Clandestine removal demands corroborative evidence; suspicious entries and an unconfirmed statement cannot sustain duty demand or penalties.

Allegations of clandestine removal must be supported by independent, positive and corroborative evidence; suspicion, isolated ledger entries or an uncorroborated statement are insufficient. The text notes that repeated stock verifications showed no discrepancy, and there was no evidence of excess raw material receipt, excess manufacture, transport, payment trail or connecting statements from intermediary units. On that basis, the duty demand and penalties were not sustainable, the impugned order was set aside, and the assessee's appeal was allowed; the individual appeal abated on death.

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Issues: Whether the demand of duty and penalties based on alleged clandestine removal of yarn was sustainable in the absence of independent corroborative evidence.

Analysis: The demand rested mainly on entries in the receipt books of two sizing mills and the use of the word "S. Pathy", which was treated as linking the cleared yarn to the assessee. The record showed repeated stock verifications at the assessee's factory during the relevant period without any discrepancy in raw materials or finished goods. There was no evidence of excess receipt of raw materials, excess manufacture, clandestine clearance, transport details, payment trail, or statements from the intermediary units connecting the yarn to the assessee. The statement recorded from the managing director did not amount to a clear admission of clandestine activity and, by itself, could not sustain the charge without corroboration. Clandestine removal must be established by positive and tangible evidence and not by suspicion, surmise, or conjecture.

Conclusion: The allegation of clandestine removal was not proved and the duty demand and penalties could not be sustained.

Final Conclusion: The impugned order was set aside and the assessee's appeal was allowed, while the individual appeal stood abated on account of death.

Ratio Decidendi: Allegations of clandestine removal must be proved by independent, positive, and corroborative evidence, and cannot rest solely on suspicious entries or an uncorroborated statement.

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