Clandestine removal demands corroborative evidence; inconsistent statements and toll receipts alone cannot sustain demand, confiscation, or penalties.

A charge of clandestine removal under central excise law must rest on independent, corroborative evidence, not on inconsistent statements or suspicion alone. Toll receipts, brand markings, and related circumstances were treated as insufficient without supporting material such as parallel records, stock shortages, unaccounted raw material, or proof of clandestine manufacture and removal. Where the foundational allegation fails, the demand cannot stand, and consequential confiscation, redemption fine, and penalties also fall away because they depend on proof of the main contravention.

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Issues: (i) Whether the alleged clandestine removal of MS bars from the factory was proved on the basis of the drivers' statements, toll receipts, brand markings, and other surrounding circumstances; (ii) Whether confiscation of the seized goods, and penalty on the noticees, could be sustained when the demand itself was not established.

Issue (i): Whether the alleged clandestine removal of MS bars from the factory was proved on the basis of the drivers' statements, toll receipts, brand markings, and other surrounding circumstances.

Analysis: The adverse material relied upon by the Department consisted mainly of contradictory statements of the drivers and related persons, together with toll receipts and the fact that the seized goods bore the JMD brand. The prior statements were found mutually inconsistent, and the record did not contain independent documentary or circumstantial corroboration such as parallel records, shortage of stock, unaccounted raw material, or proof of clandestine manufacture and removal. The statement of the trader supported lawful movement under invoices, and toll receipts by themselves were held insufficient to establish removal from a particular factory. The finding on clandestine removal therefore required more than suspicion or inference.

Conclusion: The allegation of clandestine removal was not proved and the demand could not be sustained.

Issue (ii): Whether confiscation of the seized goods, and penalty on the noticees, could be sustained when the demand itself was not established.

Analysis: Once the charge of clandestine removal failed, the foundation for confiscation, redemption fine, and penalties also disappeared. In the absence of a proved duty evasion or established contravention of the Central Excise law, invocation of penal provisions under Section 11AC and the confiscation provisions could not survive. The Tribunal treated the consequential penalties and confiscation as dependent upon proof of the main allegation.

Conclusion: Confiscation and penalty were not sustainable.

Final Conclusion: The appellate order in favour of the assessees was sustained, and the Revenue's challenge failed because the alleged clandestine removal was not proved and the consequential confiscation and penalties could not stand.

Ratio Decidendi: A charge of clandestine removal under central excise law must be supported by independent and corroborative evidence, and where the foundational allegation fails, consequential confiscation and penalty cannot be imposed.

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