Clandestine removal demands need independent corroboration; short-period records may support suppression, but extrapolation alone cannot sustain longer liability.

A demand based on a short period of proved suppressed production was sustained because private records recovered from the factory showed date-wise raw material use and heats that supported excess production over statutory records. The objection that the entries were not proved through the person maintaining them did not displace the evidentiary value of the documents. By contrast, a longer-period demand built only by extrapolating the short-period discrepancy was rejected for lack of independent corroboration, and general allegations of electricity pilferage were insufficient without supporting material. Penalties on sister concerns and functionaries were also deleted where there was no evidence of receipt of non-duty-paid goods or conscious involvement.

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Issues: (i) Whether the demand of Rs. 6,63,320/- for alleged suppression of production during 1-1-93 to 17-1-93 was sustainable on the basis of the private records recovered from the factory premises; (ii) Whether the remaining demand for the earlier period and the penalties imposed on the appellant firm, sister concerns, and their functionaries were sustainable.

Issue (i): Whether the demand of Rs. 6,63,320/- for alleged suppression of production during 1-1-93 to 17-1-93 was sustainable on the basis of the private records recovered from the factory premises.

Analysis: The private records recovered from the premises contained date-wise details of raw material issue and heats for the relevant short period. Those records showed production in excess of what was reflected in the statutory records. The challenge that the entries were not proved through the statement of the person maintaining them did not displace the evidentiary value of the records, since the documents themselves supported the finding of suppressed production for that period.

Conclusion: The demand of Rs. 6,63,320/- was upheld and is against the assessee.

Issue (ii): Whether the remaining demand for the earlier period and the penalties imposed on the appellant firm, sister concerns, and their functionaries were sustainable.

Analysis: The larger demand for the prior period was worked out only by extrapolating the shortfall noticed for 1-1-93 to 17-1-93, without independent evidence of suppression for the longer period. The reliance on general observations about electricity pilferage was not supported by material on record, and the assessee's electricity consumption records were not rebutted. Likewise, there was no evidence that the sister concerns had received non-duty-paid ingots or that the connected individuals were liable for penalty on that basis. In the absence of corroborative evidence, the extended demand and connected penalties could not stand.

Conclusion: The remaining demand and the penalties on the sister concerns and their functionaries were set aside, and the appellant firm's penalty was reduced.

Final Conclusion: The decision sustained only the demand founded on the proved short period of suppression, while deleting the extrapolated demand and the connected penalties, leaving the appellant with a substantially reduced liability.

Ratio Decidendi: A demand for clandestine removal or suppression cannot be sustained for a longer period merely by extrapolating a short-period discrepancy unless it is supported by independent corroborative evidence; connected penalties also require evidence of conscious involvement or receipt of offending goods.

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