Clandestine Removal Demands Fail When Recast Register and Computation Are Not Disclosed to the Assessee

Duty demands, confiscation and penalties based on alleged clandestine removal cannot be sustained where they rest on an investigation-generated recast register or production computation that is not furnished to the assessee. The computed basis may support such a case only if the opening stock, production tally and methodology are disclosed so the assessee can test its reliability. Here, non-supply of the recast register and underlying computation meant the evidentiary foundation could not be properly scrutinised, so the impugned order was not sustainable and the matter had to be decided afresh after disclosure of the computation.

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Issues: Whether the duty demands and related confiscation and penalties based on alleged clandestine removal, founded on a recast register or computation not furnished to the assessee, could be sustained.

Analysis: The demands rested on an investigation-generated computation of production and removals, but such a basis is meaningful only if the opening stock, production tally, and methodology adopted for the recast register are made available for scrutiny. A case of clandestine removal can be upheld on computed records where the computation is reasonable and testable, but the assessee must be afforded the material necessary to challenge its acceptability. Since the recast register and underlying computation were not made available, the evidentiary foundation of the adjudication could not be properly tested.

Conclusion: The impugned order could not be sustained and the matter was required to be decided afresh after furnishing the computation in the recast register to the assessee.

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