Clandestine removal demands need substantive evidence; input-output ratios and an uncorroborated statement were held insufficient.

A demand for duty based on alleged clandestine removal of texturised fabrics was rejected because the department relied mainly on an input-output ratio and a recorded managerial statement. The statement was not treated as reliable support for the quantified allegation, and no concrete, positive evidence was produced to prove clandestine manufacture and clearance. The material on record was held insufficient to meet the required standard of proof for clandestine removal, which must rest on substantive evidence rather than inference alone. The duty demand was therefore set aside in favour of the assessee.

---

---

Issues: Whether the demand for duty based on alleged clandestine removal of texturised fabrics, founded principally on input-output ratio and the recorded statement of the manager, was sustainable.

Analysis: The demand had been confirmed on the basis that consumption of POY and anti-static oil should have resulted in excess production, and the department relied on a statement recorded during investigation. The recorded statement was not found to furnish reliable support for the quantified allegation, and apart from the input-output ratio there was no concrete and positive evidence on record to establish clandestine manufacture and clearance. Cases of clandestine removal require proof beyond doubt on the basis of substantive evidence, and the material relied upon was insufficient to meet that standard.

Conclusion: The demand was set aside and the appeal was allowed in favour of the assessee.

---