Clandestine manufacture proved by circumstantial evidence; duty demand, interest and penalties sustained for duty-free clearance of gutkha.

Clandestine manufacture and removal of gutkha/pan masala can be established through credible circumstantial evidence, including seized consignments, transport documents, account entries, money receipts, dispatch registers and recorded statements. The Tribunal noted that the Department need not prove evasion with mathematical precision; it is sufficient to show the charge on a preponderance of probability supported by reliable material. On that basis, the goods were found to be linked to the respondent's manufacturing activity and cleared without duty and invoices, so the duty demand, interest and penalties were sustained against the respondent and connected noticees.

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Issues: Whether the Revenue had established clandestine manufacture and removal of gutkha/pan masala so as to justify demand of duty and penalties.

Analysis: The liability was founded on interception of seized consignments, transport documents, crossing account statements, money receipts, dispatch registers, and statements recorded during investigation. The evidence showed that the consignments described as gutkha were linked to the respondent's manufacturing activity and that the goods were cleared without duty and without invoices. The Tribunal held that clandestine activity is ordinarily proved by circumstantial evidence and that the Department is not required to establish such evasion with mathematical precision, but only on a preponderance of probability supported by credible material.

Conclusion: The charge of clandestine manufacture and removal was proved and the demand of duty, interest, and penalties was sustained against the respondent and the connected noticees.

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