Clandestine removal demands require corroborative evidence; doubtful stock verification and unproved private records cannot sustain excise liability.

Central excise duty demand based on alleged stock shortage and private records was found unsustainable because the physical verification was not reliably supported by a proper panchnama, clear measurement methodology, or a quantified stock report. The alleged clandestine removals were also rejected because the private records were not proved to be authentic or properly linked to the unit, and no corroboration emerged from buyers, transport documents, electricity use, raw material procurement, or sale proceeds. In the absence of positive and tangible evidence, the burden on the Revenue was not discharged, and the proposed penalties and interest could not survive.

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Issues: Whether the demand of central excise duty and related penalties could be sustained on the basis of alleged stock shortage and private records without corroborative evidence.

Analysis: The demand rested on two grounds, namely, shortage found during physical verification and alleged clandestine removals inferred from private records. The stock shortage itself was held doubtful because the verification was not supported by a proper panchnama, the measurement methodology was not established with certainty, and the stock report did not show the quantity contained in each than. The alleged private records were also found unreliable because their authorship was not proved, they were not properly linked to the unit, no handwriting examination was done, and no corroboration emerged from buyers, transport records, electricity consumption, raw material procurement, or receipt of sale consideration. The finding on clandestine removal therefore remained unsupported by positive and tangible evidence, and the burden placed on the Revenue was not discharged. Since the demand itself failed, the proposed penalties and interest could not survive.

Conclusion: The duty demand was not sustainable and the assessee succeeded on the merits.

Ratio Decidendi: Allegations of clandestine removal and duty evasion must be proved by positive, corroborative, and tangible evidence, and cannot be upheld on doubtful stock verification, unverified private records, or mere suspicion.

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