Clandestine removal needs reliable evidence, while admitted unaccounted stock may still face confiscation and redemption fine.

A demand for clandestine removal of cotton yarn cannot be sustained without a complete and reliable evidentiary chain, including proof of recovery of the relied-upon record, supporting seizure documents, and credible linkage to the assessee; on that basis, the duty demand and penalty were set aside. By contrast, admitted excess unaccounted stock of excisable goods is liable to confiscation, and a redemption fine may be upheld where the explanation for non-accountal is belated and the fine is not shown to be unreasonable. The dispute thus resulted in partial relief, with the assessee succeeding only on the demand and penalty component.

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Issues: (i) Whether the duty demand and penalty could be sustained on the basis of the material relied upon to allege clandestine removal of cotton yarn. (ii) Whether the confiscation of the excess unaccounted stock of cotton yarn and the redemption fine imposed in lieu of confiscation were liable to be interfered with.

Issue (i): Whether the duty demand and penalty could be sustained on the basis of the material relied upon to allege clandestine removal of cotton yarn.

Analysis: The demand rested on a private record said to relate to clearances through an untraced intermediary, but there was no satisfactory proof of its recovery, no supporting mahazar, no statement of the author, and no reliable evidence linking the document to the appellant. The intermediary was never traced and the evidentiary chain necessary to prove clandestine removal was missing. In the absence of sufficient evidence, the finding of clandestine removal could not be sustained, and the penalty founded on that finding also could not survive.

Conclusion: The duty demand and penalty were set aside in favour of the assessee.

Issue (ii): Whether the confiscation of the excess unaccounted stock of cotton yarn and the redemption fine imposed in lieu of confiscation were liable to be interfered with.

Analysis: The excess stock found in the factory was not in dispute, and the explanation offered for the alleged omission to account for production was found to be belated and lacking bona fides. Admitted unaccounted stock of excisable goods is liable to confiscation, and the amount of redemption fine imposed in relation to the value of the goods was not shown to be unreasonable.

Conclusion: The confiscation and redemption fine were upheld against the assessee.

Final Conclusion: The appeal succeeded on the duty and penalty component, but failed on the confiscation and redemption fine component, leaving only partial relief to the assessee.

Ratio Decidendi: A demand for clandestine removal must be supported by a complete and reliable evidentiary chain, while admitted unaccounted stock of excisable goods may validly be confiscated with an appropriate redemption fine.

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