Clandestine removal demands need corroborative evidence; transporter records and untested statements alone cannot sustain duty or penalties.

Clandestine removal of pan masala was held not proved where the Department relied mainly on transporter documents and statements untested by cross-examination. The Tribunal found that the records were not linked with sufficient certainty to the manufacturer and that no corroborative incriminating material was found in the factory or connected premises, such as stock, production, raw material, or power consumption discrepancies. Retracted or unreliable statements could not, by themselves, sustain the allegation. The burden of proving clandestine manufacture and clearance was not discharged, so the duty demand and penalties were held unsustainable.

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Issues: Whether the alleged clandestine manufacture and clearance of pan masala was established on the basis of transporter documents and statements, and whether the duty demand and penalties could be sustained without corroborative evidence and cross-examination of witnesses.

Analysis: The evidence relied upon by the Department consisted mainly of documents recovered from transporters and statements of certain persons. The Tribunal found that those documents were not linked with sufficient certainty to the manufacturer and did not, by themselves, establish clandestine clearance. It was noted that no incriminating material, such as discrepancies in raw materials, stock, production, power consumption, or finished goods, was found in the factory or connected premises. The transporter statements were not tested by cross-examination despite request, and several statements had been retracted or were otherwise unreliable. The Tribunal held that assumptions, suspicions, and uncorroborated transporter records could not substitute proof, and that the Department had not discharged the burden of establishing clandestine removal.

Conclusion: The charge of clandestine manufacture and clearance was not proved, and the duty demand and penalties were unsustainable.

Final Conclusion: The manufacturer and the co-noticees were entitled to relief, and the Revenue's challenge failed for want of reliable and corroborated evidence.

Ratio Decidendi: A demand for clandestine removal cannot be sustained on transporter records or untested statements alone unless supported by cogent corroborative evidence linking the assessee to the alleged removals.

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