Clandestine manufacture allegations require reliable corroboration; uncorroborated statements and speculative inferences could not sustain excise demand or penalty.

Allegations of clandestine manufacture and clearance of re-rolled iron and steel products under central excise law must be supported by reliable corroborative evidence; uncorroborated witness statements and speculative inference are insufficient. The record lacked supporting material such as abnormal electricity consumption, weighment records, sale proceeds, or procurement of additional inputs, and the claimed profit motive was not persuasive on the figures in the show-cause notice. On that basis, the Revenue failed to establish clandestine activity, so the duty demand, penalty, and related confiscatory consequences could not be sustained.

---

---

Issues: Whether the Revenue had proved clandestine manufacture and clearance of re-rolled iron and steel products so as to sustain the demand of duty, penalty and consequential confiscation-related reliefs.

Analysis: The appeal rested mainly on witness statements and a claim that certain documents were corroborative, but the lower appellate authority had recorded crucial findings that there was no supporting evidence of illicit manufacture or clearance in the form of abnormal electricity consumption, weighment records, sale proceeds, or procurement of additional inputs. The asserted profit motive was also found unpersuasive on the figures in the show-cause notice. The record did not contain material sufficient to dislodge those findings, and the absence of effective corroboration meant that the allegations of clandestine activity were not established.

Conclusion: The Revenue failed to prove clandestine manufacture and clearance, and the demand, penalty and related confiscatory consequences could not be sustained.

Final Conclusion: The impugned appellate relief in favour of the assessee was maintained and the Revenue's challenge was rejected.

Ratio Decidendi: Allegations of clandestine manufacture and removal under central excise law must be supported by reliable corroborative evidence; uncorroborated statements and speculative inferences are insufficient to sustain duty demand and penalty.

---