Clandestine removal requires corroborative evidence; a mere RG-1 discrepancy cannot sustain demand or penalty.

Clandestine removal cannot be established merely from a discrepancy between finished goods declared and entries in the RG-1 register. The department must prove the allegation with concrete corroborative evidence such as movement of goods, receipt of sale consideration, or an inculpatory statement, and the burden remains on the department. Here, the discrepancy related to a stock declaration as on 1-4-2003, and no independent evidence supported removal outside the records. The demand and penalty were therefore unsustainable.

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Issues: Whether the demand and penalty could be sustained on the allegation of clandestine removal based only on the difference between the finished goods declared and the quantity entered in the RG-1 register.

Analysis: The allegation rested on the appellant's inability to explain the discrepancy in quantities. The record showed that the declaration made on 26-5-2003 related to stock as on 1-4-2003, and the department did not establish by independent evidence any movement of goods, receipt of sale consideration, inculpatory statement, or other corroborative material. A charge of clandestine removal cannot be sustained on assumptions alone, and the burden to prove such allegation lies on the department by concrete evidence.

Conclusion: The allegation of clandestine removal was not proved, and the demand with penalty was unsustainable in favour of the assessee.

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