Natural justice and proof of clandestine removal: writ relief was available, and electricity data alone could not sustain the demand.

Writ jurisdiction was held available despite an appellate remedy where the adjudicating authority failed to supply relied-upon documents and denied a meaningful opportunity of hearing, violating natural justice. The Court also held that clandestine removal of M.S. ingots cannot be established on electricity-consumption data alone; such figures are only corroborative and must be supported by concrete evidence of raw material, production, packing, labour, stock discrepancy, transport, and sale proceeds. Because the essential materials were missing and the defence was not properly heard, the adjudication was quashed and the matter remanded for fresh decision.

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Issues: (i) Whether the writ petition was maintainable despite the availability of an appellate remedy when the adjudication was alleged to have been made in violation of natural justice. (ii) Whether the order-in-original alleging clandestine removal of M.S. ingots could be sustained on the basis of electricity-consumption data and other materials, and whether remand was warranted.

Issue (i): Whether the writ petition was maintainable despite the availability of an appellate remedy when the adjudication was alleged to have been made in violation of natural justice.

Analysis: The petitioners had repeatedly sought supply of documents referred to and relied upon in the show-cause notice, but two of the principal documents were not supplied before adjudication. The absence of those materials, coupled with the recording in the order-in-original that no reply had been filed, showed that the petitioners were not afforded an adequate opportunity of hearing. In such circumstances, the availability of an alternative remedy did not bar writ jurisdiction.

Conclusion: The writ petition was maintainable and the objection based on alternative remedy failed.

Issue (ii): Whether the order-in-original alleging clandestine removal of M.S. ingots could be sustained on the basis of electricity-consumption data and other materials, and whether remand was warranted.

Analysis: The adjudication rested substantially on electricity-consumption figures, Dr. N.K. Batra's report, and inferences about low wages and losses. The Court held that electricity consumption can only be a corroborative circumstance and cannot, by itself, establish clandestine manufacture or removal. Positive and concrete evidence was required, including proof regarding raw material, production, packing, labour, stock discrepancy, transport, and sale proceeds. Since the essential supporting evidence was absent and relevant relied-upon documents had not been supplied, the adjudication was vitiated. The Court also directed that, if electricity-consumption data is relied upon in future, an experiment at the assessee's own factory premises should be carried out before using such a report.

Conclusion: The order-in-original was unsustainable and was quashed, and the matter was remanded for fresh adjudication of the show-cause notice.

Final Conclusion: The challenge succeeded on the ground of violation of natural justice and lack of substantive evidence, resulting in quashing of the adjudication and a de novo decision on remand.

Ratio Decidendi: A demand alleging clandestine removal cannot be sustained on electricity-consumption estimates alone; where relied-upon documents are withheld and the assessee is denied a meaningful opportunity of hearing, the adjudication is vitiated and the matter must be decided afresh.

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