Clandestine removal requires corroboration; unverified log book entries cannot by themselves sustain duty demand or equal penalty.

Clandestine removal of yarn could not be sustained on uncorroborated log book entries alone. The record showed that the shift engineers' entries were not proved by examination of the authors, admission, or supporting evidence such as excess power use, excess raw material consumption, higher production, or sales to buyers; at most, the materials indicated heavy wastage, not suppressed manufacture or removal. On that basis, CEGAT set aside the duty demand and equal penalty linked to the alleged clandestine removal. The smaller, uncontested demands relating to yarn removed for testing and goods found short were upheld, while the penalty was reduced.

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Issues: Whether the demand of duty and equal penalty for alleged clandestine removal of yarn could be sustained on the basis of uncorroborated log book entries, and whether the smaller duty demands for yarn removed for testing and goods found short required interference.

Analysis: The allegation of clandestine removal rested essentially on entries in a log book maintained by shift engineers. Those entries were not shown to be conclusive proof of suppressed manufacture or removal. The persons who made the entries were not examined, no admission supported the entries, and no corroborating evidence was brought on record showing excess electricity consumption, excess raw material use, higher production, or sales to buyers. The record at most indicated heavy wastage, not clandestine manufacture and removal. In contrast, the smaller demands relating to yarn removed for testing and yarn found short were not contested before the Tribunal.

Conclusion: The demand of Rs. 17,98,988.74 and the equal penalty based on alleged clandestine removal were set aside. The uncontested demands of Rs. 7,020 and Rs. 26,660 were upheld, with penalty reduced to Rs. 5,000.

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