Clandestine removal requires corroborative evidence; photocopies and unverified records were insufficient to sustain duty and penalties.

Demand for central excise duty based on photocopies of invoices, loose sheets, gate pass entries, internal production slips and statements was found unsustainable where the department failed to produce corroborative evidence of clandestine removal. The photocopies lacked evidentiary value because the originals were not produced or satisfactorily accounted for, and the alleged records were not supported by author identification, buyer-side verification, transport evidence, or other independent corroboration. Affidavits from buyers and transporters supported the assessee, while retracted statements did not conclusively prove evasion. In the absence of evidence of raw-material excess, unaccounted cash, power consumption, or production capacity, the charge of clandestine removal was not established and penalties could not be sustained.

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Issues: Whether the demand of central excise duty and penalties could be sustained on the basis of photocopies of invoices, loose sheets, gate pass entries, internal production slips, and statements, in the absence of corroborative evidence of clandestine removal.

Analysis: The material relied upon by the department was found insufficient to prove clandestine clearance. Photocopies of invoices were treated as lacking evidentiary value because the originals were not produced and their non-production was not satisfactorily explained, attracting the rule against admission of secondary evidence. The alleged loose sheets, gate pass reversals, and production slips were not supported by identification of the authors, verification at the buyers' end, transport evidence, or other independent corroboration. The affidavits of buyers and transporters supported the assessee's case, while the retracted statements of departmental witnesses and the dispatch clerk were held not to conclusively establish evasion. The record also lacked evidence of raw-material procurement, excess power consumption, unaccounted cash, or production capacity sufficient to sustain the allegation of clandestine manufacture and removal.

Conclusion: The charge of clandestine removal was not proved, and the duty demand and penalties could not be sustained.

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