Clandestine removal demands need corroborative evidence; private records, uncertified electronic printouts, and untested statements are insufficient.

A clandestine removal demand requires tangible, corroborative evidence and cannot rest on assumptions, presumptions, private records, or unverified electronic material alone. In the absence of proof of excess raw materials, abnormal electricity use, additional labour, transport of unaccounted goods, identifiable buyers, flow-back of consideration, or unexplained deposits, the allegation fails. Electronic printouts from pen drives and similar devices are unreliable without compliance with Section 36B safeguards, including source and certification requirements. Statements recorded during investigation also lack substantive evidentiary value unless Section 9D procedure is followed, including proper examination and cross-examination. Penalties based solely on the failed demand cannot survive.

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Issues: (i) whether the charge of clandestine removal could be sustained on assumptions, presumptions, private records, and uncorroborated material; (ii) whether printouts taken from pen drives and other electronic equipment were admissible without compliance with Section 36B; (iii) whether statements recorded during investigation could be relied upon without compliance with Section 9D; and (iv) whether the penalties imposed on the appellants could survive once the duty demand failed.

Issue (i): Whether the charge of clandestine removal could be sustained on assumptions, presumptions, private records, and uncorroborated material.

Analysis: The charge of clandestine removal required tangible and corroborative evidence. The record did not establish excess procurement of raw materials, excess electricity consumption, additional labour, transport of unaccounted goods, identifiable buyers, flow-back of consideration, or unexplained cash or bank deposits. The alleged removal was founded mainly on private documents and electronic data, without independent verification of the alleged manufacture and clearance pattern.

Conclusion: The issue was answered in favour of the appellants. The allegation of clandestine removal could not be sustained on assumptions, presumptions, or private records alone.

Issue (ii): Whether printouts taken from pen drives and other electronic equipment were admissible without compliance with Section 36B.

Analysis: Computer output and electronic records are admissible only when the statutory conditions governing regular use, source, authenticity, and certification are satisfied. The seized pen drives were not proved to be the exclusive records of the appellants, and the required certificate was not obtained. In the absence of compliance with the statutory safeguards, the electronic printouts could not be treated as reliable evidence for confirming the duty demand.

Conclusion: The issue was answered in favour of the appellants. The printouts from pen drives and other electronic devices were not admissible evidence in the facts of the case.

Issue (iii): Whether statements recorded during investigation could be relied upon without compliance with Section 9D.

Analysis: Statements recorded before excise officers during investigation do not acquire evidentiary value unless the statutory procedure is followed. The witnesses were not examined in chief before the adjudicating authority in the manner contemplated by the provision, and cross-examination was not properly afforded. Without that mandatory process, the statements could not be used as substantive evidence to prove clandestine removal.

Conclusion: The issue was answered in favour of the appellants. The statements lacked evidentiary value for sustaining the demand.

Issue (iv): Whether the penalties imposed on the appellants could survive once the duty demand failed.

Analysis: The penalties rested entirely on the alleged clandestine removal. Once the principal charge failed for want of admissible and corroborated evidence, the foundation for penalty and related recovery also failed.

Conclusion: The issue was answered in favour of the appellants. The penalties could not be sustained.

Final Conclusion: The demand of duty, interest, and penalties founded on alleged clandestine removal was set aside, and the appeals succeeded with consequential relief.

Ratio Decidendi: A clandestine removal demand cannot be sustained on private records or electronic printouts alone unless the allegation is supported by corroborative evidence and the statutory requirements governing electronic records and recorded statements are strictly complied with.

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