Clandestine removal allegations fail where Revenue's calculations rest on retracted statements and unsupported assumptions about raw material uniformity.

Demand of duty, interest and penalty based on alleged clandestine removal of imported raw materials was not sustainable where the Revenue's calculation rested on retracted statements, contradictory witness versions, and an assumed uniform weight and thickness of sheets. The record showed variation in the thickness of the imported materials, and no independent evidence established either uniformity of the raw inputs or diversion of goods for unaccounted manufacture. In the absence of reliable corroboration, the calculation method adopted by the Revenue could not be upheld, and the assessee succeeded.

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Issues: Whether the demand of duty and penalty could be sustained on the basis of the calculation method and statements relied upon by the Revenue in the alleged clandestine removal of imported raw materials used for manufacture of metal containers.

Analysis: The dispute had earlier been remanded for reconsideration on the basis of the appellant's calculations. The adjudicating authority nevertheless relied substantially on the statements recorded during investigation and on an assumed uniform weight and thickness of imported sheets, despite the fact that the same witness had given contradictory versions and the statements had been retracted. The record also showed that the thickness of imported materials varied and that no independent evidence established uniformity of the raw materials or supported the allegation of clandestine diversion. In these circumstances, the calculation adopted by the Revenue could not be upheld.

Conclusion: The demand, interest, and penalty were not sustainable and the appeal was allowed in favour of the assessee.

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