Clandestine clearance demand fails where seized documents show prior duty-paid clearance and no contrary proof exists.

Documents seized from the truck, including invoices, GR particulars, delivery note and bill of sale, showed that the goods had already been cleared on payment of duty. In the absence of any material to prove that the seized consignment was different from the goods covered by those documents, or that clandestine removal from the factory had occurred, the duty demand based on alleged clandestine clearance was not sustainable. As the demand failed, the consequential penalties and redemption fine also could not survive and were set aside.

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Issues: Whether the duty demand based on alleged clandestine clearance of seized goods was sustainable and, if not, whether the penalties and redemption fine could survive.

Analysis: The documents seized from the truck, including the invoices, GR particulars, delivery note and bill of sale, showed that the goods had already been cleared by the assessee on payment of duty. The Revenue produced no material to establish that the seized consignment was different from the one covered by those invoices or that any clandestine removal from the factory had taken place. In the absence of proof supporting the demand, the consequential penalties and redemption fine could not be sustained.

Conclusion: The duty demand was held not maintainable and the penalties and redemption fine were set aside.

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