Clandestine manufacture requires corroboration; a seized diary and retracted statements were insufficient to sustain duty, penalty, or confiscation.

Clandestine manufacture and removal of man-made fabrics could not be established on the basis of a seized diary and statements alone. The diary was not proved to belong to the appellant, its contents were not admitted, and the scribe was unidentified; the only trader statement initially relied upon was later retracted. The other named traders were not examined, cross-examination of the relied-upon witness was not given, and no corroborative evidence showed excess electricity use, consumption of dyes or chemicals, transport of goods, seizure of clandestinely cleared goods, or any other link to unaccounted production and removal. In the absence of such proof, the duty demand, interest, penalty, and confiscation were unsustainable.

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Issues: Whether clandestine manufacture and removal of man-made fabrics was proved on the basis of a seized diary and statements, and whether the demand of duty, interest, penalty, and confiscation could be sustained.

Analysis: The demand was founded mainly on entries in a diary recovered from the factory premises. The diary was not admitted to belong to the appellant, its contents were not admitted, and the scribe was not identified. Only one trader's statement was initially relied upon, but that statement was later retracted. The remaining traders whose names appeared in the diary were not examined, and no corroborative evidence was brought on record regarding excess electricity consumption, use of dyes or chemicals, transport of goods, seizure of clandestinely removed goods, or any other link connecting the diary entries with actual unaccounted manufacture and clearance. Cross-examination of the relied-upon third party witness was also not provided. In such circumstances, private records and untested statements, without supporting evidence, were held insufficient to establish clandestine activity.

Conclusion: The allegation of clandestine manufacture and removal was not proved, and the duty demand, penalty, and confiscation were unsustainable.

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