Clandestine removal demands cannot rest on electricity data alone; corroborative evidence of manufacture and removal is essential.

Clandestine removal of excisable goods cannot be sustained on electricity consumption data and theoretical power norms alone. The Tribunal held that duty demands based on estimated production require tangible, direct and corroborative evidence of actual manufacture, removal, transport, sale, or receipt of sale proceeds; none was shown on record. Mere assumptions of production from power consumption were treated as unsustainable under the principle that tax liability must rest on proved facts, not estimation. The earlier R.A. Castings ruling on the same issue was followed, and the demand was set aside.

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Issues: Whether a demand of central excise duty for alleged clandestine removal could be sustained solely on the basis of electricity consumption data and technical reports, without independent corroborative evidence of manufacture and removal.

Analysis: The demand was founded on estimated production worked out from electricity consumption and on technical opinions regarding power norms for induction furnaces. The Tribunal followed the settled principle that tax cannot be levied on mere estimation and that clandestine manufacture and removal must be proved by tangible, direct and affirmative evidence. It noted that no independent evidence of unaccounted raw material, actual excess manufacture, transport, sale, or receipt of sale proceeds had been brought on record. The principle reflected in Article 265 of the Constitution of India was applied, and the approach of fixing duty liability only on assumed production from electricity consumption was held to be unsustainable. The earlier decision in the identical matter of R.A. Castings, which had already rejected such a basis of demand, was treated as governing the controversy.

Conclusion: The demand based only on electricity consumption was held to be unsustainable, and the assessee succeeded.

Ratio Decidendi: Clandestine removal of excisable goods cannot be presumed merely from high electricity consumption or theoretical production norms unless supported by independent, credible and corroborative evidence of actual manufacture and removal.

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