Clandestine removal demands corroborative evidence; disputed electronic records and inconsistent statements were found insufficient to sustain duty and penalties.
Procedural irregularities in panchnama proceedings, including defects in search conduct and repeated use of panch witnesses, did not by themselves exclude the seized material, but its reliability still had to be independently tested. Electronic evidence from a hard disk and related printouts required compliance with statutory safeguards for computer output, and without the necessary certificate and verification, the material could not sustain the case on its own. The statements relied upon were inconsistent and lacked corroboration on raw material, manufacture, clearance, buyers, and sale proceeds, so they were insufficient to prove clandestine removal. On the evidence as a whole, the duty demand and penalties were unsustainable.
Issues: (i) Whether the panchnama proceedings were vitiated for violation of the procedure under Section 100(3) of the Code of Criminal Procedure, 1973; (ii) whether the printouts taken from the hard disk and the other electronic and documentary materials were admissible and could be relied upon; (iii) whether the statements relied upon were sufficient to prove clandestine removal; and (iv) whether the demand of duty, quantification and penalties could be sustained on the basis of the evidence on record.
Issue (i): Whether the panchnama proceedings were vitiated for violation of the procedure under Section 100(3) of the Code of Criminal Procedure, 1973.
Analysis: The proceedings suffered from procedural irregularities, including the repeated use of the same panch witnesses and deficiencies in the conduct of search at the so-called secret office. At the same time, such irregularities did not by themselves render the seized material wholly inadmissible. The evidence had still to be tested on the touchstone of reliability and corroboration.
Conclusion: The panchnama proceedings were irregular, but the evidence was not excluded solely on that ground.
Issue (ii): Whether the printouts taken from the hard disk and the other electronic and documentary materials were admissible and could be relied upon.
Analysis: The hard disk was treated as electronic evidence, and compliance with the statutory safeguards for computer output was required. No satisfactory basis was shown for treating the seized device as a regular computer system in use, and the expected certificate and supporting verification were not obtained. The evidentiary value of the printouts therefore depended on independent corroboration, which was found lacking.
Conclusion: The electronic material could not, by itself, sustain the demand and was insufficiently reliable without corroboration.
Issue (iii): Whether the statements relied upon were sufficient to prove clandestine removal.
Analysis: The statements were inconsistent, limited in scope, and not supported by a complete chain of material particulars. There was no adequate proof of raw material procurement, manufacture, transportation, actual removal, receipt by buyers, or realization of sale proceeds. The statements did not furnish the kind of concrete support required in a clandestine removal case.
Conclusion: The statements were not sufficient to prove clandestine removal.
Issue (iv): Whether the demand of duty, quantification and penalties could be sustained on the basis of the evidence on record.
Analysis: A serious allegation of clandestine removal must rest on tangible and corroborative evidence, not on assumptions, extrapolation, or a single set of disputed records. The investigation did not establish the essential chain of clandestine manufacture and clearance, and the quantification was not supported by dependable evidence.
Conclusion: The duty demand and penalties were unsustainable.
Final Conclusion: The appeal succeeded because the record did not establish clandestine removal through reliable, corroborated evidence, and the adjudication could not be upheld on the basis of the disputed electronic and documentary material alone.
Ratio Decidendi: In a case of alleged clandestine removal, the charge must be proved by tangible and corroborative evidence showing the complete chain of manufacture, clearance and realization, and disputed electronic evidence must satisfy the statutory conditions of admissibility or be independently corroborated.