Clandestine removal can be proved by missing records, unaccounted stock and unretracted admissions, supporting duty and penalty exposure.

Clandestine removal may be established through non-maintenance of statutory production records, recovery of unaccounted stock, private or job-work challans used outside the prescribed procedure, and unretracted admissions by a company director. Where the material shows removals without invoices, without RG-1 entry and without payment of duty, the demand of central excise duty, interest and equal penalty is sustained. A director who is shown to control day-to-day affairs and to be aware of the evasion may also face personal penalty when his admissions and surrounding records link him to the clandestine clearances.

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Issues: (i) Whether the demand of central excise duty, interest and equal penalty was sustainable on the basis of clandestine clearances without invoice, without proper accountal in RG-1, and supported by the director's admissions; (ii) Whether penalty on the director under Rule 209A of the Central Excise Rules, 1944 was sustainable.

Issue (i): Whether the demand of central excise duty, interest and equal penalty was sustainable on the basis of clandestine clearances without invoice, without proper accountal in RG-1, and supported by the director's admissions.

Analysis: The record showed non-maintenance of statutory production records for a continuous period, recovery of unaccounted stock, and clearances made on private or job-work challans without following the prescribed procedure. The director's statements admitted removal of finished goods without entry in RG-1, without invoices, and without payment of duty. Those statements were not retracted. The contention regarding non-supply of statements was not raised before the lower authorities and was treated as an afterthought.

Conclusion: The demand, interest and equal penalty on the appellant company were upheld.

Issue (ii): Whether penalty on the director under Rule 209A of the Central Excise Rules, 1944 was sustainable.

Analysis: The director was found to be in charge of the day-to-day affairs of the company and was aware of the clandestine clearances. His admissions and the surrounding material established his involvement in the evasion of duty.

Conclusion: The penalty imposed on the director was upheld.

Final Conclusion: The appeals failed in entirety and the impugned order confirming duty, interest and penalties was sustained.

Ratio Decidendi: Clandestine removal can be established by a combination of non-maintenance of statutory records, unaccounted stock, corroborative seized records, and unretracted admissions, and penalty is sustainable on persons knowingly responsible for such removals.

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