Clandestine removal demands need corroborative evidence; shortage of one input and a director's statement were insufficient.

A demand for clandestine manufacture and removal cannot be sustained on the basis of shortage of one raw material and a director's statement alone. Where other inputs and finished stock were found in order, and no independent evidence connected the shortage to unaccounted production or clearance, the allegation rests only on suspicion and assumptions. Clandestine removal requires tangible, corroborative evidence showing actual manufacture and removal of finished goods. On that basis, the demand was not sustainable and the impugned order was set aside in favour of the assessee.

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Issues: Whether a demand for clandestine manufacture and removal could be sustained on the basis of shortage of one raw material and the director's statement, in the absence of independent corroborative evidence.

Analysis: The only material relied upon was the shortage of one input and the statement of the director. The other inputs and finished stock were stated to be in order, and no independent evidence was brought on record to show actual clandestine manufacture or removal of the finished goods. The finding of clandestine removal cannot rest on suspicion, assumptions, or shortage of raw material alone; it requires tangible and corroborative evidence connecting the shortage to unaccounted production and clearance.

Conclusion: The issue is decided in favour of the assessee. The demand could not be sustained and the impugned order was set aside.

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