Clandestine removal requires independent corroboration; a diary and statements alone cannot sustain duty demand or penalty.

Clandestine manufacture and removal cannot be established on a solitary diary or uncorroborated statements alone; independent evidence such as raw material procurement, electricity consumption, or sale proceeds is required. On that basis, the duty, interest, and penalty demand was held unsustainable. Penalty was also found legally untenable because the relevant penal provision could not support the entire earlier period, and simultaneous imposition under Section 11AC and Rule 173Q was not justified. The adjudication confirming duty, interest, and penalty was set aside.

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Issues: Whether the demand of duty, interest, and penalty was sustainable on the basis of a diary and statements alone, without independent corroboration of clandestine manufacture and removal, and whether the penalty under the excise provisions was legally tenable.

Analysis: The duty demand rested principally on the diary maintained by the foreman and the initial statements of the foreman and the manager. The entries in the diary were not supported by independent evidence showing procurement of additional raw material, higher electricity consumption, sale proceeds, or other material indicating clandestine manufacture and removal. The Tribunal applied the settled principle that clandestine removal cannot be established on one uncorroborated circumstance and that categorical manufacture and removal must be proved by reliable evidence. On penalty, the Tribunal found force in the objection that the penal provision introduced with effect from 28.9.1996 could not sustain penalty for the entire earlier period and that joint imposition under Section 11AC and Rule 173Q was not justified.

Conclusion: The demand of duty, interest, and penalty was not sustainable.

Final Conclusion: The appeal succeeded and the adjudication confirming duty, interest, and penalty was set aside.

Ratio Decidendi: A charge of clandestine manufacture and removal cannot be sustained on a solitary diary or uncorroborated statements; independent corroborative evidence is required, and penalty cannot be imposed without a legally sustainable foundation for the entire period covered.

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