Clandestine removal demands need strict proof: untested statements and unauthenticated electronic records are not enough.

Untested statements recorded during investigation have no evidentiary value unless the statutory procedure under Section 9D of the Central Excise Act is followed, and computer printouts from third-party electronic devices are inadmissible unless the conditions under Section 36B are satisfied. A clandestine removal allegation also cannot stand on presumptions or third-party material alone; it requires independent corroboration through tangible evidence such as transport records, stock discrepancy, production data, or cash trail. Where these safeguards and corroborative materials are absent, the duty demand and related penalty exposure cannot be sustained.

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Issues: (i) whether statements recorded during investigation could be relied upon without compliance with Section 9D of the Central Excise Act, 1944; (ii) whether computer printouts obtained from a third party's electronic devices were admissible without compliance with Section 36B of the Central Excise Act, 1944; and (iii) whether the charge of clandestine removal could be sustained in the absence of corroborative evidence.

Issue (i): whether statements recorded during investigation could be relied upon without compliance with Section 9D of the Central Excise Act, 1944.

Analysis: The demand was founded primarily on statements recorded under Section 14 of the Central Excise Act, 1944. Those statements were not tested in the manner required by Section 9D of the Central Excise Act, 1944. The makers were not examined in the adjudication proceedings in accordance with the statutory procedure, nor was the mandatory safeguard for admitting such statements as evidence satisfied. In these circumstances, the statements could not be treated as reliable substantive evidence.

Conclusion: The statements had no evidentiary value and could not support the demand, in favour of the assessee.

Issue (ii): whether computer printouts obtained from a third party's electronic devices were admissible without compliance with Section 36B of the Central Excise Act, 1944.

Analysis: The electronic material was recovered from a third party and relied upon without the certificate and foundational compliance required for admissibility of computer-generated records under Section 36B of the Central Excise Act, 1944. The necessary proof of authenticity, control, and statutory conditions for treating the printouts as evidence was absent. On that basis, the printouts could not be used to fasten duty liability on the appellants.

Conclusion: The computer printouts were inadmissible for proving the allegation, in favour of the assessee.

Issue (iii): whether the charge of clandestine removal could be sustained in the absence of corroborative evidence.

Analysis: The record did not disclose supporting evidence of vehicle movement, transporter or driver statements, stock discrepancy, excess production, or cash flow to corroborate the alleged removal of goods without duty. The case rested on presumptions drawn from third-party material, which was insufficient to establish clandestine removal, a serious charge requiring tangible and clinching evidence.

Conclusion: The allegation of clandestine removal was not proved, in favour of the assessee.

Final Conclusion: The duty demand, penalties, and consequential liability could not be sustained, and the appellants succeeded on the merits.

Ratio Decidendi: A demand for clandestine removal cannot be sustained on untested statements or unauthenticated electronic records unless the statutory conditions for their admissibility are strictly complied with and the allegation is independently corroborated by tangible evidence.

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