Clandestine removal demands need reliable nexus and corroboration; untested statements and unrelated documents cannot sustain duty liability.

A duty demand based on alleged clandestine removal failed because the Department relied on packing slips and an employee's statement without proving that the slips related to the disputed period or that the statement was capable of cross-examination. In the absence of corroborative evidence linking the documents to the alleged clearances, the allegation remained unsubstantiated. The evidentiary material was insufficient to displace the assessee's explanation, so the duty demand could not be sustained and the impugned order was set aside.

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Issues: Whether the demand of duty based on alleged clandestine removal could be sustained on the strength of packing slips and a statement recorded by the department when the packing slips were not shown to relate to the disputed period and the witness was not offered for cross-examination.

Analysis: The Department's case rested principally on two bundles of packing slips and the statement of an employee recorded at the time of search. The packing slips were stated to tally with statutory records, but the order did not establish that they related to the period in dispute, namely June and July 1987. The appellants also disputed the actual recovery of the slips and pointed out that the statement relied upon by the Department could not be tested by cross-examination in the de novo proceedings. In the absence of corroborative evidence connecting the slips to the disputed clearances, the allegation of clandestine removal remained unsubstantiated. The evidentiary material was therefore insufficient to displace the appellants' explanation.

Conclusion: The allegation of clandestine removal was not proved, and the duty demand could not be sustained. The appeal was allowed and the impugned order was set aside.

Ratio Decidendi: A duty demand for clandestine removal cannot rest on an uncorroborated statement and documentary material that is not shown to pertain to the relevant period; where the Department fails to establish nexus by reliable evidence, the assessee is entitled to the benefit of doubt.

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