Clandestine removal demands fail where stock shortage and notebook entries rest on presumption, not direct evidence.

Duty demands based on alleged non-availability of stock, stock shortage and entries in a Jet Dyeing notebook were held unsustainable because the Revenue relied on presumption rather than direct evidence of clandestine processing or removal without payment of duty. The statement cited by the Revenue was not treated as an admission of evasion, and the alleged shortage was not supported by substantial proof. The notebook entries were accepted as internal records kept for labour charges, not as records of final processed goods. On that basis, the CESTAT upheld dropping of the demands.

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Issues: Whether the duty demands based on alleged non-availability of stock, stock shortage, and entries in the Jet Dyeing note book were sustainable.

Analysis: The demand relating to the alleged non-availability of MMF lots was found to rest only on presumption, with no evidence of clandestine processing or removal without payment of duty. The statement relied upon by the Revenue did not amount to an admission of evasion. The demand for shortage was also unsupported by direct or substantial evidence establishing clandestine removal. The entries in the Jet Dyeing note book were accepted as internal records maintained for labour charges and not as records of final processed goods.

Conclusion: The duty demands were not sustainable and the dropping of the demands was upheld.

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