Clandestine removal demands need corroboration; commercial invoices and charts alone are insufficient without reliable proof of actual clearance.

Duty demand for alleged clandestine removal cannot rest merely on commercial invoices, transporter details, follow-up reports or chart entries unless actual removal is corroborated by reliable evidence. Where seized lorry receipts are absent, transporters and consignees do not support the allegation, and cross-examination of third-party witnesses is denied, the evidentiary basis for the demand is materially weakened. In such circumstances, deductions for exempted goods, traded goods, repeated entries and unsupported entries may be accepted, leaving only any residual duty liability supported by the record. A partner's penalty linked to the same alleged evasion may also fail where the principal demand and penalty are substantially reduced and the underlying basis is not independently sustained.

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Issues: (i) Whether the duty demand and penalty could be sustained on the basis of commercial invoices, transporter details, follow-up reports and chart entries without adequate corroboration of actual removal of goods. (ii) Whether penalty on the partner could survive when the principal demand and penalty were substantially modified.

Issue (i): Whether the duty demand and penalty could be sustained on the basis of commercial invoices, transporter details, follow-up reports and chart entries without adequate corroboration of actual removal of goods.

Analysis: The demand was founded mainly on commercial invoices and related entries said to be supported by lorry receipt details, payment particulars and follow-up reports. The record did not establish actual clearance of goods by independent evidence. Blank columns in the assessee's charts, absence of seized lorry receipts, lack of corroboration from transporters and consignees, and denial of cross-examination of third-party witnesses weakened the Department's case. The alleged clearances based only on third-party letters, ledgers or rough charts were not treated as sufficient proof of clandestine removal. The claimed deductions relating to exempted goods, traded goods, repeated entries and entries unsupported by invoices or delivery evidence were therefore accepted in substance, and the demand was confined only to the residual amount after exemption benefits and admitted payments were given effect.

Conclusion: The larger part of the duty demand and the corresponding penalty was not sustainable; only a limited duty liability remained recoverable, and the assessee succeeded substantially on this issue.

Issue (ii): Whether penalty on the partner could survive when the principal demand and penalty were substantially modified.

Analysis: The partner's penalty was linked to the same alleged evasion. Once the principal assessee's liability was substantially reduced and the demand was not sustained on the major allegations, the basis for a separate penalty on the partner did not remain convincing. The appellate authority's view setting aside the partner's penalty was accepted.

Conclusion: Penalty on the partner was not sustainable and the Revenue's challenge on that count failed.

Final Conclusion: The assessee's appeal succeeded in part with substantial relief on the duty and penalty issues, while the Revenue's appeals were dismissed.

Ratio Decidendi: A demand of duty for alleged clandestine removal cannot be sustained merely on commercial invoices, third-party records or charts unless supported by reliable corroborative evidence of removal, receipt or payment, and denial of cross-examination in such a case materially weakens the evidentiary basis of the demand.

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