Clandestine removal demands require corroborative evidence, and pre-takeover duty cannot be imposed on a distinct successor company.

A charge of clandestine removal must be supported by cogent, corroborative evidence; uncorroborated employee statements, delayed transport-owner statements and inconsistent records were insufficient, so the duty demand, interest and penalties were unsustainable. Liability for a period before the successor company came into existence could not be fastened on that company merely because a common principal was involved, and absent proof of transfer or assumption of liabilities, the pre-takeover demand also failed. The appeal therefore succeeded in full, and the Revenue's demands were set aside.

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Issues: (i) Whether duty demand based on alleged clearance of plastic sheets/films in the guise of lay flat tubing, along with consequential penalty and interest, was sustainable on the evidence relied upon by the Revenue; (ii) Whether duty liability for the period prior to takeover could be fastened on the successor company.

Issue (i): Whether duty demand based on alleged clearance of plastic sheets/films in the guise of lay flat tubing, along with consequential penalty and interest, was sustainable on the evidence relied upon by the Revenue.

Analysis: The Revenue's case rested principally on statements of employees, transport owners and selected documentary records. The evidence was found insufficient to conclusively establish clandestine removal. The statements of a production supervisor with only a short period of employment, an excise assistant who disclaimed knowledge of the nature of clearances, and a general manager whose version was internally inconsistent and later retracted, were not treated as dependable without independent corroboration. The transport owners' statements, recorded long after the relevant period and without cross-examination, were also found inadequate to prove the charge for all disputed clearances. The absence of proof of excess recovery, the permissibility of cash-and-carry sales, the absence of any legal requirement to mention complete buyer addresses in the invoices, and the lack of tangible corroborative evidence weakened the Revenue's case. The charge of clandestine removal therefore was not established to the requisite standard.

Conclusion: The demand, interest and penalties founded on the alleged clandestine clearance of sheets/films in the guise of lay flat tubing were not sustainable and were set aside.

Issue (ii): Whether duty liability for the period prior to takeover could be fastened on the successor company.

Analysis: The period of dispute substantially preceded the date on which the successor company came into existence and took over the business. A company is a distinct legal entity, and liability for clearances made before its existence cannot be imposed on it merely because one of the principals was common to both entities. In the absence of proof of transfer of liabilities or a legal basis to fasten pre-takeover duty on the successor, the demand for the earlier period could not stand against the appellant company.

Conclusion: Duty liability for the pre-takeover period could not be fastened on the successor company.

Final Conclusion: The appeal succeeded in full, with the duty demands and consequential penalties unsustained on the evidence and legal basis relied upon by the Revenue.

Ratio Decidendi: A charge of clandestine removal must be proved by cogent and corroborative evidence, and liability for a prior period cannot be imposed on a distinct successor entity absent a clear legal basis and proof of assumption of liabilities.

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