Clandestine removal evidence sustained through admissions, records and corroboration; belated retraction and cross-examination objections failed.

An admission by a responsible partner, when supported by panchnamas, recovered records, diary entries and corroborating statements, can sustain findings of clandestine manufacture and removal of excisable goods. The material in this matter was treated as a cumulative chain of oral and documentary evidence rather than reliance on a single statement, and the belated, unsupported retraction did not displace that evidentiary value. Valuation and quantity objections, including alleged duplication, were examined on verification, and the challenge based on denial of cross-examination failed where the impugned statements were not the sole basis of reliance.

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Issues: (i) whether the demand of duty, confiscation and penalties for clandestine manufacture and removal of impregnated diamond scalves were sustainable on the basis of statements, panchnamas, diary entries and other surrounding material; (ii) whether the valuation, quantity determination, alleged duplication and denial of cross-examination vitiated the adjudication.

Issue (i): Whether the demand of duty, confiscation and penalties for clandestine manufacture and removal of impregnated diamond scalves were sustainable on the basis of statements, panchnamas, diary entries and other surrounding material.

Analysis: The record showed that the unit was manufacturing excisable diamond scalves without central excise registration and without payment of duty. The search yielded finished and packed goods, machinery suitable for manufacture, coded markings on goods, loose papers and a diary, all of which were explained by the managing partner and corroborated by the statements of other partners and purchasers. The admitted facts included manufacture, clearance, receipt of goods without invoices, and non-payment of duty. The evidence was not treated as resting on one isolated statement alone, but as a cumulative chain of oral and documentary material supporting clandestine removal and customer involvement.

Conclusion: The demand, confiscation and penalties were rightly sustained and are in favour of Revenue.

Issue (ii): Whether the valuation, quantity determination, alleged duplication and denial of cross-examination vitiated the adjudication.

Analysis: The managing partner's admission regarding higher market value was not displaced merely because the adjudicating authority adopted a lower figure on a bill-based assessment. The alleged retraction was found belated and unsupported by particulars of coercion. The duplication objection was examined and adjusted by the adjudicating authority on verification, leading to the final quantified clandestine clearances. The complaint regarding cross-examination failed because no statements of the named officers were relied on so as to require their examination. The unit's entitlement to small-scale exemption did not negate the finding of clandestine manufacture and removal, and the statutory and factual basis for liability remained intact.

Conclusion: The valuation, quantity determination and procedure were upheld, and the challenge was rejected in favour of Revenue.

Final Conclusion: The adjudication disclosing clandestine manufacture and removal of excisable goods, together with connected confiscation and penalties on the firm, partners and purchasers, was sustained in full and the appeals were dismissed.

Ratio Decidendi: An admission made by a responsible partner, when corroborated by panchnamas, recovered records and allied statements, can sustain findings of clandestine manufacture and removal, and a belated or unsupported retraction does not by itself displace the evidentiary value of the admission.

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