Clandestine removal proved by private records and un-retracted admission; extended limitation applied because suppression emerged only on investigation.

Private notebooks, loose papers, and an un-retracted inculpatory statement were treated as sufficient evidence to support clandestine removal, because the entries corroborated unaccounted receipts of raw materials and clearances of finished goods with and without duty payment. The absence of the supervisor's statement did not displace the evidentiary value of the director's admission. Suppression came to light only through departmental investigation and the material was outside statutory records, so the extended limitation period was available and the demand was held to be within time. The duty demand and consequential penalty were sustained.

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Issues: (i) Whether the demand for central excise duty based on private notebooks, loose papers, and the director's statement established clandestine removal of goods. (ii) Whether the demand was barred by limitation.

Issue (i): Whether the demand for central excise duty based on private notebooks, loose papers, and the director's statement established clandestine removal of goods.

Analysis: The demand was founded on private records recovered from the factory and the director's inculpatory statement, which admitted that the records contained details of receipt of raw materials and clearances of finished goods with and without payment of duty. The statement was not retracted and was treated as admissible evidence. The entries in the private records were found to corroborate the allegation of unaccounted clearances, and the absence of the supervisor's statement did not displace the effect of the director's admission.

Conclusion: The finding of clandestine removal was upheld in favour of Revenue.

Issue (ii): Whether the demand was barred by limitation.

Analysis: The evasion came to light only through departmental investigation and the material relied upon was not part of the statutory records. The facts disclosed suppression of clearances from the department, which justified invocation of the extended period of limitation.

Conclusion: The demand was held to be within limitation and this issue was decided in favour of Revenue.

Final Conclusion: The impugned order setting aside the duty demand was reversed and the Revenue's appeal succeeded, sustaining the duty demand and consequential penalty.

Ratio Decidendi: Private records corroborated by an un-retracted inculpatory admission can constitute sufficient evidence of clandestine removal, and suppression discovered only through investigation warrants invocation of the extended limitation period.

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