2026-VIL-1685-CESTAT-ALH-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Clandestine manufacture and removal - Demand based on loose sheets, WhatsApp printouts, laptop data and third-party transport record - Revenue appealed against the order of the Commissioner (Appeals) which had rejected the departmental appeal and allowed the Respondent's appeal against the demand of duty and NCCD on the allegation of clandestine production and supply of chewing tobacco without payment of duty - Whether the demand of duty, interest and penalty on alleged clandestine clearances can be sustained on the basis of such private and third-party records in the absence of corroborative evidence - HELD - The loose sheets did not bear the name of the Respondent or any signature and did not disclose the nature of goods, brand, packing or value. A fiscal demand cannot be sustained by stacking one unproved assumption upon another. The WhatsApp printouts suffered from defects as to provenance, extraction and preservation of the electronic record, and no material established their nexus with the Respondent. Electronic evidence does not acquire a higher status merely because it is found in a mobile phone, and Section 36B of the CEA, 1944 contemplates statutory safeguards for such evidence. The laptop was not recovered from the premises of the Respondent, the accounts were maintained under the name of a different concern, and there was no proof of ownership, sealing or custody. Ownership of the device, authorship of the entries and truth of the transactions are separate evidentiary stages. No source documents were recovered, and the statements relied upon could at best establish a marketing or distribution connection. Absence of documentary evidence cannot itself be converted into evidence of clandestine clearance. The file recovered from a third party was an unverified private document of unknown authorship and uncertain provenance, and describing it as confidential cannot dispense with proof of authorship and authenticity. The attribution of laminate by an assumed ratio was an extrapolation built upon an earlier extrapolation. The Department failed to establish the chain of unaccounted procurement of raw material, excess manufacture, removal, transportation, delivery to identified recipients and flow-back of sale proceeds. A presumption cannot be founded upon another presumption, and interest and penalty cannot survive where the foundational allegation remains unproved - The Tribunal finds no perversity in the concurrent findings and the appeal filed by the Revenue is dismissed
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