Clandestine removal and private records justified excise demand and penalties where raw material suppression was proved.

Private records showing excess receipt and issue of quartz, charcoal and steel scrap, together with an admitted clearance of finished goods without duty or documents, were treated as reliable evidence of suppression and clandestine production. The explanation that excess quartz was unusable and dumped in pits was rejected for want of supporting evidence, and the claimed return of substandard scrap was found unconvincing. On these facts, the Tribunal held that the pattern of raw material movement and clandestine removal established duty evasion, so the excise demand and penalties were upheld.

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Issues: Whether the demand of central excise duty and imposition of penalty were sustainable on the basis of private records, excess receipt and issue of raw materials, and admitted clandestine removal of finished goods.

Analysis: The private records showed excess receipt and issue of quartz, charcoal and steel scrap, while the explanation that the excess quartz was unusable and thrown into pits was not supported by evidence. The quantity received was weighed at the appellant's end before segregation, and the claimed return of substandard scrap was found unconvincing. The record also contained an admitted instance of removal of 300 bags of ferro silicon without duty and without proper documents. The Tribunal held that the pattern of private records, unexplained excess raw material consumption, and admitted clandestine clearance established suppression of raw materials and use of such materials in production. The plea based on decisions relating to shortages of a single raw material was held inapplicable on the facts.

Conclusion: The demand of duty and the penalties were upheld, and the appeal failed.

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