Clandestine removal allegations require clinching corroborative evidence; private records alone were insufficient to sustain duty and penalty.

Allegations of clandestine manufacture and removal could not be sustained where the duty demand rested only on private notebooks, balance sheets and bank-related records. The Tribunal found no clinching corroboration of excess production or clearance, such as proof of raw material movement, excess power use, dispatch particulars, buyer receipt of goods, sale proceeds or a flow-back of funds. Applying the principle that serious clandestine removal allegations require tangible and corroborative evidence, the Tribunal held that private documents alone were insufficient and the assessee was entitled to benefit of doubt. The duty demand and penalty were therefore not sustainable.

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Issues: Whether duty demand and penalty for alleged clandestine removal of goods could be sustained solely on the basis of private records, exercise notebooks, balance sheets and bank-related documents without clinching corroborative evidence.

Analysis: The demand was founded on private documents said to reflect higher production and clearances than the statutory records. The Tribunal noted that the Revenue had not established the essential corroborative circumstances, such as purchase and movement of raw materials, excess power consumption or generator use, dispatch particulars, realisation of sale proceeds, receipt of finished goods by buyers, or a flow back of funds. In the absence of such investigation and supporting evidence, private records by themselves were treated as insufficient to prove clandestine manufacture and removal. Applying the settled principle that such serious allegations must rest on tangible and clinching evidence, the Tribunal held that the assessee was entitled to benefit of doubt.

Conclusion: The duty demand and penalty were not sustainable; the assessee's appeal was allowed and the Revenue's appeal was rejected.

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