Clandestine removal requires positive corroborative evidence; theoretical calculations alone cannot sustain demand or penalty.

Clandestine removal cannot be sustained on a theoretical formula alone when no corroborative evidence shows unrecorded manufacture or clearance. The Tribunal noted that laminated fabrics were cleared under Chapter X procedure and that the assessee had produced technical material, including a Chartered Engineer's certificate, BIS standards and an IPCL letter indicating that lamination yields may vary. Because the adjudication order did not properly consider this material and relied mainly on a ratio calculation and excess stock found during search, the demands on items other than the seized goods and related HDPE tapes were set aside. The penalty was reduced accordingly.

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Issues: Whether the demand and penalties, other than those relating to the seized laminated fabrics and the HDPE tapes found relatable to them, could be sustained on the basis of a theoretical formula and calculation in the absence of corroborative evidence of clandestine removal.

Analysis: The laminated fabrics were cleared under Chapter X procedure pursuant to Notification No. 63/87, and the appellant had produced material such as the Chartered Engineer's certificate, BIS standards and the IPCL letter indicating that lamination yields may vary for technical reasons. The Tribunal found that these materials had not been considered in the adjudication order. It further held that, apart from the theoretical ratio and the excess stock noticed during search, no independent evidence established clandestine manufacture or removal. In a case alleging clandestine removal, something more than a formula-based inference or bare admission is required.

Conclusion: The demands confirmed in respect of items other than the seized goods and the HDPE tapes relatable to the seized goods were set aside, and the penalty was reduced to Rs. 2,500.

Ratio Decidendi: Clandestine removal cannot be sustained merely on theoretical calculations or assumptions and must be proved by positive, corroborative evidence.

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