Clandestine removal demands upheld only for admitted shortage and seized fabrics; uncorroborated private-record demands were set aside.

Duty demands based on admitted stock shortage and seized cotton fabrics were sustained because the shortage, seizure, related statements, and prior payment of duty provided sufficient circumstantial evidence of clandestine manufacture and removal. The remaining demands based on private records, alleged manufacture of man-made fabrics, and denial of Notification No. 253/82 were set aside because there was no independent corroboration such as stock, seizure, raw material movement, or verified recipient evidence, and the claim to the notification benefit was not rebutted on reliable material. Liability therefore remained confined to the shortage and seized cotton fabrics, with the balance demands and consequential penalties interfered with accordingly.

---

---

Issues: (i) Whether the duty demands relating to the stock shortage and the seized cotton fabrics were sustainable on the evidence recorded; (ii) Whether the remaining demands based on private records, alleged manufacture of man-made fabrics, and denial of the benefit of Notification No. 253/82 were sustainable.

Issue (i): Whether the duty demands relating to the stock shortage and the seized cotton fabrics were sustainable on the evidence recorded.

Analysis: The shortage found during stock verification and the seized quantity of cotton fabrics in the second unit were admitted at the initial stage, and duty on the shortage was also paid. The statements of persons associated with the manufacturing activity, together with the physical shortage and seizure, furnished sufficient circumstantial material to support the finding of clandestine manufacture and removal for these two items.

Conclusion: The duty demands relating to the shortage and seized cotton fabrics were upheld against the assessee.

Issue (ii): Whether the remaining demands based on private records, alleged manufacture of man-made fabrics, and denial of the benefit of Notification No. 253/82 were sustainable.

Analysis: The record did not show stock, seizure, raw material movement, or other independent corroboration for the alleged manufacture of man-made fabrics. The remaining demands were founded mainly on private records, notebooks, and statements, without verification from recipients or other supporting investigation. In the absence of such corroboration, the findings could not be sustained merely on suspicion or presumptions. The claim to the benefit of Notification No. 253/82 was also not dislodged on reliable evidence.

Conclusion: The remaining demands were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded in part, with the confirmed liability confined to the shortage and seized cotton fabrics, while the balance demands and consequential penalties were interfered with to the extent indicated.

---