Clandestine removal cannot rest on computer printouts alone where stock discrepancy lacks physical verification and corroboration.

Demand of duty and penalty based only on computer printouts and an alleged stock discrepancy was held unsustainable where no physical stock verification was done and no independent evidence corroborated clandestine removal. The Tribunal noted that the shortage was derived from a comparison between software-based stock records, but the Revenue failed to show that those records were complete and reliable accounts of manufacture and clearance. In the absence of corroborative material, reliance on the printouts was insufficient to establish removal of finished goods without payment of duty, and the demand, interest and penalty were rejected.

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Issues: Whether the demand of duty and penalty based on computer printouts and stock discrepancy, without physical stock verification or independent evidence of clandestine removal, could be sustained.

Analysis: The stock shortage was inferred from a comparison between the Daily Stock Account and the Stock Summary Account maintained in software. The record showed that no physical verification of stock was conducted and no independent enquiry or corroborative material was produced to establish actual removal of finished goods without payment of duty. Reliance on computer printouts was insufficient in the absence of proof that the alleged data represented a complete and reliable account of manufacture and clearance. The Tribunal found the earlier decision relied upon by the Commissioner (Appeals) to be applicable and held that the Revenue had failed to substantiate clandestine removal on evidence.

Conclusion: The demand, interest and penalty were not sustainable and the Revenue's appeal was rejected.

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