The charge of clandestine removal of excisable goods cannot be sustained on the basis of private records recovered from third-party premises unless a clear link is established connecting the documents to the appellants. Mere recovery from the residences of employees or ex-employees, without proof of authorship or possession by the accuser, renders such documents inadmissible for confirming demands.
Electronic records, including computer printouts, hard disk data, or pen drive contents, are inadmissible as evidence unless strict compliance with the certificate provisions under Section 36B of the Central Excise Act, 1944, is met. The absence of such a certificate vitiates the evidentiary value of the extracted data.
Statements recorded during an investigation under Section 14 of the Act cannot be relied upon as evidence unless the mandatory procedure under Section 9D is strictly followed. This includes the requirement to examine the maker in chief and afford them an opportunity for cross-examination before the adjudicating authority forms an opinion admitting the statement in the interests of justice.
A shortage of stock ascertained solely by eye estimation during a short window (e.g., six hours) without corroborative weighment slips does not constitute sufficient evidence to sustain a charge of clandestine removal.
Furthermore, any amount deposited by the assessee during the course of investigation is considered a deposit made under protest and cannot be treated as an unequivocal admission of deceit or clandestine removal. Consequently, if the primary allegations of evasion are not established by tangible evidence, penalties imposed under Rule 26(1) are unsustainable and must be set aside.
In the present matter, the Tribunal found that the Revenue failed to discharge its onus regarding clandestine removal, electronic evidence, and investigative statements. Accordingly, the demand for central excise duty and interest was set aside, and no penalty was imposable on the appellant-companies or their directors. The appeals were allowed.
