Clandestine removal requires reliable corroboration; employee statements and loose sheets alone were insufficient to sustain the demand.

Clandestine removal of excisable goods was not proved where the Revenue relied mainly on employee statements and loose sheets without reliable corroboration. Key persons in charge of production and despatch were not examined, no statement of the managing director or director was recorded, and the loose sheets were neither shown to be part of the books of account nor traced to an identified maker. Because corroborative evidence is essential in such cases, the order dropping the demand and penalty was upheld and the Revenue's challenge failed.

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Issues: Whether the Revenue had established clandestine removal of excisable goods on the basis of employee statements and loose sheets, so as to justify interference with the order dropping the demand and penalty.

Analysis: The available material did not furnish reliable corroboration of clandestine removal. The department relied on statements of employees, but did not record the statements of key persons in charge of production and despatch, and no statement of the managing director or director was recorded. The loose sheets relied upon were not shown to form part of the books of account and the maker of those sheets was not identified. In a case alleging clandestine removal, corroborative evidence is essential, and that requirement was not satisfied.

Conclusion: The allegation of clandestine removal was not proved. The order under appeal required no interference and the Revenue's appeal failed.

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