Clandestine removal can be proved by seized records, shortages and un-retracted statements when the overall evidence supports unaccounted clearance.

In clandestine removal disputes, incriminating seized documents, shortages in finished goods and inputs, and an un-retracted partner's statement can together establish unaccounted clearance of excisable goods. Direct proof is not indispensable where surrounding circumstances consistently point to removal, and documents recovered from the premises may be treated as reliable absent contrary evidence. A defence that the papers reflected only sauda or brokerage entries was rejected as an afterthought, especially where broker commission correspondence supported completed transactions. Minor ledger discrepancies were held insufficient to rebut the inference drawn from the overall evidence, and the duty demand and penalties were sustained.

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Issues: Whether the evidence of shortages, incriminating documents and the partner's statement established clandestine removal of excisable goods and justified the duty demand and penalties.

Analysis: The appeal turned on whether the seized papers, shortages noticed in finished goods and inputs, and the un-retracted statement of a partner were sufficient to prove clandestine removal. The documents recovered from the premises were treated as trustworthy in the absence of contrary proof. The explanation that the papers reflected only sauda or brokerage entries was rejected as an afterthought, particularly because the broker's commission correspondence supported completion of transactions. Minor discrepancies in the broker's ledger were held insufficient to displace the inference drawn from the overall evidence. In a clandestine removal case, direct proof is not indispensable when surrounding circumstances, seized records and statements consistently point to unaccounted clearance.

Conclusion: The clandestine removal was proved and the Revenue's appeal succeeded.

Ratio Decidendi: Clandestine removal may be established by a combination of incriminating documents, shortages, and un-retracted statements, and once such material is produced, the assessee must rebut the presumption arising from it.

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