Clandestine removal allegation fails when balance-sheet production figures are read with closing stock entries and no contrary evidence exists.

Duty demand based on alleged clandestine removal was not sustainable where the Revenue relied on balance-sheet production figures but ignored the corresponding closing stock entry. The tribunal noted that the earlier remand required the demand to be worked out from viscose yarn manufactured during the relevant period, yet the adjudicating authority treated 14.54 MTs as clandestinely cleared solely from production figures. Because the same balance sheet showed a closing balance of 24.16 MTs of polyester/Art Silk Embroidery thread and there was no contrary evidence that this did not include the disputed quantity, clandestine removal could not be inferred merely from the figures relied upon. The duty and consequential interest were set aside.

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Issues: Whether the demand of duty and interest on alleged clandestine removal of Art Silk Embroidery thread was sustainable when the assessment was based on balance-sheet figures that also disclosed closing stock for the relevant period.

Analysis: The demand had to be worked out strictly in terms of the earlier remand direction, on the basis of the viscose yarn manufactured during the relevant period. The adjudicating authority relied on the production figure in the balance sheet to treat 14.54 MTs as clandestinely cleared, but the same balance sheet also showed a closing balance of 24.16 MTs of polyester/Art Silk Embroidery thread as on 31-3-1996. Once the Revenue chose to rely on the balance sheet, it was necessary to take the closing stock entry into account as well. In the absence of any contrary evidence showing that the closing balance did not include the disputed quantity, clandestine removal could not be inferred merely from the production figures.

Conclusion: The demand of duty and the consequential interest on the alleged clandestine removal were not sustainable and were set aside in favour of the assessee.

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