shortage were not established by tangible corroboration, and the duty demand and penalties were set aside with consequential relief.

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Issues: (i) Whether computer printouts and retrieved data from the CPU could be relied upon as admissible and reliable evidence in the absence of the statutory certificate and expert opinion; (ii) Whether the statements of the authorized signatory and transporters could be used against the appellants without affording cross-examination; (iii) Whether clandestine removal and shortage were proved so as to sustain the duty demand and penalties.

Issue (i): Whether computer printouts and retrieved data from the CPU could be relied upon as admissible and reliable evidence in the absence of the statutory certificate and expert opinion.

Analysis: The electronic data from the computer system was treated as the foundation of the demand, but the required statutory safeguards for electronic evidence were not satisfied. The absence of the certificate contemplated by the relevant evidentiary provision, coupled with the absence of opinion from an examiner of electronic evidence, rendered the printouts doubtful. The conclusion that the computer software enabled repeated generation of invoices was therefore not established to the requisite standard.

Conclusion: The computer printouts and retrieved data could not be safely relied upon to sustain the demand.

Issue (ii): Whether the statements of the authorized signatory and transporters could be used against the appellants without affording cross-examination.

Analysis: The demand substantially rested on statements recorded during investigation. Since those persons were not produced for cross-examination, their statements could not be treated as reliable evidence against the appellants. In proceedings of this nature, when the Revenue relies on such statements, the witnesses must be made available for cross-examination to satisfy the requirements of fairness and natural justice.

Conclusion: The statements of the authorized signatory and transporters were not admissible against the appellants for want of cross-examination.

Issue (iii): Whether clandestine removal and shortage were proved so as to sustain the duty demand and penalties.

Analysis: Clandestine removal is a serious charge and must be supported by tangible and clinching evidence such as excess production, excess raw material, electricity consumption, dispatch particulars, buyers' records, sale proceeds, and other corroborative material. In the present case, the case rested mainly on disputed computer data and untested statements, while the alleged shortage was based on eye estimation without reliable weighment. The evidentiary foundation was therefore insufficient to establish clandestine removal or shortage.

Conclusion: Clandestine removal and shortage were not proved, and the duty demand and penalties could not be sustained.

Final Conclusion: The impugned order was set aside, and the appeals were allowed with consequential relief in accordance with law.

Ratio Decidendi: A demand for clandestine removal cannot be sustained on doubtful electronic records and untested statements alone; electronic evidence must satisfy the statutory conditions of admissibility, and relied-upon witnesses must be subjected to cross-examination when their statements form the basis of the demand.

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