Clandestine removal of pan masala proved through stock, raw material and transport evidence; confiscation, duty and penalty upheld.

Clandestine removal of pan masala goods can be established by a combination of unexplained excess finished stock, shortage and unaccounted procurement of raw material, and corroborative transport evidence showing clearance without invoices. Here, unaccounted gutka pouches found during the factory visit remained unexplained, the shortage of supari matched supplier records showing unrecorded purchases, and transport receipts with the transporter's statement supported removal of consignments from the factory. On that evidentiary basis, confiscation of the seized goods, confirmation of duty demand, and penalty were upheld in favour of Revenue.

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Issues: Whether clandestine removal of pan masala goods without payment of duty was proved on the basis of unaccounted finished stock, unaccounted raw material, and transport records, and whether confiscation, duty demand, and penalty were justified.

Analysis: Unaccounted finished gutka pouches were found during the factory visit and remained unexplained. The shortage of supari in stock, together with the unaccounted purchase of supari from the supplier's records, established that a substantial quantity of raw material had not been entered in the statutory register. The transport receipts and the statement of the transporter further corroborated removal of pan masala consignments from the factory. On this evidence, the allegation of clandestine manufacture and clearance without payment of duty stood proved.

Conclusion: The confiscation of the seized goods, confirmation of duty demand, and imposition of penalty were upheld in favour of Revenue.

Ratio Decidendi: Clandestine removal may be established by a combination of unexplained excess stock, unaccounted raw materials, and corroborative transport evidence showing clearance without invoices.

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