Clandestine removal can be proved by corroborative circumstantial evidence, and a calibrated penalty need not be enhanced without compelling grounds.

Clandestine removal of finished goods was treated as sustainable where corroborative circumstantial evidence supported the allegation, including a recovered chit, an un-retracted statement of the director, and unaccounted raw material. The absence of a plausible explanation for the entries and the cash-based nature of the transactions weighed against the assessee. On penalty, a reduction to about 25% of the duty amount was found adequate, and no basis was seen to enhance it. The demand and reduced penalties were therefore maintained, with both appeals rejected.

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Issues: Whether the demand of central excise duty and penalty on account of alleged clandestine removal was sustainable, and whether the Revenue was entitled to enhancement of penalty.

Analysis: The recovered chit, the un-retracted statement of the director, and the discovery of unaccounted raw material were treated as corroborative evidence of clandestine clearance of finished goods. The absence of a plausible explanation for the entries in the chit and the cash-based nature of the transactions weighed against the assessee. The Tribunal further held that the penalty, having been reduced to about 25% of the duty amount, did not warrant interference.

Conclusion: The demand of duty and the reduced penalties were upheld, and both the assessee's appeal and the Revenue's appeal were rejected.

Final Conclusion: The adjudication on clandestine removal was sustained on the basis of circumstantial and corroborative evidence, and the penalty as reduced by the appellate authority remained undisturbed.

Ratio Decidendi: Clandestine removal can be sustained on the basis of corroborative circumstantial evidence, including an incriminating record, an un-retracted admission, and unexplained unaccounted stock, and a reasonably calibrated penalty need not be enhanced in the absence of compelling grounds.

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