Clandestine removal demands require tangible corroboration; statements and private records alone cannot sustain duty or penalties.

In clandestine removal cases, central excise duty demands must be supported by clear, corroborative and tangible evidence of manufacture, clearance and related circumstances; statements, private records and limited buyer confirmations alone are insufficient. The record here did not establish excess production, excess raw material procurement, abnormal electricity use, transport linkage or flow-back of consideration, and the department also failed to verify the manufacturing end effectively. On that evidentiary basis, the surviving duty demands and consequential penalties were set aside, and the assessee's and connected noticees' appeals were allowed.

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Issues: Whether the demands of central excise duty and the consequential penalties could be sustained on the basis of statements, private records and limited buyer confirmations in a case alleging clandestine removal and clearance of cotton yarn under the guise of hank yarn.

Analysis: The demand rested mainly on statements of a few persons, private diaries and records recovered from a broker, and the alleged non-existence of one trading concern. The record also showed that the buyer traded goods from several manufacturers, that the department had not carried out effective verification at the manufacturing end, and that the evidence did not establish actual excess manufacture, excess procurement of raw material, electricity consumption, transport linkage, or flow-back of consideration. The Court further noted that the adjudicating authority itself had dropped some demands on the same evidentiary foundation for want of conclusive proof. In matters of clandestine removal, the revenue must establish the charge with tangible and cogent evidence, and not on mere presumptions or on the statements of a small number of buyers.

Conclusion: The impugned demands that survived before the Tribunal were held unsustainable and were set aside. The penalties imposed on the assessee and the connected noticees were also set aside.

Final Conclusion: The appeals of the assessee and the connected noticees were allowed, while the departmental appeal was dismissed, with the result that the duty demands and penalties did not survive.

Ratio Decidendi: A charge of clandestine removal cannot be upheld unless the revenue proves it with clear, corroborative and tangible evidence of manufacture, clearance and related circumstances; statements and private records by themselves are insufficient.

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