Clandestine removal requires corroborative evidence; stock shortages and isolated slips alone do not prove duty evasion.

Demand for duty and penalty based on alleged clandestine removal was challenged on the basis of stock shortage, production slips, transport slips and seized records. The Revenue relied on statements and documents, but the assessee produced reconciliation material showing that bulk quantities noted in production slips were later tested, packed and recorded in the daily stock account before duty-paid clearance. Transport slips were explained as freight charges for empty drums, and there was no independent corroboration of raw material receipt, unaccounted finished goods, or actual clandestine removals. The text states that clandestine removal must be proved by credible corroborative evidence and cannot rest on isolated documents or untested statements alone.

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Issues: Whether the demand of duty and penalty for alleged clandestine removal could be sustained on the basis of stock shortage, production slips, transport slips and the BMW Industries consignment.

Analysis: The Revenue's case rested mainly on statements of officials, production slips in bulk stage, transport documents and the seized records. The assessee produced reconciliation statements and material to show that the bulk quantities noted in the production slips were subsequently tested, packed and entered in the daily stock account before clearance on payment of duty. The transport slips were explained as relating to freight for empty drums and not to clearance of finished goods. The record showed no effective rebuttal of the reconciliation or any independent investigation to prove receipt of raw materials, removal of finished goods, transport of unaccounted goods, or real clandestine clearances. In matters of clandestine removal, the charge must be established by credible corroborative evidence and cannot rest on untested statements or isolated documents alone.

Conclusion: The allegation of clandestine removal was not proved, and the demand confirmed by the Commissioner (Appeals) was not liable to interference.

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