Clandestine removal requires reliable proof; unsupported records and brand-name objections could not defeat SSI exemption.

Revenue must prove clandestine manufacture and removal by reliable evidence; unverified procurement records and LAB consumption alone were insufficient to establish clandestine clearances of acid slurry, so the allegation failed. The brand-name objection under Notification No. 175/86-C.E. also failed because Jaya Soap Works had not lost SSI eligibility on account of any clandestine removals; accordingly, detergent clearances bearing that brand name remained entitled to exemption, and the assessee retained the benefit.

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Issues: (i) Whether the Revenue established clandestine manufacture and removal of acid slurry by the assessee. (ii) Whether the units clearing detergents under the brand name of Jaya Soap Works were disentitled to small scale industry exemption under Notification No. 175/86-C.E. during the period in dispute.

Issue (i): Whether the Revenue established clandestine manufacture and removal of acid slurry by the assessee.

Analysis: The allegation of clandestine manufacture rested on the alleged procurement of sulphuric acid from two units and consumption of LAB. The basic records relied on for the sulphuric acid allegation were not made available to the assessee, and the earlier remand finding had already held the evidence unreliable. On the remaining material, LAB alone could not sustain an inference that acid slurry had been manufactured and removed clandestinely. In matters of this kind, the burden remained on the Revenue to prove the charge by reliable evidence.

Conclusion: The Revenue failed to establish clandestine manufacture and removal of acid slurry; the finding was in favour of the assessee.

Issue (ii): Whether the units clearing detergents under the brand name of Jaya Soap Works were disentitled to small scale industry exemption under Notification No. 175/86-C.E. during the period in dispute.

Analysis: The Revenue's objection was based on the brand name restriction in paragraph 7 of Notification No. 175/86-C.E., namely that exemption was unavailable where the goods bore the brand name of a person who was not eligible for the notification. Once it was held that Jaya Soap Works had not crossed the exemption limit on account of any clandestine clearances and remained eligible for the notification, the branded clearances made by the other units could not be denied exemption on that ground.

Conclusion: The branded clearances were eligible for SSI exemption; the finding was in favour of the assessee.

Final Conclusion: The Revenue's challenge failed on both the alleged clandestine removal and the consequential denial of SSI benefit, and the impugned orders were sustained.

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