Clandestine removal requires corroborative evidence; stock shortage and a bare statement alone cannot sustain duty demand or penalty.

Shortage noticed during stock verification, coupled with a statement of the authorised signatory, was held insufficient to sustain demand of duty, interest and penalty in the absence of independent corroboration. The tribunal emphasised that clandestine manufacture and removal must be proved by concrete and tangible evidence; a mere admission is only one relevant piece of evidence and not conclusive proof. As no inventory or other material supported the alleged stock discrepancy, and there was no indication of raw-material stock variation, the demand was found unsustainable and the impugned orders were set aside with consequential relief.

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Issues: Whether the demand of duty, interest and penalty could be sustained on the basis of shortage detected during stock verification and the statement of the authorised signatory, in the absence of independent evidence of clandestine removal.

Analysis: The shortage was relied upon along with the statement admitting that the goods might have been cleared without invoices and without payment of duty. However, no inventory or other material was produced to show that the weighment was based on actual weighment rather than an average-weight method, and there was no variation in raw-material stock. The statement of the authorised representative, by itself, was held insufficient to conclusively establish clandestine removal. The law requires the Revenue to prove clandestine manufacture and removal by concrete and tangible evidence, and an admission is only an important piece of evidence, not conclusive proof.

Conclusion: The demand of duty, interest and penalty was not sustainable.

Final Conclusion: The appeals succeeded and the impugned orders were set aside, with consequential relief granted.

Ratio Decidendi: Clandestine removal must be established by concrete and tangible evidence, and a mere statement or admission, without corroborative material, is insufficient to sustain duty demand and penalty.

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