CESTAT Quashes Excise Duty Demand Over Procedural Non-Compliance

The Custom, Excise & Service Tax Appellate Tribunal (CESTAT) in Kolkata has allowed an appeal against central excise duty and penalty demand, ruling that electronic data retrieved from seized computers cannot sustain a clandestine clearance charge.

The Division Bench found that documents and statements obtained from CPUs lacked compliance with Sections 36-B(2) and (4) of the Central Excise Act, 1944, rendering them inadmissible as evidence. The case involved Jai Mangla Sponge Iron Pvt. Ltd., which manufactured sponge iron and charcoal.

The proceedings stemmed from a search at premises linked to Maa Tara Ferrotech Ltd., where various electronic storage devices were seized. The Department had relied on data retrieved from these devices to allege clandestine removal of goods, but CESTAT found the retrieval process violated statutory requirements.