Clandestine removal evidence may sustain duty demand, but inconsistent findings can justify remand for fresh adjudication.

Admissions, recovered loose papers, log sheets and a corroborating statement of the General Manager were treated as sufficient evidence to sustain duty on the admitted shortage of sponge iron and alleged clandestine removal, and the assessee produced no material to dislodge those findings. On the larger allegation of suppressed production and clandestine clearance, the adjudication order contained internally inconsistent observations on the same evidence, including notes that part of the demand could not be rejected outright while other entries were unsustainable. The confirmed demand on shortage was upheld, but the remaining demand was remanded for de novo adjudication.

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Issues: (i) Whether the demand confirmed against the assessee for shortage of stock and alleged clandestine removal of sponge iron was sustainable on the basis of admissions, loose papers, log sheets and other corroborative material; (ii) Whether the larger demand relating to alleged suppressed production and clandestine clearance was liable to be confirmed or required remand because of inconsistent findings in the adjudication order.

Issue (i): Whether the demand confirmed against the assessee for shortage of stock and alleged clandestine removal of sponge iron was sustainable on the basis of admissions, loose papers, log sheets and other corroborative material.

Analysis: The record showed an admitted shortage of stock and supporting incriminating documents recovered from the factory. The statement of the General Manager, recorded during investigation, corroborated the physical verification results. The assessee did not produce material to dislodge these findings. The Tribunal also held that the voluntary statement and surrounding documents had evidentiary value for establishing clandestine removal.

Conclusion: The confirmation of duty on this count was upheld against the assessee.

Issue (ii): Whether the larger demand relating to alleged suppressed production and clandestine clearance was liable to be confirmed or required remand because of inconsistent findings in the adjudication order.

Analysis: The adjudication order itself recorded supportive material, including loose papers and statements, but also contained contradictory observations that the contentions could not be rejected outright and that the demand proposal was not sustainable for part of the entries. Because the findings were internally inconsistent and the evidentiary appreciation was not uniform, the matter could not be finally sustained on the existing order.

Conclusion: The demand on this count was remanded for de novo adjudication.

Final Conclusion: The assessee's challenge failed on the confirmed demand for shortage and proved clandestine removal, while the Revenue succeeded in obtaining remand of the remaining disputed demand for fresh decision.

Ratio Decidendi: In clandestine removal cases, admissions and recovered corroborative records can sustain duty demand, but where the adjudication order is internally inconsistent on the evidentiary assessment, remand for de novo consideration is warranted.

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