Clandestine removal demands need corroborated evidence; electricity data and non-compliant electronic printouts are insufficient by themselves.

In clandestine removal matters, duty demand cannot be sustained on electricity consumption alone or on surrounding materials that remain uncorroborated by positive evidence such as raw material movement, transport records, customer receipts or gate passes. The Revenue must prove suppression with concrete and legally admissible evidence, and any electronic printouts must satisfy the statutory requirements for admissibility under section 36B, including the necessary foundational proof and certificate. Standalone pendrive printouts and unsupported computer printouts are unreliable where these safeguards are absent, and cannot by themselves sustain the allegation of clandestine manufacture or removal.

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Issues: (i) Whether the demand of duty based on alleged clandestine removal could be sustained on the basis of electricity consumption and other surrounding materials. (ii) Whether the pendrive printouts and computer printouts relied upon by the Revenue were admissible and reliable under section 36B of the Central Excise Act, 1944.

Issue (i): Whether the demand of duty based on alleged clandestine removal could be sustained on the basis of electricity consumption and other surrounding materials.

Analysis: The demand was founded on a chain of alleged incriminating material, including chits, notebooks, dealer records, statements and electricity consumption. The adjudicating authority itself had recorded inconsistencies in the evidence and had noted that the entries were only probably indicative, while the exact quantum of suppression was difficult to conclude. The record also showed that the alleged production figures were not supported by independent evidence of raw material movement, transport, customer receipts, gate passes or reliable corroboration. The burden in clandestine removal cases lies on the Revenue to prove the charge by positive and concrete evidence, and electricity consumption by itself cannot be treated as a safe or sole basis for arriving at production and duty liability.

Conclusion: The demand of duty on the allegation of clandestine removal was not sustainable and the finding was in favour of the assessee.

Issue (ii): Whether the pendrive printouts and computer printouts relied upon by the Revenue were admissible and reliable under section 36B of the Central Excise Act, 1944.

Analysis: The material relied upon consisted of printouts allegedly taken from a standalone pendrive and not from a duly proved computer source. The safeguards prescribed for admissibility of computer printouts and electronic records were not complied with, including the foundational requirements as to lawful control, regular use of the device, and the requisite certificate. In the absence of compliance with section 36B, the electronic material could not be treated as reliable proof. The Revenue therefore could not use the said printouts to sustain the allegation of clandestine manufacture and removal.

Conclusion: The electronic material was held inadmissible and unreliable, which was in favour of the assessee.

Final Conclusion: The Revenue failed to establish clandestine removal by legally admissible and corroborated evidence, and the assessee's challenge to the duty demand succeeded while the Revenue's challenge failed.

Ratio Decidendi: In a clandestine removal case, duty demand cannot rest solely on electricity consumption or unproved electronic printouts; the Revenue must establish the allegation with positive, corroborative and legally admissible evidence, including compliance with the statutory requirements governing electronic records.

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