CESTAT sets aside an excise demand of ₹19.94 crore over unverified digital evidence

The Customs, Excise and Service Tax Appellate Tribunal has set aside an excise demand amounting to ₹19.94 crore after ruling that pen-drive records relied upon by the revenue department lacked the mandatory certificate required under Section 35A of the Central Excise Act, 1944, read with the Indian Evidence Act. The appellate authority held that electronic records cannot be admitted as valid evidence without fulfilling statutory verification requirements, invalidating the revenue's case which depended entirely on uncertified digital data retrieved during investigations. In indirect tax litigation, procedural safeguards around the admissibility of electronic evidence act as a critical shield for businesses against arbitrary tax assessments.

The revenue authorities previously relied upon internal digital files recovered from private premises to impute clandestine removals, whereas the appellant contested the legal validity of such unverified data. Under established evidentiary rules, electronic data requires a formal certificate to be treated as a reliable document in judicial proceedings, separating admissible proof from unsubstantiated digital extracts. Tax practitioners and corporate compliance teams must meticulously verify that any digital documents or electronic media presented during tax proceedings strictly comply with statutory certification mandates.

Professionals should advise clients to challenge any assessment orders that rely on uncertified electronic records before appellate forums within the prescribed limitation periods. Ultimately, this ruling reinforces that tax authorities must substantiate fiscal demands with legally sound and verified documentary proof rather than defective digital extracts.