Clandestine removal can be proved on documentary evidence and corroborative statements, with penalties reduced on mitigating circumstances.

In clandestine removal disputes, duty liability may be sustained on seized documents, private records, stock discrepancies and corroborative statements, with proof assessed on preponderance of probability rather than mathematical precision. The Tribunal treated the evidence as sufficient to establish unaccounted manufacture and clearance, and upheld the central excise demand. On penalties and redemption fines, it considered the appellant-company's financial difficulties and reduced the quantum imposed on the company and a noticee, along with both redemption fines.

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Issues: (i) Whether the demand of central excise duty on alleged unaccounted manufacture and clandestine removal of finished goods was sustainable on the evidence on record. (ii) Whether the penalties and redemption fines required interference.

Issue (i): Whether the demand of central excise duty on alleged unaccounted manufacture and clandestine removal of finished goods was sustainable on the evidence on record.

Analysis: The Tribunal relied on the seized documents, the private records, the stock discrepancies, and the statements of persons connected with the appellant-unit to hold that the case of unaccounted manufacture and clandestine clearances was established. It further held that in cases of clandestine removal the Department is not expected to prove every link with mathematical precision, and that the standard applicable is one of preponderance of probability, with some facts lying within the special knowledge of the assessee.

Conclusion: The duty demand was upheld.

Issue (ii): Whether the penalties and redemption fines required interference.

Analysis: Taking note of the overall circumstances and the financial difficulties of the appellant-company, the Tribunal interfered only to the extent of reducing the quantum of penalties and redemption fines. The penalty on the company and the penalty on one of the noticees were substantially reduced, and both redemption fines were also reduced.

Conclusion: The penalties and redemption fines were reduced.

Final Conclusion: The duty demand was sustained, but relief was granted by reducing the monetary penalties and redemption fines for the surviving appellants.

Ratio Decidendi: In clandestine removal cases, duty liability may be sustained on the basis of documentary evidence and corroborative statements assessed on the standard of preponderance of probability, without requiring mathematical precision or direct evidence of every transaction.

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