Unauthenticated electronic records and untested statements cannot sustain clandestine-removal demands without corroboration.

Maihar Alloys Private Limited (MAPL), a manufacturer of non-alloy steel ingots, appealed an order confirming Central Excise duty of ₹6,25,04,654, with interest and penalty, for the period 9 April 2005 to 17 July 2007.

The demand rested principally on computer printouts and private records said to show unaccounted purchases, production and clearances, statements recorded during the investigation, alleged abnormal electricity consumption, and alleged undervaluation.

The Commissioner confirmed the demand, appropriated ₹20,00,000 already deposited, and imposed an equivalent penalty on MAPL.

MAPL challenged the evidentiary basis of the demand, including the admissibility of electronic records under Section 36B and the use of statements under Section 9D.

1. Whether the electronic records and computer printouts relied upon to establish clandestine clearances and undervaluation were admissible and sufficiently linked to MAPL, particularly in the absence of compliance with Section 36B.

2. Whether the statements recorded during the investigation could be relied upon without following the procedure prescribed by Section 9D.

3. Whether the evidence, considered cumulatively—including private records, electricity consumption and alleged production—proved clandestine manufacture, removal or under-invoicing by MAPL.

Section 36B of the Central Excise Act, 1944 prescribes conditions for treating statements in electronic records as admissible evidence; computer printouts that do not satisfy those statutory requirements cannot, without more, support a duty demand.

Under Section 9D, statements recorded before a Central Excise Officer cannot be treated as proof of the truth of their contents unless the prescribed procedure is followed.

A charge of clandestine manufacture and removal must be established by cogent, tangible and corroborative evidence; private records or computer printouts alone are insufficient, and relevant corroboration may include evidence of production capacity, raw-material or power consumption, transport and movement of goods, and identifiable receipt of unaccounted consideration.

The Tribunal also relied on *Prinik Steels (P) Ltd. v. Commissioner of C.Ex., Cus. & S.Tax, Bhubaneswar-I*, 2023 (12) TMI 299 (CESTAT, Kolkata), concerning compliance with Section 36B.

The Tribunal found that the “Shri Ganesh Jee Maharaj” records were not established as MAPL’s records merely because they were retrieved from a computer at MAPL’s premises or because an employee identified them as such; independent corroboration linking the recorded transactions to MAPL was lacking.

Other records, including a document recovered from JISCO’s premises, likewise lacked adequate verification of authorship, source and transaction parties.

The computer-generated evidence did not meet the recorded requirements of Section 36B, while the relied-upon statements had not been tested under Section 9D.

Electricity consumption and an FIR alleging electricity theft did not quantify unaccounted production; the Tribunal also noted that a later de novo order in MAPL’s case had dropped a demand based on abnormal electricity consumption.

Finally, the Revenue had not demonstrated that the alleged production was achievable with MAPL’s two operational furnaces, nor had it produced the other corroborative evidence necessary to prove clandestine manufacture and clearance.

The evidence therefore did not sustain either clandestine removal or under-invoicing.

It set aside the duty demand of ₹6,25,04,654 and the interest thereon, dropped the equivalent penalty imposed on MAPL, modified the impugned order accordingly, and allowed the appeal with consequential relief, if any, in accordance with law.