Clandestine removal requires positive corroboration; mere stock shortage and a retracted statement were insufficient to sustain demand.

Clandestine removal of excisable goods was not established where the demand was based mainly on stock shortages noticed during inspection and an initial statement that was later retracted. In the absence of further investigation or independent corroboration showing when, where and to whom the goods were allegedly cleared, mere shortage entries were insufficient to sustain the allegation. The duty demand and penalties were therefore unsustainable because the revenue failed to prove clandestine removal with cogent evidence.

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Issues: Whether clandestine removal of excisable goods was established on the basis of shortages detected during stock verification and an initial statement, so as to sustain the duty demand and penalties.

Analysis: The demand rested principally on the shortage noticed at the time of inspection and the manager's statement, but the statement was later retracted by the appellants' clarification that the goods were available in the factory for inspection by railway and defence authorities. The evidence on record did not contain further investigation or independent material to prove when, where, and to whom the goods were allegedly cleared. A charge of clandestine removal cannot be sustained merely on shortage entries without sufficient and positive corroborative evidence.

Conclusion: The allegation of clandestine removal was not proved; the duty demand and penalties were unsustainable.

Final Conclusion: The appellants were entitled to relief on the basis that the revenue failed to establish clandestine removal with cogent evidence.

Ratio Decidendi: A charge of clandestine removal cannot be upheld on mere shortage of stock and requires positive, corroborative evidence from the revenue.

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