Clandestine removal requires corroborative evidence; private record discrepancies alone cannot sustain duty, penalty, or interest.

Discrepancies between a private notebook and statutory stock registers, by themselves, do not establish clandestine manufacture or removal. The department must support such allegations with independent corroborative material, such as evidence of unaccounted raw material receipt, proof of consideration, or other circumstances showing suppressed production and clearance. Where the record also reflects regular filing and assessment of returns, private entries alone are insufficient to sustain duty, penalty, or interest. On that basis, the demand was set aside in favour of the assessee.

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Issues: Whether the demand of duty, penalty and interest could be sustained on the basis of discrepancies between private records and statutory registers, in the absence of corroborative evidence of clandestine manufacture and removal.

Analysis: The alleged difference in cotton yarn quantities was drawn from a comparison between a private note book and the RG 1 register. The discrepancy was not supported by further inquiry, evidence of unaccounted receipt of raw material, proof of consideration for removed goods, or any other independent material showing clandestine production and clearance. The record also showed regular filing and assessment of RT 12 returns. In such circumstances, entries in private records alone were held insufficient to establish clandestine manufacture and removal.

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

Final Conclusion: The appeal succeeded because the department failed to substantiate clandestine removal with independent evidence beyond the private records comparison.

Ratio Decidendi: Allegations of clandestine manufacture and removal cannot be upheld merely on discrepancies in private records unless supported by credible corroborative evidence.

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