Clandestine removal demands require cogent evidence; presumption alone cannot sustain duty or penalty when recorded exempt waste is unrebutted.

A demand for duty and penalty on alleged clandestine removal of marble tiles was found unsustainable where the allegation rested only on quantity comparison and presumption. The record showed that, in manufacture of marble tiles, part of the marble slabs became exempt waste known as crazy, and the assessee had maintained records of its clearance. As no independent evidence established removal of tiles without duty, the finding of suppression was unsupported. The demand and penalty were set aside, and the adjudication order was quashed.

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Issues: Whether the demand of duty and penalty could be sustained on the allegation that marble tiles were suppressed and cleared without payment of duty, despite the assessee's assertion that only defective marble slabs were used for manufacture and that the resulting waste known as crazy was duly recorded and exempt.

Analysis: The allegation of clandestine clearance was founded only on the quantity comparison and presumption. The record showed that during manufacture of marble tiles, a portion of slabs turned into crazy, that such waste was exempt, and that the assessee maintained records of its clearance. No independent evidence was produced to establish that marble tiles were removed without payment of duty. The finding of suppression was therefore not supported by evidence.

Conclusion: The demand of duty and penalty was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the adjudication order was quashed.

Ratio Decidendi: A demand based on alleged clandestine removal cannot be sustained on presumption alone and must be supported by cogent evidence when the assessee's explanation of recorded exempt waste remains unrebutted.

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