Clandestine removal requires independent corroboration; a raw-material shortage and uncorroborated statement were found insufficient.

Allegations of clandestine manufacture and removal of excisable goods cannot be sustained on a solitary raw-material shortage and an uncorroborated statement alone; independent evidence linking the shortage to unlawful manufacture and removal is required. Here, all other raw materials and finished goods tallied with the records, and no corroborative material was produced to prove clandestine clearance. The Tribunal therefore treated the evidence as insufficient and extended the benefit of doubt to the assessee. The High Court found no legal infirmity in that factual appreciation and declined to interfere, leaving the Revenue without relief.

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Issues: Whether the Tribunal was justified in setting aside the demand and penalties on the ground that clandestine manufacture and removal of excisable goods was not proved in the absence of independent corroborative evidence, despite shortage of one raw material and the statement of the Director.

Analysis: The only material relied upon by the Revenue was the shortage of one raw material and the statement of the Director recorded during preventive checks. All other raw materials and finished goods were found to tally with the records. No independent evidence was shown to establish clandestine manufacture or removal of final products. The Tribunal's conclusion that the evidence was insufficient and that the assessee was entitled to the benefit of doubt was based on appreciation of facts. The cited authorities on admission and confession were found inapplicable because the present case did not involve an admitted factual position or a criminal confession capable of replacing proof of clandestine removal.

Conclusion: The Tribunal was right in holding that clandestine removal was not proved and in allowing the assessee's appeals.

Final Conclusion: The High Court found no legal infirmity in the Tribunal's order and declined to interfere, leaving the Revenue without relief.

Ratio Decidendi: Allegations of clandestine removal cannot be sustained on the basis of a solitary raw-material shortage and an uncorroborated statement alone; some independent evidence linking the shortage to unlawful manufacture and removal is required.

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