Clandestine removal requires corroborative and admissible evidence; untested statements and unsupported computer printouts cannot sustain demand.

A charge of clandestine manufacture and removal must rest on tangible, corroborative and admissible evidence. Rough diaries, uncorroborated statements and computer printouts were insufficient where they did not establish buyers, transport, sale proceeds or other clinching links, and suspicion could not replace proof. Reliance on statements recorded during investigation was also impermissible when cross-examination was sought but refused, as this violated natural justice. The computer printouts were not usable to sustain the demand because the statutory conditions for admissibility of computer-generated evidence were not shown. On that basis, the demand was held unsustainable and set aside.

---

---

Issues: (i) whether the demand for clandestine manufacture and removal could be sustained on the basis of rough diaries, statements and computer printouts without corroborative evidence; (ii) whether refusal of cross-examination of persons whose statements were relied upon vitiated the adjudication; (iii) whether the computer printouts were admissible as evidence under the statutory conditions.

Issue (i): Whether the demand for clandestine manufacture and removal could be sustained on the basis of rough diaries, statements and computer printouts without corroborative evidence.

Analysis: The demand was founded mainly on diary entries and statements, but the records did not show transaction value, buyers, transport details or other clinching links necessary to establish clandestine removal. No tangible corroboration was produced regarding receipt of raw material, manufacture, removal, transport, or receipt of sale proceeds. Mere suspicion or uncorroborated entries could not replace proof.

Conclusion: The demand on this basis was not sustainable and was against the assessee.

Issue (ii): Whether refusal of cross-examination of persons whose statements were relied upon vitiated the adjudication.

Analysis: The statements recorded during investigation were relied upon in the show cause notice, but cross-examination was specifically sought and refused. In such circumstances, reliance on those statements without complying with the statutory requirement governing their use in adjudication amounted to violation of natural justice.

Conclusion: The refusal to permit cross-examination rendered the reliance on those statements impermissible and was against the assessee.

Issue (iii): Whether the computer printouts were admissible as evidence under the statutory conditions.

Analysis: The printouts were treated as supporting material, but the statutory conditions for admissibility of computer-generated evidence were not established. The adjudicating authority did not examine the foundational requirements for their use as proof.

Conclusion: The computer printouts were not admissible to sustain the demand and this issue was against the Revenue.

Final Conclusion: The impugned order was unsustainable because the demand was built on uncorroborated material, inadmissible electronic records, and statements used without legally required cross-examination; the appeals succeeded and the duty demand was set aside.

Ratio Decidendi: A charge of clandestine removal must be proved by tangible, corroborative and admissible evidence, and statements or electronic records relied upon in adjudication cannot be used unless the statutory safeguards governing their admissibility are satisfied.

---