Clandestine removal requires corroborative evidence; shortages or high shrinkage alone cannot sustain duty demand and penalty.

Clandestine removal cannot be inferred merely from shortages or a high rate of shrinkage in processed fabrics; the Revenue must prove unauthorised clearance with cogent corroborative evidence. On the facts noted, the explanation that the shortage arose from processing shrinkage was accepted, and no supporting evidence established removal without accountal or duty payment. The duty demand and equal penalty were therefore held unsustainable and were set aside in favour of the assessee.

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Issues: Whether the demand of duty and equal penalty could be sustained on the allegation of clandestine removal of processed fabrics allegedly remaining unaccounted after allowing for shrinkage.

Analysis: The burden to prove clandestine clearance lay on the Revenue. A high percentage of shrinkage by itself did not establish that the shortage was due to unauthorised clearance without accountal or payment of duty. The explanation that the shortage arose from shrinkage during processing was accepted, and no corroborative evidence was produced to support the allegation of clandestine removal.

Conclusion: The finding of clandestine removal and the consequential duty demand and penalty were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The order confirming duty and penalty was annulled and the appeal succeeded.

Ratio Decidendi: Clandestine removal cannot be inferred merely from shortages or unusually high shrinkage; it must be established by cogent corroborative evidence.

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