Clandestine removal established by shortage, private records and admissions; confiscation of plant and machinery was held excessive.

Unretracted admissions recorded under Section 14 of the Central Excise Act, 1944, together with shortage findings, private production records and statements of the persons concerned, were sufficient to establish clandestine removal and sustain the duty demand without further corroboration. The demand on unaccounted production was therefore restored in favour of the Revenue, along with related penalties. Confiscation of plant and machinery, however, was found excessive on proportionality grounds and was set aside.

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Issues: (i) whether the demand of duty on unaccounted production and clandestine clearances was sustainable on the basis of shortage, private records and admissions; (ii) whether confiscation of plant and machinery could be sustained.

Issue (i): Whether the demand of duty on unaccounted production and clandestine clearances was sustainable on the basis of shortage, private records and admissions.

Analysis: Shortage found during inspection, payment of duty on the goods found short, private records maintained for production and clearances, and the statements of the persons concerned together established a consistent pattern of clandestine removal. The admissions were not retracted and were recorded under Section 14 of the Central Excise Act, 1944. In such circumstances, the admitted facts required no further corroboration, and the private records and statements were sufficient to sustain the duty demand.

Conclusion: The demand of duty on the clandestinely removed goods was sustainable and was restored in favour of the Revenue.

Issue (ii): Whether confiscation of plant and machinery could be sustained.

Analysis: Although the order restoring the demand and connected penalties was upheld, confiscation of the plant and machinery was considered excessive in the facts of the case. The confiscatory part of the order was therefore modified on proportionality considerations.

Conclusion: Confiscation of the plant and machinery was set aside.

Final Conclusion: The appeal succeeded substantially for the Revenue on the duty demand and related penalties, but the confiscation of plant and machinery was deleted as being unduly harsh.

Ratio Decidendi: Unretracted admissions, supported by shortage and private records, can sustain a finding of clandestine removal and duty demand without requiring further corroboration, while confiscation must remain proportionate to the proven misconduct.

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