Clandestine removal inferred from unexplained mismatch in laminate supplies, sustaining duty demand and penalties

A substantial mismatch between laminates shown as trading sales to Indian Railways and the quantities recorded in RG-1 supported an inference of clandestine manufacture and removal. The contracts required 3 mm laminates to undergo pre-delivery inspection, making the claimed trading purchases implausible, and inquiries showed the alleged suppliers dealt only in thinner laminates. As the appellants offered no satisfactory explanation despite repeated opportunities, the discrepancy was treated as unaccounted clearances under the guise of trading activity. The duty demand and penalties were therefore sustained.

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Issues: Whether the differential quantity of laminates shown as trading sales to Indian Railways was actually manufactured and cleared without accountal, justifying confirmation of duty and penalties.

Analysis: The appeals turned on the unexplained disparity between the quantity of laminates supplied to Indian Railways and the quantity reflected in the RG-1 records. The supply contracts required 3 mm laminates to undergo pre-delivery inspection, making the claim of purchase of such quantity from traders implausible. Inquiry from the alleged suppliers showed that they dealt only in thinner laminates, and the appellants offered no satisfactory explanation despite repeated opportunities of hearing. On this evidence, the discrepancy was treated as indicative of unaccounted manufacture and clearance under the guise of trading activity.

Conclusion: The finding of clandestine removal was upheld, and the duty demand and penalties were sustained against the appellants.

Final Conclusion: The appeals failed on merits because the evidence supported the conclusion that the disputed clearances were unaccounted and duty evasion was established.

Ratio Decidendi: Where a manufacturer cannot satisfactorily explain a substantial mismatch between recorded production and actual supplies, and the asserted trading purchases are unsupported by the surrounding evidence, an inference of clandestine removal and duty liability may be drawn.

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