Clandestine removal requires corroboration; private records and a retracted statement were insufficient to sustain duty demand or penalty.

Uncorroborated private diary entries, loose sheets and a retracted third-party statement were held insufficient to prove clandestine manufacture and removal of polyester yarn and polyester chips. The absence of cross-examination, independent buyer evidence, seizure of unaccounted goods or other tangible corroboration meant the alleged clandestine clearances were not established, and the duty demand failed. Once the principal allegation collapsed, the foundation for penalty under Rule 209A also disappeared because penal liability required a proven connection with goods liable to confiscation. The article records that the demand and penalties were set aside and consequential relief followed.

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Issues: (i) Whether clandestine manufacture and removal of polyester yarn and polyester chips was proved on the basis of the diary, loose sheets and the statement of a third party witness; (ii) Whether penalty under Rule 209A could be sustained against the individual appellant when the main allegation of clandestine removal was not established.

Issue (i): Whether clandestine manufacture and removal of polyester yarn and polyester chips was proved on the basis of the diary, loose sheets and the statement of a third party witness.

Analysis: The materials relied upon were the private diary, loose sheets and the statements of the Vice-President of the company. His statements were inconsistent, were retracted on the ground of coercion, and were not tested by cross-examination. The documents were third-party private records and were not supported by any independent corroboration. No reliable buyer evidence, seizure of unaccounted goods, or other tangible material established clandestine production or clearance. The record also did not disprove the explanation that the polyester chips were captively consumed and duly entered in statutory records.

Conclusion: Clandestine manufacture and removal were not proved; the duty demand could not be sustained.

Issue (ii): Whether penalty under Rule 209A could be sustained against the individual appellant when the main allegation of clandestine removal was not established.

Analysis: Penalty under Rule 209A required a proven connection with goods liable to confiscation. Once the allegation of clandestine manufacture and removal failed, the foundation for penalty disappeared. The retracted and uncorroborated statement, without independent evidence, was insufficient to fasten penal liability.

Conclusion: The penalty under Rule 209A was unsustainable.

Final Conclusion: The impugned duty demand and penalties were set aside, and the appeals were allowed with consequential relief.

Ratio Decidendi: Uncorroborated private records and an untested or retracted statement, without independent supporting evidence, are insufficient to prove clandestine manufacture and removal or to sustain consequential penalty.

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