Clandestine removal demands require positive evidence; theoretical calculations and presumptions alone cannot sustain excise duty liability.

A demand of central excise duty based on alleged clandestine removal failed because it rested only on theoretical calculations drawn from input consumption and production norms. The assessee supported its defence with a chart, contemporaneous declaration, and affidavits showing that the disputed input was used in manufacturing goods under Chapters 39 and 48, while the Revenue produced no positive evidence of excess raw material use, excess production, or unaccounted clearance. As clandestine removal is a serious allegation requiring reliable, tangible corroboration, the finding was rejected and the duty demand held unsustainable.

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Issues: Whether the demand of duty based on alleged clandestine removal could be sustained when it was founded only on theoretical calculations and without positive corroborative evidence.

Analysis: The demand was worked out on assumptions drawn from input consumption and production norms, while the assessee produced a chart, contemporaneous declaration, and affidavits showing that the disputed input was used for manufacture of goods falling under both Chapters 39 and 48. The declaration under Rule 57G of the Central Excise Rules, 1944 also supported the assessee's stand. The Revenue did not produce any positive and tangible evidence of clandestine manufacture or clearance, such as excess raw material consumption, excess production, or actual unaccounted removals. A charge of clandestine removal, being serious in nature, must be proved by reliable evidence and cannot rest on inference alone.

Conclusion: The duty demand was not sustainable and the finding of clandestine removal was rejected in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: A demand for clandestine removal cannot be upheld on mere theoretical calculations or presumptions and must be supported by positive, tangible, and corroborative evidence proving clandestine manufacture and clearance.

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