Clandestine removal demands need mandatory Section 9D compliance and corroborative evidence; private papers alone are insufficient.

Statements recorded during investigation under Section 14 cannot sustain a clandestine removal demand unless the statutory procedure under Section 9D for admitting and relying on such evidence is followed, and that requirement is treated as mandatory. Loose sheets and computer printouts, by themselves, are insufficient unless their authorship and evidentiary value are established through independent corroboration. In the absence of supporting proof such as raw material purchases, electricity consumption, transport movements, sale proceeds, or other clinching circumstances, the charge of clandestine manufacture and removal fails. Mere deposit of money during investigation is not an admission of liability. The department's burden to prove the demand by reliable evidence was not discharged.

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Issues: Whether the demand of Central Excise duty based on statements recorded during investigation and private documents could be sustained without compliance with the statutory procedure for admitting such statements and without independent corroborative evidence of clandestine manufacture and removal.

Analysis: The demand rested principally on statements recorded under Section 14 and on loose sheets and computer printouts recovered during search. The statement evidence was held inadmissible because the procedure prescribed under Section 9D was not followed, and such compliance was treated as mandatory. The private records were also found insufficient because their authorship and evidentiary value were not properly established and there was no supporting investigation into raw material purchase, electricity consumption, transport, sale proceeds, or other clinching circumstances normally required to prove clandestine removal. Mere deposit of money during investigation was not treated as an admission of liability. The burden remained on the department to prove the charge by reliable and corroborative evidence, which was not discharged.

Conclusion: The demand was not sustainable and the assessee succeeded.

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