Clandestine removal demands cogent corroboration; uncrossed statements and third-party documents cannot by themselves sustain liability.

Uncrossed witness statements cannot be treated as reliable substantive evidence where cross-examination is sought and denied without reason, and Section 9D compliance is required before such statements can be relied on. Documents recovered from labourers or third-party premises, without independent corroboration from transporters, buyers, consignees, or other tangible evidence, are insufficient to prove clandestine manufacture and removal of excisable goods; mere suspicion, record tallies, or cheque payments during investigation do not establish the charge. On that evidentiary basis, duty demand and penalties cannot be sustained.

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Issues: (i) Whether the demand and penalties could be sustained when the witnesses whose statements were relied upon were not offered for cross-examination and the requirements of Section 9D of the Central Excise Act, 1944 were not followed. (ii) Whether clandestine manufacture and removal of excisable goods was proved on the basis of documents recovered from labourers and third-party premises without independent corroboration.

Issue (i): Whether the demand and penalties could be sustained when the witnesses whose statements were relied upon were not offered for cross-examination and the requirements of Section 9D of the Central Excise Act, 1944 were not followed.

Analysis: The proceedings rested substantially on witness statements and recovered documents. Cross-examination of the relevant persons was sought but denied without reasons. Where statements are relied upon as substantive evidence, denial of cross-examination results in denial of fair hearing. Section 9D further requires compliance before a statement can be treated as relevant evidence, and no exception to that requirement was shown to apply.

Conclusion: The reliance on such statements was not sustainable, and the evidentiary foundation based on uncrossed statements could not be accepted.

Issue (ii): Whether clandestine manufacture and removal of excisable goods was proved on the basis of documents recovered from labourers and third-party premises without independent corroboration.

Analysis: The documents were recovered from labourers or rooms of third parties, not from the appellant's own premises. Only one labourer's statement was recorded, and that person was not shown to be working during the relevant period. No independent enquiry was made from transporters, buyers, consignees, or other corroborating sources. Mere tallying of some entries with the appellant's records, or the giving of cheques during investigation, could at best raise suspicion but could not prove clandestine manufacture and removal, which requires cogent and tangible evidence.

Conclusion: Clandestine removal was not proved.

Final Conclusion: The evidentiary basis for the duty demand and penalties failed, and the adjudication could not be sustained.

Ratio Decidendi: A charge of clandestine manufacture and removal cannot be sustained on uncrossed witness statements or on documents recovered from third-party premises unless supported by independent, corroborative, and tangible evidence.

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