Clandestine removal demand fails without corroborative evidence linking alleged excess inputs to manufacture and clearance.

A demand for central excise duty and penalty based mainly on Form A entries and an allegation of clandestine manufacture and removal failed where the record did not verify that the figures reflected actual imports or consumption. The earlier adjudication had already indicated that further investigation was required, but the remand directions were not effectively followed. In the absence of corroborative evidence showing how the alleged excess quantity entered the factory, was used in manufacture, transported, and cleared clandestinely, the charge could not be sustained. The demand and penalty were therefore set aside in favour of the assessee.

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Issues: Whether the demand of central excise duty and penalty, founded mainly on Form A and alleged clandestine manufacture and removal, could be sustained when the earlier adjudication had recorded the need for further investigation, the remand directions were not effectively followed, and no corroborative evidence was brought on record.

Analysis: The duty demand rested primarily on figures in Form A, but the material on record did not establish that the figures represented actual imports or actual consumption. The earlier adjudication itself had indicated that the issue required investigation before any demand could be created. The record also showed repeated remands for de novo adjudication, yet the directions were not duly complied with. The Tribunal found that the case was being pressed on assumptions without proving how the allegedly excess quantity entered the factory, was transported, was used in manufacture, or led to clandestine clearance. In the absence of corroborative evidence, a charge of clandestine removal could not be sustained.

Conclusion: The demand and penalty were not sustainable and were set aside in favour of the assessee.

Ratio Decidendi: A demand for clandestine removal cannot be sustained on the basis of unverified entries or presumptions alone, and it must be supported by corroborative evidence establishing the full chain of procurement, manufacture, clearance, and suppression.

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