Clandestine removal claims based on electricity consumption data turned on whether circumstantial evidence could justify suppressed production estimates.

Allegations of clandestine manufacture and removal of M.S. ingots were examined on the basis of electricity-consumption data and surrounding circumstantial material. One view held that, without direct evidence of unaccounted raw material, actual clandestine clearance, or reliable experimental data fixing a universal consumption norm, duty demand could not be sustained merely from estimated production derived from electricity use. The contrary view held that the appellants' data, admissions, and the manufacturing process justified a conservative estimate of suppressed production and supported the demand and penalties. A difference of opinion was recorded, and the matter was directed to the President for reference to a Third Member.

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Issues: Whether duty demand and penalties for alleged clandestine manufacture and removal of M.S. ingots could be sustained on the basis of electricity-consumption data and related circumstantial material, and whether the appeals should be allowed or dismissed.

Analysis: One view held that, in the absence of direct evidence of unaccounted raw material, actual clandestine clearance, or reliable experimental data fixing a universal consumption norm, demand could not rest merely on estimated production derived from electricity use; reliance was placed on the absence of a statutory norm under the earlier regime and on case law disapproving demands founded only on electricity consumption. The other view held that the self-assessment and returns were not truthful, that the manufacturing process of induction-furnace ingots made electricity a critical input, that the appellants' own data and admissions, together with surrounding circumstances, supported an estimate of suppressed production, and that the electricity-based computation adopted was conservative.

Outcome: Difference of opinion recorded. The matter was directed to be placed before the President for reference to a Third Member.

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