Clandestine manufacture requires tangible proof; unexplained brand-name goods alone cannot sustain duty demand or SSI exemption denial.

Mere recovery of goods bearing different brand names was held insufficient to prove clandestine manufacture or wrongful availment of SSI exemption. The record showed that some seized goods were the appellants' own brand, while others were supported by invoices indicating purchase from the market or other traders, and those invoices were not discredited by examining the issuers. The seized documents and witness statements did not establish manufacture or clandestine removal of branded goods, nor corroborate the allegation of job-work production for another concern. As the alleged evasion was not proved by tangible evidence, the duty demand and equal penalties on the firm and partner were unsustainable.

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Issues: Whether the demand of duty, equal penalty on the firm, and penalty on the partner were sustainable on the allegation that the appellants manufactured and clandestinely cleared branded goods while wrongly availing SSI exemption.

Analysis: The record did not furnish tangible evidence that the goods bearing other brand names were manufactured by the appellants. The goods found at the factory and trading premises included products of the appellants' own brand as well as assorted goods shown by invoices to have been purchased from the market or from other traders. Those invoices were not tested by examining the issuers, and their genuineness remained unchallenged. The seized documents did not show manufacture or clandestine removal of branded goods. The statements of the two witnesses also did not establish clandestine manufacture or removal by the appellants; one witness referred to purchases of Sunrise goods, and the other statement lacked corroboration for the allegation that branded goods of another concern were manufactured on job work or otherwise by the appellants. Mere presence of goods bearing different brand names, without proof of manufacturing capacity, in-process manufacture, or corroborated evidence of clearance, was insufficient to sustain the charge.

Conclusion: The allegations of wrongful availment of SSI exemption and clandestine manufacture and clearance were not proved, and the duty demand and penalties were unsustainable.

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