Clandestine clearance claim required de novo scrutiny as electricity data and supporting evidence had to be reassessed.

Clandestine production and clearance allegations required fresh adjudication where statements relied on by the department had not survived cross-examination, but electricity-consumption data and supporting annexures still indicated possible excess production. The appellate record showed that such consumption figures could not be ignored and had to be weighed with the remaining evidence before deciding whether clandestine manufacture and removal were established. The order was therefore set aside and the matter remanded for de novo consideration, with the Revenue allowed to rely on electricity-consumption patterns and other supporting material. The penalty issue in relation to Shri Murali was also left open for reconsideration by the original authority.

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Issues: Whether the demand and penalty case based on alleged clandestine production and clearance required remand for de novo consideration in the light of electricity consumption data and other supporting evidence.

Analysis: The record showed that the statements relied upon by the department were not sustained in cross-examination, but there was also prima facie material indicating substantial electricity consumption and possible excess production. The earlier authority had treated electricity consumption as not the sole basis for the demand, yet the appellate record indicated that the consumption figures and annexures required proper appreciation along with other evidence. In these circumstances, the matter needed fresh examination on the question whether the electricity-consumption pattern, coupled with supporting material, established clandestine production and clearance. The question of penalty on Shri Murali also required reconsideration by the original authority.

Conclusion: The impugned order was set aside and the matter was remanded for de novo consideration, with the Revenue permitted to establish clandestine production and clearance by electricity-consumption figures and other supporting evidence, and the penalty issue left open for reconsideration.

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