Clandestine removal requires proof of intent and readiness for illicit clearance, not mere unaccounted stock in the factory.

Unaccounted goods found in factory premises do not, by themselves, establish clandestine removal. The record must show reliable evidence of intent to evade duty and actual readiness for illicit clearance; here, the statements at search did not admit planned removal, and the assessee's explanation that further operations and testing were needed was supported by the material and a technical certificate. On those facts, mere stock discrepancy was insufficient to sustain duty demand, confiscation, redemption fine or penalty, and the allegation of clandestine removal failed.

---

---

Issues: Whether the unaccounted copper goods found in the factory could be treated as finished goods intended for clandestine removal so as to justify duty demand, confiscation, redemption fine and penalty.

Analysis: The goods were found in the factory during stock verification, but the record did not establish any intention to clear them clandestinely. The statements recorded at the time of search did not contain any admission of planned illicit removal. The assessee's explanation that the goods required further operations and testing before reaching the finished stage was supported by the material on record and by the cited technical certificate. On the facts, mere unaccounted presence of goods in the factory was held insufficient to infer clandestine clearance, especially where the goods had not been shown to be fully marketable and ready for dispatch in the sense required by the case law relied upon.

Conclusion: The allegation of clandestine removal was not proved. The duty-related findings could not be sustained and the confiscation, redemption fine and penalty were set aside in favour of the assessee.

Ratio Decidendi: Unaccounted goods found in factory premises do not, by themselves, establish clandestine removal unless there is reliable evidence of intention to evade duty and actual readiness for illicit clearance.

---