Clandestine removal claims require independent corroboration; statements alone cannot sustain confiscation, duty demand, or penalties.

Confiscation of finished goods and redemption fine were unsustainable where the stock was reflected in statutory records and the alleged discrepancy was not supported by independent evidence; they were set aside. A demand for duty, equal penalty and personal penalty based only on statements, without corroboration of clandestine manufacture or removal by tangible evidence such as transport details, buyers, sale proceeds or workers' statements, could not be sustained; those demands were also set aside. The operative principle is that clandestine removal or manufacture must be proved by reliable independent corroboration, not by statements alone.

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Issues: (i) Whether confiscation of finished goods and imposition of redemption fine were sustainable when the stock was reflected in statutory records and the alleged discrepancy was not supported by independent evidence; (ii) Whether demand of duty, equal penalty and personal penalty could be sustained on the basis of statements alone without corroborative evidence of clandestine manufacture and removal.

Issue (i): Whether confiscation of finished goods and imposition of redemption fine were sustainable when the stock was reflected in statutory records and the alleged discrepancy was not supported by independent evidence.

Analysis: The stock position was recorded in the statutory records, and the appellants produced those records on the next working day after the search. The explanation for non-production on the day of search was not considered. The confiscation could not rest merely on the alleged discrepancy when the recorded stock position and the surrounding explanation were on record. Further, the authorities failed to substantiate the alleged clandestine nature of the goods with independent material.

Conclusion: Confiscation of the finished goods and the redemption fine were not sustainable and were set aside in favour of the assessee.

Issue (ii): Whether demand of duty, equal penalty and personal penalty could be sustained on the basis of statements alone without corroborative evidence of clandestine manufacture and removal.

Analysis: The department relied mainly on confessional and supervisory statements, but did not produce independent corroboration regarding transportation, buyers, sale proceeds, workers' statements, or other tangible evidence of clandestine clearance. The statutory records and explanations furnished by the appellants were not properly dealt with. In the absence of corroborative evidence, the alleged clandestine removal was not proved to the required standard.

Conclusion: The duty demand, equal penalty and personal penalty were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The appeals succeeded, and the impugned orders were set aside because the allegations of clandestine removal were not established by reliable corroborative evidence.

Ratio Decidendi: A demand for clandestine manufacture or removal, and consequential confiscation or penalty, cannot be sustained on statements alone and must be supported by independent, tangible, corroborative evidence.

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