Electronic evidence and untested statements cannot sustain clandestine removal demands without statutory compliance and independent corroboration.

A central excise demand based on data from a pen drive, computer printouts and a common director's statement was held unsustainable where the electronic evidence was not proved under Section 36B and the statement was not relied on in compliance with Section 9D, with no cross-examination afforded. The record also lacked independent corroboration such as excess stock, unaccounted raw materials, sales proceeds, transport material or electricity data, and documents from third-party premises were not linked through independent investigation. On that basis, the duty demand and consequential penalties were set aside.

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Issues: Whether a demand of central excise duty and consequential penalty could be sustained on the basis of data retrieved from a pen drive and computer printouts, together with a statement of a common director, without compliance with the statutory requirements governing electronic evidence and without independent corroboration.

Analysis: The demand was founded mainly on electronic data recovered from a pen drive and printouts taken from that data, along with a statement recorded from the common director. The record did not show any search or seizure from the appellant's own premises, nor any independent corroboration such as excess stock, excess raw materials, unaccounted sales proceeds, transport evidence, electricity consumption data, or other tangible indicators normally required to establish clandestine removal. The electronic material was not proved in accordance with the mandatory requirements of Section 36B of the Central Excise Act, 1944, and the statement of the director could not be relied upon as an admissible basis for demand when the prescribed procedure under Section 9D of the Central Excise Act, 1944 was not followed and cross-examination was not afforded. Documents recovered from third-party premises, without linkage through independent investigation, were treated as insufficient proof of clandestine clearance.

Conclusion: The demand of duty and the penalties were not sustainable, and the appeal succeeded.

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