Clandestine manufacture demands need corroborative evidence; electricity consumption from another unit alone is insufficient.

Duty demand for alleged clandestine manufacture cannot be sustained on average electricity consumption norms taken from another unit alone. In the absence of corroborative evidence such as excess production, use of inputs, statements, private records, or other material showing suppression, and without a unit-specific determination of normal production, suspicion was held insufficient to prove removal. Reliance on tests from a different factory was found inadequate because power consumption depends on unit-specific factors. The demand and consequential penalties were therefore not sustainable.

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Issues: Whether duty demand and penalties could be sustained merely on the basis of average electricity consumption taken from another unit and without corroborative evidence of excess production or clandestine removal.

Analysis: The demand was founded mainly on electricity consumption figures and on an order concerning another unit, while no investigation was shown in the appellant's factory to establish actual production, use of inputs, statements, private records, or any other material indicating suppression. The reliance on tests conducted in a different factory was held to be insufficient, because power consumption depends on several unit-specific factors such as machinery, raw materials, and technology. The framework under Rule 173E of the Central Excise Rules contemplates determination of normal production on relevant factors, but no such unit-specific normal was fixed here. Suspicion, even if serious, was held not to amount to evidence.

Conclusion: The duty demand and consequential penalties could not be sustained on such material, and the appeal succeeded.

Ratio Decidendi: A demand for alleged clandestine manufacture cannot be confirmed merely on the basis of electricity consumption norms derived from another unit, in the absence of corroborative evidence and unit-specific determination of normal production.

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