Clandestine excise clearance demands need tangible proof; duty survived only for parallel invoices, samples and weighment-slip removals.

Central excise duty demands for alleged clandestine manufacture and removal of tea cannot be sustained on comparative register entries, stock calculations, raw material consumption figures or cash-book inferences alone, because such arithmetical assumptions do not amount to tangible proof of actual manufacture and clearance. The larger demand was therefore set aside. Liability was, however, upheld for quantities covered by parallel invoices, sample clearances without proof of duty payment, and removals evidenced by weighment slips, since the explanations for identical invoice serial numbers, receipt of goods by a consignee, and the duty-paid character of those removals were unsatisfactory. Penalty was reduced accordingly.

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Issues: Whether the demand of central excise duty and penalty on alleged clandestine manufacture and removal of tea was sustainable in law, and if so, to what extent.

Analysis: The demand founded on comparative calculations drawn from registers, stock entries, manufacturing reports, raw material consumption, and cash-book entries was not accepted for the larger allegations of clandestine clearance, as such conclusions were not supported by tangible evidence of actual manufacture and removal. A demand cannot rest merely on arithmetical inferences, assumptions, or presumptions. However, the evidence regarding parallel invoices, the clearance of samples without supporting proof of duty payment, and removals evidenced by weighment slips was treated differently, since the assessee did not furnish a satisfactory explanation for identical invoice serial numbers, the admitted receipt of goods by one consignee, or the claimed duty-paid character of the samples and weighment-slip removals.

Conclusion: The bulk of the duty demand was set aside, but duty was sustained to the extent of the quantities covered by parallel invoices, weighment slips, and samples. The penalty was correspondingly reduced, and the appeal succeeded only in part.

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