Clandestine manufacture demand set aside in part where return figures and installed capacity showed the revenue's working was unrealistic.

A demand based on alleged clandestine manufacture and removal of Kraft media paper was found unsustainable on the Revenue's working, because the production and clearance figures were unrealistic when tested against the RT-12 returns and admitted installed capacity. The Tribunal held that the show cause notice rested on imaginary and illusive data and a misreading of the documents, so the demand confirmed on that basis could not stand as framed. The matter was remanded for limited recalculation of duty on the basis of clearances shown in the returns.

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Issues: Whether the demand founded on alleged clandestine manufacture and removal of Kraft media paper was sustainable, and whether the duty liability required recalculation on the basis of the clearances shown in the returns.

Analysis: The Tribunal compared the Revenue's working with the RT-12 return figures and the admitted installed capacity. It found that the production and clearance figures assumed by the Revenue were unrealistic and could not be accepted as a sound basis for sustaining the entire demand. The material on record showed that the impugned show cause notice proceeded on imaginary and illusive data and on a misreading of the documents. In that situation, the demand and the adjudication based on such working could not stand in the form in which they had been confirmed.

Conclusion: The demand based on alleged clandestine production and clearance was not upheld in its entirety, and the matter was remanded for limited recalculation of duty on the basis of clearances as per returns.

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