Corroborative evidence required for clandestine removal; loose papers alone cannot sustain duty demand, while excess stock may still justify confiscation.

Clandestine removal allegations require cogent corroborative evidence; loose sheets, labour payment vouchers and ratio-based or theoretical calculations alone are insufficient to sustain duty demand, credit denial or penalty. Where supporting statements are retracted and the alleged documents are not satisfactorily proved, the demand cannot rest on assumptions or presumptions. Excess finished goods found on stock verification may justify confiscation for rule contravention, but redemption fine and penalties must remain proportionate and can be reduced where excessive.

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Issues: (i) Whether the demand of duty and denial of credit could be sustained on the basis of loose sheets, labour payment vouchers and alleged clandestine removal without corroborative evidence. (ii) Whether confiscation of excess finished goods and the consequential redemption fine and penalties were justified.

Issue (i): Whether the demand of duty and denial of credit could be sustained on the basis of loose sheets, labour payment vouchers and alleged clandestine removal without corroborative evidence.

Analysis: The demand based on alleged clandestine manufacture and clearance rested mainly on loose papers, labour payment vouchers and a ratio-based calculation. The material relied upon was not adequately proved, the seized writings were not satisfactorily explained, and the statements supporting the allegation had been retracted. The charge of clandestine removal requires tangible and corroborative evidence, and a demand cannot be upheld on assumptions, presumptions or theoretical computations alone.

Conclusion: The demand founded on alleged clandestine removal and the related penalty were not sustainable, and the corresponding relief was granted in favour of the assessee.

Issue (ii): Whether confiscation of excess finished goods and the consequential redemption fine and penalties were justified.

Analysis: The excess finished goods were found during stock verification, and the Tribunal found sufficient basis to sustain confiscation for contravention of the rules. However, the quantum of redemption fine and penalties was considered excessive in the facts of the case and called for reduction.

Conclusion: Confiscation was upheld, but the redemption fine and penalties were reduced.

Final Conclusion: The impugned order was sustained in substance with partial relief to the assessee by setting aside one penalty component and reducing the fine and penalty on the confiscation-related issue.

Ratio Decidendi: A demand for clandestine removal must be supported by cogent corroborative evidence, and loose papers or estimated calculations by themselves are insufficient to sustain duty demand or penalty.

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