Clandestine removal must be proved by positive evidence; a repair-movement procedural lapse cannot, by itself, sustain duty demand.

CESTAT, New Delhi held that a demand based only on a gate register and an alleged shortage of inputs could not stand without positive evidence of clandestine removal. Goods shown in the gate register were explained as having been sent for repairs, and detailed particulars were furnished in reply to the show cause notice; on that record, the authorities found no material to prove illicit removal. The tribunal also held that non-compliance with the prescribed procedure for movement of repair goods, by itself, did not establish clandestine removal or justify penalty. The duty demand and penalty were therefore unsustainable, and the Revenue's challenge failed.

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Issues: Whether the demand of duty could be sustained on the basis of the gate register and alleged shortage of inputs in the absence of positive evidence of clandestine removal, and whether non-compliance with the procedure for movement of goods for repairing purposes justified confirmation of demand and penalty.

Analysis: The materials recorded by the authorities showed that the goods reflected in the gate register were explained as having been sent for repairing work, and detailed particulars for each item were furnished in the reply to the show cause notice. The adjudicating authority and the appellate authority found no evidence to establish clandestine removal after examining the explanation and the statements on record. Mere reliance on the gate register, without corroborative evidence, was insufficient to uphold the charge. A procedural lapse in following the prescribed movement procedure for repair goods did not by itself amount to clandestine removal.

Conclusion: The demand of duty and the penalty could not be sustained, and the Revenue's challenge failed.

Final Conclusion: The order dropping the major demand was upheld, and the Revenue's appeal was rejected.

Ratio Decidendi: A charge of clandestine removal must be supported by positive evidence, and a mere procedural irregularity in the movement of goods for repair cannot substitute for proof of illicit removal.

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