Clandestine removal in excise proved by records and admissions, sustaining duty demand, penalties and confiscation.

Contemporaneous inward records, supplier confirmations, and admissions by the authorised signatory and director were treated as sufficient evidence of receipt of polyester texturised yarn, non-accountal in excise records, manufacture, and clearance without duty. The explanation of work-in-progress was rejected because it was unsupported by stock-taking records or the panchnama. On that basis, the demand of central excise duty for clandestine removal was sustained. Once suppression and clandestine clearance were established, the related penal consequences under the Central Excise Rules, 1944, including penalties and confiscation of land, building, plant and machinery, were treated as justified.

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Issues: (i) Whether the demand of central excise duty on the alleged clandestine removal of polyester texturised yarn was sustainable on the basis of the records, supplier confirmations and statements of officials. (ii) Whether the penalties and confiscation ordered under the Central Excise Rules, 1944 were justified once suppression and clandestine removal were established.

Issue (i): Whether the demand of central excise duty on the alleged clandestine removal of polyester texturised yarn was sustainable on the basis of the records, supplier confirmations and statements of officials.

Analysis: The receipt of the material from the two suppliers was reflected in the inward records and was supported by confirmations from the suppliers. The appellant's own authorised signatory and director admitted receipt, non-accountal in excise records, manufacture of texturised yarn and clearance without payment of duty. The explanation regarding work-in-progress was rejected as an afterthought because it was not supported by the stock-taking records or the panchnama. The evidence on record therefore established suppression of production and clandestine clearance.

Conclusion: The duty demand was rightly confirmed and the challenge to it failed.

Issue (ii): Whether the penalties and confiscation ordered under the Central Excise Rules, 1944 were justified once suppression and clandestine removal were established.

Analysis: Once clandestine removal and suppression stood proved, penal consequences under the relevant rules necessarily followed. The statements recorded during investigation were treated as valid evidence, and no retraction was shown. In that factual setting, the penalty on the firm and the confiscation of land, building, plant and machinery could not be said to be excessive or illegal.

Conclusion: The penalties and confiscation were upheld.

Final Conclusion: The impugned order was sustained in full and the appeal was rejected.

Ratio Decidendi: Where suppression of production and clandestine removal are established by contemporaneous records and admissions, the excise duty demand is sustainable and the statutory penal consequences may follow.

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