Clandestine manufacture findings require full appraisal of rebuttal evidence before confirming duty, confiscation and penalty.

An adjudication confirming duty, confiscation and penalty for alleged clandestine manufacture and removal of acid slurry was set aside because the evidence had not been properly appraised. The authority failed to deal adequately with the assessee's rebuttal on receipt of essential inputs, transport evidence, storage and manufacturing capacity, and electricity consumption. As the question of clandestine production could not be satisfactorily determined on the existing record, the matter was remanded for de novo consideration.

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Issues: Whether the impugned adjudication order, confirming duty, confiscation and penalty for alleged clandestine manufacture and removal of acid slurry, had to be set aside and remanded for fresh consideration because it did not properly consider the assessee's rebuttal evidence and the material aspects of manufacture, inputs and electricity consumption.

Analysis: The order was found to have proceeded without a proper appraisal of the defence that both essential inputs, namely LAB and oleum, had not been proved to have been received in the quantities alleged, and without dealing with the challenge to the alleged transport evidence, storage capacity, manufacturing capacity, and consumption pattern. The Tribunal also noted that the adjudicating authority had not adequately addressed the rebuttal material and that the question of clandestine production could not be satisfactorily concluded without a fuller consideration of the relevant evidence. The matter was therefore taken as one requiring fresh adjudication rather than final confirmation on the existing record.

Conclusion: The impugned order was set aside and the matter was remanded for de novo consideration.

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