Clandestine manufacture demands need corroborative evidence; electricity consumption ratios alone cannot prove unaccounted production or removal.

A demand for clandestine manufacture and removal of M.S. ingots cannot be sustained on estimated electricity consumption ratios alone. The tribunal noted that no actual experiment was conducted in the appellant's unit, the ratio was borrowed from another unit despite differing operational conditions, and there was no corroborative evidence of unaccounted raw material, shortage of finished goods, or unrecorded sales. On that footing, electricity usage by itself was held insufficient to prove clandestine production or clearance, and the duty demand and penalty were set aside for want of independent supporting evidence.

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Issues: Whether duty demand and penalty for alleged clandestine manufacture and removal of M.S. ingots could be sustained solely on the basis of electricity consumption ratio, without independent evidence of unaccounted production or clearance.

Analysis: The demand was founded only on the presumed norm of electricity required for producing one metric tonne of ingots. No experiment was conducted in the appellant's unit to ascertain actual consumption, and the ratio adopted from another unit was treated as determinative despite differences in operational factors such as machinery age, heats per day, and power breakdowns. The record contained no evidence of shortage of finished goods, unaccounted procurement of raw material, or unrecorded sales. In these circumstances, electricity consumption by itself was held insufficient to establish clandestine production or removal, and the reliance on the cited Supreme Court decision was found misplaced in the absence of supporting evidence.

Conclusion: The demand and penalty were unsustainable and were set aside.

Final Conclusion: The appeals succeeded and the adjudication confirming duty and penalty was annulled for want of corroborative evidence of clandestine activity.

Ratio Decidendi: A demand for clandestine manufacture and removal cannot be upheld merely on estimated electricity consumption ratios unless supported by independent evidence of unaccounted production or removal.

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