Electronic evidence in excise demands requires statutory compliance and corroboration; unverified pen-drive data cannot prove clandestine removal.

Central excise duty demand based on pen-drive data and confessional statements was held unsustainable because the electronic material did not satisfy the statutory requirements for admissibility of electronic evidence, including the necessary certificate and proper provenance of the output. The pen drives were not properly seized, and the retrieval of printouts did not meet the safeguards for electronic records. The allegation of clandestine manufacture and removal also failed for want of independent corroboration such as excess raw material, excess power consumption, extra labour, cash trail, or transport evidence. Clandestine removal must be proved by tangible and affirmative evidence, not unauthenticated data or unverified statements.

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Issues: Whether the demand of central excise duty based on pen-drive data and confessional statements, without compliance with the statutory requirements for electronic evidence and without corroborative evidence of clandestine manufacture and removal, was sustainable.

Analysis: The demand rested primarily on data retrieved from pen drives recovered during search and on statements recorded from the director and employees. The electronic material was not shown to have been produced from a computer regularly used to store or process information, and the required certificate accompanying the electronic output was not obtained. The pen drives were not seized through a proper seizure memo, and the manner of retrieval of printouts did not satisfy the safeguards prescribed for admissibility of electronic records. The record also lacked independent corroboration such as evidence of excess raw material, excess power consumption, extra labour, cash trail, or transport of clandestinely removed goods. In clandestine removal matters, the charge must be established by tangible, direct, and affirmative evidence, not by suspicion or uncorroborated private records.

Conclusion: The demand was not sustainable, and the assessee was entitled to relief.

Ratio Decidendi: Electronic records relied upon for excise demand are admissible only when the statutory conditions for electronic evidence are satisfied, and clandestine removal must be proved by corroborative, tangible evidence rather than unauthenticated data or unverified statements.

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