Clandestine removal demands require full corroboration; loose papers, invoices and weighment slips alone cannot prove duty liability.

A charge of clandestine removal cannot be sustained on suspicion or isolated documents alone. Seized ledger entries and loose sheets were insufficient because they were third-party records, mixed personal and business entries, and were not linked to manufacture, removals, buyers, transport, or sale proceeds; the demand and penalties on that basis were set aside. Parallel invoices were also inadequate, as their origin was not proved through buyer-side recovery or independent enquiry, so that demand failed as well. Weighment slips likewise did not identify the goods or establish actual clearance, and without transport evidence or proof of consideration, they could not support the allegation. The appeals were allowed with consequential relief.

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Issues: (i) Whether the demand of central excise duty and penalties could be sustained on the basis of the seized ledger book and loose sheets without corroborative evidence; (ii) whether the demand could be upheld on the basis of parallel invoices allegedly recovered during investigation; (iii) whether the demand could be sustained on the basis of weighment slips and related documents in the absence of proof of actual clandestine clearance.

Issue (i): Whether the demand of central excise duty and penalties could be sustained on the basis of the seized ledger book and loose sheets without corroborative evidence.

Analysis: The ledger was maintained by a third party and contained mixed personal and business entries, with no description of goods, no reliable linkage to raw material purchase, manufacture, removal, buyers, transport, or receipt of sale proceeds. The Revenue did not produce independent evidence of excess manufacture, electricity consumption, movement of goods, or actual clearances. The uncorroborated statement of the director was insufficient by itself to establish clandestine removal.

Conclusion: The demand based on the ledger book and loose sheets was not sustainable, and the finding was in favour of the assessee.

Issue (ii): Whether the demand could be upheld on the basis of parallel invoices allegedly recovered during investigation.

Analysis: The original source of the alleged parallel invoices was not established through recovery from buyers or by independent enquiry at the buyers' end. No reliable investigation connected the invoices with actual clandestine removal, and the related buyer statements and documents were not relied upon in a manner sufficient to prove the charge.

Conclusion: The demand based on parallel invoices was not sustainable, and the finding was in favour of the assessee.

Issue (iii): Whether the demand could be sustained on the basis of weighment slips and related documents in the absence of proof of actual clandestine clearance.

Analysis: The weighment slips did not identify the goods, the nature of the movement, or establish whether the entries related to inputs or finished goods. There was no corroboration through transport documents, buyer evidence, or proof of receipt of sale consideration. In the absence of positive evidence, the slips could not be treated as proof of clandestine removal.

Conclusion: The demand based on weighment slips was not sustainable, and the finding was in favour of the assessee.

Final Conclusion: The impugned demand and the consequential penalties failed for want of corroborative evidence and were set aside, resulting in allowance of the appeals with consequential relief.

Ratio Decidendi: A charge of clandestine removal cannot be sustained on suspicion, assumptions, or isolated inculpatory material alone, and must be proved by a complete chain of corroborative evidence establishing manufacture, clearance, and receipt of consideration.

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