Clandestine removal allegations fail when uncross-examined statements and unproved slips lack corroboration.

Duty demand and penalties based mainly on witness statements recorded behind the assessee's back could not be sustained where cross-examination was refused, making those statements inadmissible against the assessee. Alleged slips were also unreliable because they were not shown or supplied to the assessee and were not properly put to the witnesses. With no other tangible or corroborative evidence supporting clandestine removal through misdescription of cotton yarn as plain reel hanks, the charge was not proved and the consequential penalty findings failed.

---

---

Issues: Whether the duty demand and penalties were sustainable on the basis of uncross-examined witness statements and alleged slips, and whether the allegation of clandestine removal by misdescription of cotton yarn as plain reel hanks was proved.

Analysis: The demand rested principally on statements recorded from witnesses behind the back of the assessee and on slips said to have been maintained by them. Cross-examination of those witnesses was refused, and the statements therefore could not be used against the assessee. The alleged slips were neither shown to the assessee nor supplied in copy, and they were not properly put to the witnesses during examination. There was no other tangible or reliable evidence corroborating the allegation that the yarn had been cleared in cones while being described as plain reel hanks. In the absence of admissible and corroborated evidence, the charge of clandestine removal and the consequential penalty findings could not stand.

Conclusion: The demand of duty and the penalties were not proved and were liable to be set aside in favour of the assessee.

---