Clandestine removal of excisable goods requires corroborated evidence; retracted statements and weak document links could not sustain the demand.

Clandestine removal of Jarda was not proved because the Department failed to produce positive, cogent and corroborated evidence linking the alleged raw tobacco supplies, transport records and cash conversions to the assessee's factory. The Tribunal noted that key statements had been retracted or were inconsistent, and that goods challans, transport receipts and related documents did not reliably establish acknowledgement or actual receipt by the assessee. Without verified linkage between the alleged supplies, production and removals, the evidence remained insufficient. The duty demand, confiscation of goods and vehicle, interest and penalties were therefore set aside.

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Issues: Whether the demand of central excise duty, confiscation, interest and penalties could be sustained on the basis of intercepted goods, supplier and transporter statements, and documentary material alleged to show clandestine removal of Jarda.

Analysis: The Department had to establish clandestine manufacture and removal by positive, cogent and corroborated evidence. The Tribunal found that many of the statements relied upon had been retracted, several were inconsistent or improved versions, and the documentary materials such as transport receipts, goods challans and related records did not bear clear acknowledgements by the appellants or otherwise reliably link the alleged raw tobacco supplies to the appellants' factory. The evidence also did not satisfactorily correlate the alleged cash conversions into demand drafts with the quantity and value of raw tobacco said to have been received, nor did the investigation verify supplies to similarly named traders or other manufacturers. In these circumstances, reliance on uncorroborated and retracted statements, without reliable linkage evidence, was held insufficient to prove clandestine removal.

Conclusion: The demand of duty, confiscation of goods and vehicle, interest and penalties were not sustainable and were set aside in favour of the assessee.

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