Clandestine removal requires tangible corroboration; transporter records and suspicion alone cannot prove unaccounted clearance.

A charge of clandestine manufacture and removal of gutkha cannot be sustained on transporter records, internal memos, cash recovery, or third-party statements alone when there is no corroboration from unaccounted raw material, excess production, stock discrepancies, excess electricity use, or proof of receipt of sale proceeds. The Tribunal found that the Revenue failed to establish a direct link between the assessee and any unaccounted production or clearance, and that statements of transporters, dealers, and agents did not show duty-free removal. Accordingly, the allegation of clandestine removal was not proved and the Revenue's appeal failed.

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Issues: Whether the alleged clandestine removal of gutkha by the assessee stood proved on the basis of transporter records, statements, cash recovery, and third-party documents without corroborative evidence of unaccounted raw material, excess production, or receipt of sale proceeds.

Analysis: The demand was founded mainly on entries in the transporters' inward registers, repeated use of lorry receipts, internal memos, cash found with intermediaries, and statements of transporters and dealers. The adjudicating authority and the Tribunal found that these materials did not establish a direct link with clandestine manufacture and removal by the assessee. The investigation had not brought on record evidence of unaccounted procurement of raw materials, excess electricity consumption, shortages or discrepancies in stock, or receipt of sale proceeds by the assessee. The statements of consignment agents and dealers indicated purchases only under invoices and did not prove direct receipt of goods without duty payment. The Tribunal held that transporter records, by themselves, were insufficient to discharge the Revenue's burden in a serious allegation of clandestine removal, which must be supported by tangible and concrete corroboration.

Conclusion: The allegation of clandestine removal was not proved, and the Revenue's appeal failed.

Ratio Decidendi: A charge of clandestine manufacture and removal cannot be sustained on transporter records or suspicion alone and must be proved by positive, tangible, and corroborative evidence linking the assessee to unaccounted production and clearance.

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