Clandestine removal demands need independent corroboration; private records and retracted statements alone cannot sustain liability.

Duty demands based on worksheets, third-party bank entries, collection book entries and a sale register were found unsustainable where the department produced no independent corroboration of clandestine manufacture and clearance. No buyers, transporters or consignees were examined, and there was no supporting evidence on raw material procurement, electricity use, labour payments or movement of goods. Retracted statements were relied on without effective cross-examination, and private records were not linked to the appellant's alleged removals. On that basis, the duty demand failed and the consequential penalties also could not survive.

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Issues: Whether the duty demands founded on worksheets, third-party bank entries, collection book entries and a sale register could be sustained as proof of clandestine removal in the absence of corroborative evidence and whether the penalties could survive.

Analysis: The demand rested on worksheets prepared from bank statements of alleged dummy concerns and on certain private records, but there was no independent investigation showing actual manufacture and clearance of goods from the appellant's factory. No buyers, transporters or consignees were examined, and there was no evidence regarding raw material procurement, electricity consumption, labour payment or movement of goods. The statements relied upon were retracted promptly and the persons who made the statements were not made available for effective cross-examination. Mere entries in third-party bank accounts or private papers, without linkage to the appellant's clearances, were held insufficient to establish clandestine removal. The additional demands based on the collection book and the sale register also lacked independent verification and could not be connected to the appellant's alleged removals.

Conclusion: The duty demands were not sustainable, and the consequential penalties also failed. The assessee's appeal was allowed and the Revenue's appeal was rejected.

Final Conclusion: Proof of clandestine removal requires reliable corroboration of manufacture, clearance and receipt of sale proceeds, and private documents or retracted statements by themselves are not enough.

Ratio Decidendi: A charge of clandestine removal cannot be upheld solely on private records, third-party statements or retracted confessions unless supported by independent corroborative evidence linking manufacture, clearance and sale of goods to the assessee.

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