Clandestine removal requires independent corroboration; a record mismatch and retracted statement were not enough to sustain duty demand.

Clandestine removal was not established where the alleged mismatch between GP-1 records and HPCL material receipt reports was explained as reflecting different accounting bases, not unaccounted clearances. The Tribunal treated the retracted officer statement, recorded under coercive circumstances, as unreliable and insufficient on its own to prove evasion. In the absence of independent investigation showing receipt of unaccounted drums or payment outside the regular accounting system, the demand of duty, interest, and penalties could not be sustained. The job-work arrangement, duty reimbursement, and credit availment also made the alleged suppression commercially improbable and revenue neutral, so the assessee succeeded.

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Issues: Whether the demand of duty and penalty could be sustained on the basis of alleged clandestine removal inferred from the discrepancy between GP-1 records and HPCL's material receipt reports, together with a retracted statement of the appellant's officer.

Analysis: The Tribunal held that the discrepancy between GP-1 quantities and HPCL's MRR figures, by itself, was not sufficient to establish clandestine removal because the MRR reflected the quantity of drums actually filled with asphalt and not necessarily the entire quantity cleared from the appellant's factory. The Tribunal also found that the statement relied upon by the department had been retracted and was recorded under coercive circumstances, and therefore could not be treated as reliable proof of evasion. No independent investigation was conducted to show receipt of unaccounted drums by HPCL or payment outside the regular accounting system. The Tribunal further noted that the supplies were made exclusively to HPCL under a job-work arrangement, with duty reimbursement and availment of credit, making the alleged clandestine clearances commercially improbable and revenue neutral.

Conclusion: The allegation of clandestine removal was not proved, and the demand of duty, interest, and consequential penalties was set aside in favour of the assessee.

Final Conclusion: The appeals succeeded and the impugned order was quashed, with consequential relief granted according to law.

Ratio Decidendi: Clandestine removal cannot be upheld on a mere mismatch between internal dispatch records and recipient receipt records when the recipient's records are shown to reflect only a different basis of accounting, the principal inculpatory statement stands retracted, and no independent corroborative evidence establishes unaccounted clearance.

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