Clandestine removal requires independent evidence and excisable-stage goods; internal records alone did not sustain duty demand.

Clandestine removal of S.O. Dyes was alleged because goods were entered in the Blender Register but not in RG-1. The Tribunal's analysis treated RG-1 liability as arising only when the goods had reached the stage of fully finished, standardised and marketable excisable goods, and accepted that batches awaiting customer approval or standardisation in loose bags did not automatically require RG-1 entry. It also noted that the Technical Director's statements were not inculpatory and that no independent evidence supported the allegation beyond internal records. On that reasoning, the duty demand could not survive and the penalties also fell once the demand was rejected on merits.

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Issues: Whether the demand of duty and the penalties were sustainable on the allegation that S.O. Dyes recorded in the Blender Register but not in the RG-1 register had been clandestinely cleared.

Analysis: The Tribunal held that the goods reflected in the Blender Register were not shown to have reached the stage of fully finished, standardised and marketable goods requiring entry in RG-1. It relied on the earlier Tribunal view that, in the context of S.O. Dyes, batches awaiting customer approval or standardisation and kept in loose bags could not automatically be treated as liable for RG-1 accountal. The statements of the Technical Director were found not to be inculpatory, and there was no independent evidence of clandestine removal apart from assumptions drawn from the internal records. The earlier appellate distinction drawn by the Revenue was rejected as misconceived.

Conclusion: The allegation of clandestine removal was not proved and the duty demand could not survive; the penalties also failed once the demand on merits was set aside.

Ratio Decidendi: Clandestine removal cannot be sustained on the basis of internal production records alone unless the goods are shown to have reached the excisable stage and the allegation is supported by independent evidence.

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