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Issues: (i) Whether the duty demand and penalty were sustainable on the basis of computer-generated dispatch charts and related records alleging clandestine clearances without payment of duty; (ii) whether confiscation of the excess stock of 5,000 HDPE/PP bags and the redemption fine were sustainable.
Issue (i): Whether the duty demand and penalty were sustainable on the basis of computer-generated dispatch charts and related records alleging clandestine clearances without payment of duty.
Analysis: The demand was founded on dispatch charts and a sales summary recovered from the factory. Entries without invoice numbers were alleged to show removals without duty, and discrepancies in buyer names and quantities were treated as evidence of parallel invoices. The explanation that some orders had been cancelled, some goods were covered by other invoices, and some entries reflected the name of the procuring intermediary rather than the ultimate buyer was found acceptable. The absence of transport evidence, customer confirmation, or other corroboration meant that clandestine removal could not be presumed merely from the internal charts. On the disputed entries, the explanations offered by the appellant were accepted, and the basis for the duty demand failed.
Conclusion: The duty demand founded on the disputed chart entries was not sustainable, and the connected penalty on the appellant company could not survive.
Issue (ii): Whether confiscation of the excess stock of 5,000 HDPE/PP bags and the redemption fine were sustainable.
Analysis: The stock verification showed 5,000 bags in excess of the balance recorded in the RG-I register. This non-accountal was established independently of the disputed chart entries. However, the record did not show that the excess stock was held with intent to clandestinely remove goods, so the basis for penalty on this count was not made out. Confiscation and redemption fine, however, were justified on the proven non-accountal.
Conclusion: Confiscation of the excess 5,000 bags and the redemption fine were upheld, while penalty on this count was not warranted.
Final Conclusion: The appeal succeeded on the duty demand and penalty arising from the alleged clandestine clearances, but failed in respect of the confiscation and redemption fine relating to the unaccounted stock.
Ratio Decidendi: Clandestine removal cannot be sustained merely on internal dispatch records without corroborative evidence, but unaccounted stock found on physical verification may validly be confiscated even if penalty is not justified absent proof of intent.
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