Clandestine removal allegation fails after principal witness retracts statement and denies authorship of relied documents.

Clandestine removal of cotton cone yarn was not established after de novo cross-examination of the principal witness. The Tribunal noted that the department's case rested on Shri P. Duraisamy's statement and documents said to be authored by him, but in cross-examination he denied being the Technical Director, disowned the attributed statement, and denied any connection with the private notebooks and related records. With that evidentiary foundation collapsed, the remaining statements and documents did not independently sustain the allegation, so the demand of central excise duty and equal penalty could not be sustained.

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Issues: Whether the demand of central excise duty and equal penalty for alleged clandestine removal of cotton cone yarn could be sustained after the de novo cross-examination of the principal witness and the retraction of the statements and documents relied upon by the department.

Analysis: The earlier remand had made the adjudication dependent on the cross-examination of Shri P. Duraisamy, since his statement and the documents said to be authored by him were the foundation of the department's case. In cross-examination, he denied that he was the Technical Director, disowned the statement attributed to him, and denied any connection with the private notebooks and related records. The Tribunal found that the core evidentiary basis for alleging clandestine removal had collapsed after such cross-examination, and the other statements and documents did not independently sustain the charge.

Conclusion: The demand and penalty could not be sustained and the impugned order was set aside in favour of the assessee.

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