Clandestine removal not proved: inadvertent register lapse was insufficient to justify denial of credit and penalties.

Clandestine removal was not established on the evidence, because the record did not support a deliberate scheme to evade duty and the incomplete register entries were explained as an inadvertent lapse. On that footing, denial of deemed credit could not be justified, and penalties under Section 11AC and Rule 209A were unsustainable. The operative principle is that an accounting omission, without proof of intentional suppression or repeated unauthorised removals, does not by itself warrant duty-related consequences or penal action.

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Issues: Whether the Department had established clandestine removal so as to justify denial of deemed credit and imposition of penalty under Section 11AC and Rule 209A.

Analysis: The factual basis for clandestine removal was not proved. The explanation that the register entries were left incomplete due to an inadvertent lapse was not shown to be false, and the record did not support an inference that the invoice and register references were deliberately omitted for repeated removals. In the absence of proof of a designed scheme to evade duty, the denial of credit and the penalties could not stand.

Conclusion: The allegation of clandestine removal failed, and the reversal of credit and penalties under Section 11AC and Rule 209A were unsustainable.

Final Conclusion: The assessees succeeded, and the orders imposing duty-related consequences and penalties were set aside with consequential relief.

Ratio Decidendi: Where clandestine removal is not established on the evidence, an inadvertent accounting lapse does not by itself justify denial of credit or imposition of penalty.

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