Clandestine removal can be sustained on un-retracted admission and unexplained stock shortage, while penalties may still be reduced.

Unretracted admission of clandestine clearance, supported by unexplained shortage and unaccounted finished fabrics, was sufficient to sustain the finding of clandestine removal even without proof of identifiable buyers. The explanation that the goods were awaiting folding and packing was rejected as an afterthought. Confiscation and liability were therefore upheld on merits, while the penalties and redemption fine were reduced as excessive in the circumstances.

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Issues: Whether the demand, confiscation and penalties arising out of alleged clandestine removal of finished fabrics were sustainable, and whether the quantum of penalty and redemption fine called for reduction.

Analysis: The partner's initial statement admitting clearance of goods in the open market without invoices or duty payment was not retracted in time and was treated as reliable. The explanation that the goods were lying in the factory awaited folding and packing was rejected as an afterthought. The unexplained shortage of finished fabrics and the existence of a large quantity of unaccounted goods were held sufficient to support the finding of clandestine removal, and the department was not required to identify buyers where the removal stood admitted. However, having regard to the circumstances, the quantum of punishment was considered excessive.

Conclusion: The findings on clandestine removal, confiscation and liability were upheld. The appeal failed on merits, but the penalties and redemption fine were reduced.

Ratio Decidendi: An un-retracted admission of clandestine clearance, reinforced by unexplained shortage and unaccounted stock, is sufficient to sustain a finding of clandestine removal without proof of identifiable buyers.

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