Clandestine removal demands need positive evidence; loose slips alone were held insufficient without corroboration.

A demand for duty based on alleged clandestine removal of scrap and finished goods could not be sustained where the charge rested mainly on loose slips and papers recovered during search. The Tribunal emphasised that clandestine removal must be proved by positive and cogent evidence, and that loose papers by themselves are insufficient without independent corroboration. It also noted that the department's own report suggested the alleged scrap generation was extraordinarily high and commercially impracticable for an electrical switch manufacturer. In the absence of reliable supporting evidence, the demand and penalties were rejected in favour of the assessee.

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Issues: Whether the demand of duty for alleged clandestine removal of scrap and finished goods could be sustained on the basis of loose slips and papers recovered during search, in the absence of corroborative evidence.

Analysis: The allegation of clandestine removal was founded essentially on loose papers recovered during search. The Tribunal noted that such a serious charge must be proved by positive and cogent evidence. The departmental report itself indicated that, if the alleged scrap figures were accepted, the scrap generation would be extraordinarily high and commercially impracticable for a unit manufacturing electrical switches. The record did not contain independent evidence sufficient to support the alleged removals, and the loose slips by themselves were not adequate to establish the charge.

Conclusion: The demand and penalties could not be sustained, and the issue was decided in favour of the assessee.

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