Clandestine removal allegation needs corroboration; mere stock shortage and immediate duty payment were insufficient to sustain penalty.

Penalty for alleged clandestine removal could not be sustained on the basis of a mere shortage of finished goods where the shortage was admitted, duty was paid immediately, and there was no admission or corroborative evidence of clandestine clearance. In the absence of supporting material such as unaccounted raw material procurement or private records showing removal without duty, the allegation of clandestine removal could not be fastened on the assessee. The order setting aside the penalty was therefore upheld.

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Issues: Whether penalty could be sustained on the basis of a mere shortage of finished goods without admission of clandestine removal or corroborative evidence.

Analysis: The shortage noticed by the officers was admitted, and the duty was paid immediately. There was, however, no admission of clandestine removal and no supporting material such as unaccounted procurement of raw materials or private records showing clearance of finished goods without payment of duty. In the absence of such corroboration, a serious allegation of clandestine removal could not be fastened on the assessee.

Conclusion: Penalty was not sustainable and the order setting aside the penalty was upheld.

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