Clandestine removal needs corroborative evidence; private notebooks alone failed, while belated gate pass and stock discrepancy were treated differently.

Clandestine removal cannot be established merely from private notebook entries or general statements unless supported by reliable corroborative evidence; the duty demand on alleged past clearances was therefore set aside. Where yarn was seized during transport and the gate pass was prepared belatedly, the procedural lapse did not by itself determine liability, so the demand was remanded for verification of prior duty payment. A claimed shortage of 85 bags, when explained as a technical discrepancy and not indicative of removal without documents, did not justify duty demand or redemption fine; both were set aside.

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Issues: (i) Whether the demand of duty on alleged past clearances was sustainable on the basis of private notebooks and statements; (ii) Whether the demand on 1,275 kgs of yarn seized during transport was sustainable when duty had allegedly already been paid but the gate pass was prepared belatedly; (iii) Whether the demand and redemption fine on the alleged shortage of 85 bags were justified.

Issue (i): Whether the demand of duty on alleged past clearances was sustainable on the basis of private notebooks and statements.

Analysis: The demand rested mainly on entries in private notebooks and on general statements from certain persons said to have received yarn without bills. The statements did not specify the quantity purchased, the date of purchase, mode of conveyance, or mode of payment. The alleged clearances were also supported by GP-1 numbers and bill numbers produced by the appellants, and those particulars were not effectively controverted. A charge of clandestine removal requires cogent corroborative evidence, and private notebook entries by themselves are insufficient.

Conclusion: The demand of duty on alleged past clearances was not sustainable and was set aside in favour of the appellant.

Issue (ii): Whether the demand on 1,275 kgs of yarn seized during transport was sustainable when duty had allegedly already been paid but the gate pass was prepared belatedly.

Analysis: The record indicated that duty had been debited, but the gate pass was prepared later. The failure to prepare the gate pass before removal amounted to a procedural violation, yet the central question was whether duty liability had in fact been discharged. The matter therefore required verification of the appellants' claim of prior duty payment.

Conclusion: The demand on 1,275 kgs of yarn was remanded for verification of payment of duty.

Issue (iii): Whether the demand and redemption fine on the alleged shortage of 85 bags were justified.

Analysis: The stock discrepancy was found to have been mixed up with the separate issue of transport without documents. The bags were marked with mill name, count and weight, and only serial numbers were missing. The explanation offered for the stock position reduced the alleged shortage substantially, and the remaining variation was treated as technical rather than evidencing clandestine removal. On that footing, seizure and appropriation were not warranted.

Conclusion: The demand of duty on 85 bags and the redemption fine were set aside in favour of the appellant.

Final Conclusion: The appeal succeeded substantially, with two duty demands and the redemption fine annulled, while the third demand was sent back for factual verification of duty payment.

Ratio Decidendi: Clandestine removal cannot be sustained merely on private notebook entries or general statements unless supported by reliable corroborative evidence, and a procedural lapse in documentation does not by itself justify duty demand where prior payment of duty is asserted and requires verification.

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