Clandestine removal proved by seized records and admissions; duty upheld, confiscation set aside, and penalties partly reduced.

Clandestine removal of excisable goods was established through seized challans, notebooks and corroborated admissions, as the documents contained matching particulars and the partner's statement was supported by merchant-manufacturers' statements; the delayed retraction was ineffective, so the duty demand was upheld. Confiscation of land, building, plant and machinery was found unwarranted and set aside, with the redemption fine also set aside. The penalty on the main appellant and the partner was reduced, while modest penalties on the other appellants were sustained because their admitted role in sending grey fabrics under kachcha challans and receiving processed fabrics without duty payment brought them within Rule 209A.

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Issues: (i) Whether clandestine removal of excisable goods and consequent duty demand were established on the basis of seized challans, notebooks and statements; (ii) Whether confiscation, redemption fine and penalties, including penalty under Rule 209A, were sustainable in full.

Issue (i): Whether clandestine removal of excisable goods and consequent duty demand were established on the basis of seized challans, notebooks and statements.

Analysis: The seized kachcha/pakka grey challans and the two notebooks were found to contain matching particulars of merchant-manufacturers, dates, quality and meterage of fabrics, and the entries were shown to have been transferred from the challans to the notebooks. The partner's statement admitting unrecorded receipt and clearance of grey fabrics was corroborated by the documentary evidence and by the statements of 22 merchant-manufacturers, who admitted sending grey fabrics for processing and receiving the processed fabrics without excise invoices. The delayed retraction was treated as ineffective in view of the corroborative material and the detailed nature of the original admission. Mere absence of evidence such as electricity consumption or installed capacity did not dislodge the documentary and oral corroboration already on record.

Conclusion: Clandestine removal was proved and the duty demand was upheld against the main appellant.

Issue (ii): Whether confiscation, redemption fine and penalties, including penalty under Rule 209A, were sustainable in full.

Analysis: Although the duty demand was sustained, confiscation of land, building, plant and machinery was found unwarranted on the facts and was set aside, along with the redemption fine. The penalty imposed on the main appellant was considered excessive and reduced. The partner's personal penalty was also reduced. As regards the other appellants, their admitted participation in sending grey fabrics under kachcha challans and receiving processed fabrics without duty payment or excise invoices brought them within the mischief of Rule 209A, and the modest penalties imposed on them were left undisturbed.

Conclusion: Confiscation and redemption fine were set aside, penalties on the main appellant and partner were reduced, and the penalties on the other appellants were sustained.

Final Conclusion: The appeals succeeded only to the limited extent of relief against confiscation and reduction of certain penalties, while the core finding of clandestine removal and the consequential duty liability remained intact.

Ratio Decidendi: Clandestine removal may be proved by seized contemporaneous documents and corroborated admissions, and a belated unsupported retraction does not neutralize such evidence where the record otherwise establishes unaccounted manufacture and clearance.

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