Clandestine removal demands require corroborative evidence; stock shortage and private slips alone are insufficient to sustain duty and penalty.

A demand alleging clandestine removal cannot be sustained on stock shortage alone or on loose private slips without corroborative evidence of unrecorded manufacture and clearance. The alleged shortage at inspection did not, by itself, prove clandestine clearance, especially where the explanation that goods were on the production floor was not disproved by tangible material. Private papers, without independent support such as proof of unaccounted raw materials, transport, buyers, sale proceeds, or actual removal, were insufficient. The duty demand and penalty were therefore unsustainable.

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Issues: Whether the demand of central excise duty and penalty could be sustained on the basis of alleged stock shortage and loose paper slips, in the absence of corroborative evidence of clandestine manufacture and removal.

Analysis: The shortage found at the time of inspection, by itself, did not establish clandestine clearance. The explanation that the goods were lying on the production floor and the stock was not properly taken could not be rejected merely on suspicion. Likewise, the loose slips recovered from the factory were private records and, without independent corroboration, were insufficient to prove unrecorded production or removal. No supporting evidence such as proof of unaccounted raw materials, transport, sale proceeds, buyers, or actual removal was brought on record. In matters alleging clandestine activity, adverse findings must rest on tangible and corroborative material, not on assumptions or internal papers alone.

Conclusion: The allegation of clandestine removal was not proved, and the duty demand and penalty were unsustainable.

Ratio Decidendi: A demand for clandestine removal cannot be upheld solely on stock discrepancy or private slips unless supported by corroborative evidence of actual unrecorded manufacture and clearance.

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