Clandestine removal proved by admission and matching records; duty demand upheld, director's penalty sustained, company's penalty reduced.

A clear and voluntary admission of clandestine removal, supported by matching invoices, invoice-cum-delivery challans and transporter details, was treated as reliable evidence and no further corroboration was required. The delayed retraction, not promptly communicated to the department, and the unexplained raw material shortage reinforced the finding. The demand of duty and the conclusion of clandestine removal were therefore upheld. On penalty, the director's active involvement justified sustaining the penalty against him, while the company received limited relief through reduction of its penalty.

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Issues: (i) Whether the demand of duty and the finding of clandestine removal were sustainable on the basis of the director's statement and the surrounding documentary material. (ii) Whether the penalty deserved reduction.

Issue (i): Whether the demand of duty and the finding of clandestine removal were sustainable on the basis of the director's statement and the surrounding documentary material.

Analysis: The statement of the director contained a clear admission of the modus operandi adopted for clearance of goods without payment of duty, and the particulars in the regular invoices and invoice-cum-delivery challans substantially matched, including the number of cartons and the transporter. The alleged retraction was delayed and was not promptly placed before the department. The shortage of raw material was also not satisfactorily explained by independent evidence. In these circumstances, the admission was treated as reliable and no further corroboration was considered necessary.

Conclusion: The demand of duty and the finding of clandestine removal were upheld.

Issue (ii): Whether the penalty deserved reduction.

Analysis: The director was held to be actively involved in the clandestine removal, and no ground was found to interfere with the penalty imposed on him. At the same time, considering the overall circumstances, the penalty on the company was reduced.

Conclusion: The penalty on the director was sustained, while the penalty on the company was reduced.

Final Conclusion: The appeal failed on the merits of the duty demand and the finding of clandestine removal, but limited relief was granted by reducing the company's penalty.

Ratio Decidendi: A clear and voluntary admission of clandestine removal, corroborated by attendant documents and not effectively retracted, can sustain the demand even without additional independent corroboration, while penalty may still be moderated on the facts of the case.

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