Clandestine removal demands must rest on properly assessed production capacity and reliable evidence before confirmation.

Allegations of clandestine manufacture and removal of M.S. ingots could not be sustained on the existing record where the demand rested on private heat registers, log books, electricity consumption records and an alleged movement register. The furnace capacity, stated by the manufacturer as 2.1 MTs and later accepted by the Department under the Induction Furnace Annual Capacity (Determination) Rules, 1997, required proper scrutiny before any finding of excess production or clandestine clearance could be confirmed. The matter was therefore sent back for reconsideration and fresh adjudication on production capacity and the supporting evidence.

---

---

Issues: Whether the demand of duty and penalties for alleged clandestine manufacture and removal of M.S. ingots could be sustained on the basis of private registers and related records, and whether the matter required re-examination in light of the furnace capacity and connected evidence.

Analysis: The demand was founded on private heat registers, log books and electricity consumption records, along with an alleged movement register showing clearances to another unit. The record also showed that the furnace capacity had been stated by the manufacturer as 2.1 MTs and that the same capacity had later been accepted by the Department under the Induction Furnace Annual Capacity (Determination) Rules, 1997. In these circumstances, the evidentiary basis for the alleged excess production and clandestine clearances required fresh scrutiny, particularly on the question whether the production figures had been correctly determined and whether the connected material sufficiently established clandestine removal.

Conclusion: The matter was not finally sustained on the existing record and was sent back for reconsideration and fresh adjudication on the question of clandestine production and clearance.

Ratio Decidendi: Allegations of clandestine removal must be re-determined on a proper appreciation of production capacity and the connected evidence, and the adjudication cannot stand where the factual foundation requires fresh examination.

---