Electronic evidence in excise demands requires strict admissibility safeguards and independent corroboration for clandestine removal allegations.

Electronic evidence in central excise proceedings is admissible only when statutory safeguards for computer outputs and contemporaneous handling are strictly met; where pen drive printouts were not properly secured or proved, they could not be relied on against the assessee. A charge of clandestine removal or undervaluation cannot rest on such uncorroborated data and statements alone; it must be supported by independent, affirmative evidence such as raw material discrepancy, excess production, stock shortage, transport material, buyer evidence, or cash trail. In the absence of such corroboration, the demand was held unsustainable and the adjudication was set aside with consequential relief.

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Issues: (i) Whether the pen drive printouts and other electronic records relied upon by the department were admissible in evidence under the Central Excise law. (ii) Whether the demand for clandestine removal and undervaluation could be sustained on the basis of the pen drive data and statements alone.

Issue (i): Whether the pen drive printouts and other electronic records relied upon by the department were admissible in evidence under the Central Excise law.

Analysis: The electronic records were not found to have been secured with adequate safeguards, including proper sealing and contemporaneous handling. The printouts were largely taken after conclusion of the panchnama and the mandatory conditions for admissibility of computer outputs were not satisfied. The required statutory safeguards for electronic evidence were held not to have been complied with, and the statement relied upon was also not established in the manner required by law.

Conclusion: The electronic records were not admissible and could not be relied upon against the assessee.

Issue (ii): Whether the demand for clandestine removal and undervaluation could be sustained on the basis of the pen drive data and statements alone.

Analysis: The alleged sales ledger was not shown to be co-relatable with the excise invoices and was unsupported by any independent corroboration. No evidence of unaccounted raw material, excess production, shortage of stock, electricity consumption, transport, buyers, or cash flow back was brought on record. The charge of clandestine clearance, being a serious allegation, required affirmative and clinching evidence and could not rest on assumptions or presumptions.

Conclusion: The demand for clandestine removal and undervaluation was not sustainable.

Final Conclusion: The impugned adjudication was set aside and the appeals succeeded with consequential relief.

Ratio Decidendi: A demand of clandestine removal or undervaluation cannot be sustained on uncorroborated electronic data unless the statutory requirements governing admissibility of such evidence are strictly satisfied and the allegation is supported by independent, affirmative evidence.

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