Clandestine clearance demands need independent corroboration; retracted statements and private diary entries alone are insufficient.

Clandestine clearance allegations based on private diaries, retracted statements and assumptions require independent corroboration before duty demand, confiscation or penalties can be sustained. The Tribunal noted that immediately retracted statements were not voluntary, the diary symbols were interpreted without adequate support from the records, and no buyer evidence showed receipt of goods different from those invoiced. On that basis, the material was treated as insufficient because suspicion cannot replace proof and non-accountal alone does not establish intent to evade duty. The discussion therefore emphasises that clandestine manufacture or removal must be supported by clear corroborative evidence.

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Issues: Whether the duty demand, confiscation and penalties for alleged clandestine clearance of cross reel hank yarn could be sustained on the basis of private diaries, retracted statements and assumptions without independent corroboration.

Analysis: The basis of the demand was that cross reel hank yarn had been cleared in the guise of plain reel hank yarn. The recorded statements of the company officials were immediately retracted, and the Tribunal treated them as not voluntary. The private diary entries were also not accepted as conclusive because the Department had attributed meanings to the symbols used in the diaries without adequate support from the records themselves. The Tribunal further found that there was no evidence from any buyer showing receipt of cross reel hank yarn instead of the goods described in the invoices, including the 20 invoices relied upon by the Department. On that footing, the case rested on suspicion and presumptions rather than clear proof. The Tribunal applied the settled principle that suspicion cannot replace evidence, and that non-accountal by itself does not establish an intention to evade duty.

Conclusion: The duty demand, confiscation and penalties were not sustainable and were set aside in favour of the assessee.

Ratio Decidendi: A duty demand and allied confiscation or penalty cannot be sustained on the basis of retracted statements, private diary notations and presumptions unless there is independent corroborative evidence establishing clandestine manufacture or removal and intent to evade duty.

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