2026 Supreme(Online)(CESTAT) 2238

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Steelex Electrocast Private Limited – Appellant
Versus
Commissioner of Central Goods and Service Tax – Respondent
Excise Appeal No. 75395 of 2020

Statements recorded during investigation are inadmissible as substantive evidence unless the mandatory examination procedure under Section 9D is followed. Likewise, computer-generated records are inadmissible without strict compliance with the certification and authenticity requirements stipulated under Section 36B of the Act.

Headnote:(A) Central Excise Act, 1944 - Sections 9D, 11A(4), 11AA, 11AC, 14, 36B - Clandestine removal of goods - Admissibility of statements - Mandatory procedure under Section 9D - Non-compliance - Effect - Statements recorded under section 14 cannot be relied upon for proving the truth of their contents unless the procedure prescribed in section 9D(1)(b) is followed - No examination-in-chief of any witness before the adjudicating authority was conducted, nor were the circumstances under 9D(1)(a) invoked - Non-compliance renders statements devoid of evidentiary value. (Paras 8.1, 8.4, 8.6, 9, 8.10)

(B) Evidence - Electronic records - Section 36B - Admissibility - Mandatory conditions - Compliance with sub-sections (2) and (4) - Failure to obtain certificate - Effect - Admissibility of computer-derived records requires fulfillment of cumulative conditions under 36B(2) and issuance of a certificate under 36B(4) - Absence of these foundational facts makes computer printouts inadmissible - Non-compliance denudes electronic records of their evidentiary value. (Paras 10.1, 10.2, 10.3, 10.5, 11)

(C) Clandestine removal - Burden of proof - Essential parameters - Standard of evidence required - Revenue must prove charge through tangible, independent, and corroborative evidence - Mere inferences or unwarranted assumptions based on private notes or statements without verification are insufficient - Factors like procurement of excess raw material, unexplained electricity consumption, and missing vehicle records must be established. (Paras 12, 12.3, 13)

Facts of the case:
The appellant was engaged in the manufacturing of goods and was accused by the revenue authority of clandestine manufacture and clearance of goods without payment of duty. The department relied upon search operations, resumed private documents, notebooks, and statements recorded during the investigation. The adjudicating authority confirmed the demand for excise duty along with interest and penalty. The appellant contested the findings, arguing the inadmissibility of statements due to non-compliance with statutory procedures, the lack of evidentiary value of seized documents, and the absence of corroborative evidence.

Findings of Court:
The tribunal found that the adjudicating authority heavily relied upon statements without following the mandatory procedure under section 9D. Further, the seized electronic and computer-derived evidence did not satisfy the requirements of section 36B. The revenue failed to establish essential parameters for clandestine removal, such as excess raw material procurement, unexplained usage of resources, or actual movement of unaccounted goods. The assessment was found to be based solely on assumptions and presumptions.

Issues: Whether the statements recorded under the act are admissible as evidence without following section 9D; whether electronic/computer records satisfy section 36B; and whether clandestine removal is independently established by corroborative evidence.

Ratio Decidendi: Compliance with section 9D is mandatory to admit statements recorded during investigation as substantive evidence, and failure to do so renders them inadmissible. Similarly, computer-derived evidence is not admissible unless foundational conditions under section 36B are met, including certification. A grave charge like clandestine removal requires tangible corroborative proof, and cannot rest on internal brokerage sheets or unverified statements.

Result: Appeal allowed.