Clandestine removal allegations fail without corroborative evidence of raw material receipt, manufacture, clearance and sale.

Allegations of clandestine removal based on retracted statements, estimated scrap receipts, assumed production from furnace capacity and electricity consumption, and alleged dispatch slips were held unsustainable without independent corroborative evidence of unaccounted raw material, manufacture, transport, buyers, cash consideration or actual clearance of finished goods. The claimed excess stock was also not reliably proved by physical verification or corroborated investigation, and the scrap was not shown to have been received or unloaded in the factory through independent evidence. As the substantive duty demand failed, the associated confiscation and personal penalties also fell.

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Issues: (i) Whether the duty demand founded on alleged unaccounted receipt of scrap, estimated production of MS ingots, electricity consumption, furnace capacity and retracted statements could be sustained; (ii) whether confiscation of alleged excess stock and penalties on the noticees were liable to be upheld.

Issue (i): Whether the duty demand founded on alleged unaccounted receipt of scrap, estimated production of MS ingots, electricity consumption, furnace capacity and retracted statements could be sustained.

Analysis: The demand rested substantially on statements recorded during investigation, estimated scrap receipts, assumptions on production capacity and electricity consumption, and alleged dispatch slips. The statements were retracted and were not supported by independent corroboration. No reliable evidence of receipt of unaccounted raw material, transportation, buyers, cash consideration or actual clandestine clearance of finished goods was produced. The alleged excess production could not be inferred merely from electricity consumption or the theoretical capacity of the furnace.

Conclusion: The duty demand was not sustainable and was set aside.

Issue (ii): Whether confiscation of alleged excess stock and penalties on the noticees were liable to be upheld.

Analysis: The alleged excess finished goods and scrap were not proved by reliable physical verification or corroborative investigation. The excess finished stock was plausibly attributable to unentered production of the previous shift, and the scrap was not shown to have been received or unloaded in the factory through independent evidence. Once the substantive demand failed, the foundation for confiscation and personal penalties also disappeared.

Conclusion: The confiscation and penalties were not sustainable and were set aside.

Final Conclusion: The impugned order was set aside in full and all appeals were allowed with consequential reliefs.

Ratio Decidendi: Allegations of clandestine removal cannot be sustained on retracted statements, estimated production, electricity consumption or furnace-capacity assumptions unless supported by independent corroborative evidence of receipt of raw material, manufacture, removal and sale of the goods.

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