Clandestine removal needs tangible proof; transporter records and statements alone cannot sustain duty demand or penalty.

A charge of clandestine removal of aluminium sections failed because duty demand and equal penalty were sought mainly on transporter records, disputed statements, and alleged unaccounted furnace oil and scrap, without cogent corroborative evidence of manufacture, buyers, parallel invoices, excess electricity use, or a reliable link to clearance from the factory. The duty demand and Section 11AC penalty were set aside. Finished goods found in the factory were upheld as confiscable for non-entry in RG-1, but that omission was treated as a technical lapse rather than proof of intent to evade duty. Confiscation was maintained, while redemption fine and related personal penalties were reduced or set aside.

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Issues: (i) Whether the demand of duty and equal penalty for alleged clandestine removal of aluminium sections, based on transporter records, statements, and alleged unaccounted furnace oil and scrap, was sustainable. (ii) Whether confiscation of seized aluminium sections and the consequential redemption fine and penalty for non-accountal in RG-1 register were sustainable.

Issue (i): Whether the demand of duty and equal penalty for alleged clandestine removal of aluminium sections, based on transporter records, statements, and alleged unaccounted furnace oil and scrap, was sustainable.

Analysis: The record did not establish unaccounted manufacture and removal by cogent and corroborative evidence. The alleged clandestine clearances rested mainly on third-party transporter documents, disputed statements, and inferences drawn from alleged unaccounted furnace oil and scrap. The material did not satisfactorily prove the actual manufacture of the quantity alleged, the identity of buyers, any parallel invoices, any excess electricity consumption, or any reliable link between the recovered documents and clandestine removals from the factory. In a case of clandestine removal, suspicion and probability cannot substitute for tangible proof.

Conclusion: The demand of duty and the equal penalty under Section 11AC were not sustainable and were set aside.

Issue (ii): Whether confiscation of seized aluminium sections and the consequential redemption fine and penalty for non-accountal in RG-1 register were sustainable.

Analysis: The seized finished goods found in the factory were not shown to have been duly entered in RG-1, and some consequence followed from that omission. However, the omission was treated as a technical lapse rather than proof of an intention to remove the goods without duty. The original fine and penalty were therefore considered excessive, though confiscation itself was maintained.

Conclusion: Confiscation was upheld, but the redemption fine and penalty were reduced, and the personal penalties for non-entry were set aside.

Final Conclusion: The substantive duty demand for alleged clandestine removal failed, while the confiscation-related consequences were sustained only to a limited extent with reduction of monetary burden.

Ratio Decidendi: A charge of clandestine removal must be proved by credible, corroborative and tangible evidence of manufacture and clearance, and cannot rest merely on transporter records, statements, assumptions, or preponderance of probability unsupported by material particulars.

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