Clandestine removal requires independent corroboration; income-tax data and unsupported electronic records cannot sustain excise demand.

A charge of clandestine removal under central excise law must be supported by independent, affirmative and corroborative evidence; data, loose papers and statements received from the Income-tax Department are insufficient on their own. Computer printouts and other electronic records cannot be relied upon unless the statutory requirements for admissibility under Section 36B of the Central Excise Act, 1944 are satisfied. In the absence of evidence of actual manufacture, identified buyers, movement of goods, excess raw material use, higher electricity consumption or flow-back of sale proceeds, the duty demand fails and consequential penalties cannot be sustained.

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Issues: Whether the demand of central excise duty and consequential penalties for alleged clandestine removal could be sustained solely on the basis of data and statements received from the Income-tax Department without independent corroboration and without compliance with the requirements for admissibility of electronic records.

Analysis: The demand was founded on Tally and Visual Udyog data, loose papers and statements gathered by the Income-tax authorities, but the record showed no independent investigation by the excise department to establish actual manufacture, identification of buyers, movement of goods, excess raw material consumption, higher electricity use, or flow-back of sale proceeds. The computer printouts relied upon were not supported by the statutory certificate and conditions required under Section 36B of the Central Excise Act, 1944. The statements recorded during income-tax search proceedings were treated as having limited evidentiary value for income-tax purposes and could not, by themselves, prove clandestine removal under excise law. The materials adduced by the appellants, including production-capacity evidence, cross-examination, and VAT check-post records, further weakened the revenue case and showed the absence of affirmative corroboration.

Conclusion: The allegation of clandestine removal was not proved, the duty demand could not be sustained, and the penalties on the main appellant and co-appellants were set aside.

Ratio Decidendi: A charge of clandestine manufacture and removal must be proved by independent, affirmative and corroborative evidence, and electronic records cannot be relied upon unless the statutory conditions for admissibility are satisfied.

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