Clandestine removal requires corroboration; an unproved notebook and suspect statement were insufficient to sustain demand and penalties.

An allegation of clandestine manufacture and removal cannot be sustained on an uncorroborated private notebook and a suspicious statement alone. Here, the notebook was not proved by examining its author, no worker statements or buyer confirmation supported the charge, and stock tallies of inputs and finished goods matched the records. In the absence of corroborative evidence showing actual manufacture or clearance, the demand of duty and penalties failed. The Tribunal therefore set aside the impugned order in favour of the assessee.

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Issues: Whether the demand of duty and penalties for alleged clandestine manufacture and removal could be sustained on the basis of a rough note book and the director's statement, in the absence of corroborative evidence.

Analysis: The demand rested mainly on a rough note book said to have been written by the chief operator, but the person who authored it was not examined. The director's statement created suspicion, but it was not treated as conclusive proof of clandestine removal. No corroborative material was produced to show actual clandestine manufacture or clearance, no statements were recorded from workers engaged in production, no buyer statement supported the allegation, and the physical stock of inputs and finished goods tallied with the records. These facts weakened the Revenue's case and supported the appellant's explanation.

Conclusion: The allegation of clandestine removal was not proved and the demand and penalties were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the impugned order did not survive.

Ratio Decidendi: An allegation of clandestine manufacture and removal cannot be sustained merely on an uncorroborated private note book and a suspicious statement when the record lacks supporting evidence of actual removal, buyer confirmation, or stock discrepancy.

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