Duty demand fails without proof of clandestine removal, where scrap was accounted in job work records and RG-1 entries.

A duty demand based solely on alleged non-accountal of scrap in RG-1 could not be sustained where the assessee maintained job work records and reflected scrap clearance through sale invoices in RG-1. The record showed accounting of scrap at the job workers' end, and there was no allegation or evidence of clandestine removal or suppression of material facts. A mere defect in record maintenance, without proof of unaccounted clearance, was insufficient to justify the levy; the notice was also internally inconsistent. The impugned order was set aside and relief followed for the assessee.

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Issues: Whether the demand of duty could be sustained on the allegation that scrap generated during job work was not accounted for in RG-1 register, when the assessee maintained entries in the job work register and reflected sale invoices in RG-1.

Analysis: The only allegation in the notice was non-accountal of scrap in RG-1, but the record showed that the scrap generated at the job workers' end was entered in the job work register and the clearance of scrap on payment of duty was also reflected in RG-1. There was no allegation or evidence of clandestine removal. A mere allegation of improper maintenance of records, without proof of unaccounted clearance or suppression of material facts, was insufficient to sustain the duty demand. The notice was also found to be internally inconsistent in its allegations.

Conclusion: The demand was not sustainable and the assessee succeeded on the merits.

Final Conclusion: The impugned order was set aside and the appeal was allowed, resulting in relief to the assessee.

Ratio Decidendi: A duty demand cannot be sustained merely for alleged improper record maintenance or non-accountal in RG-1 unless there is evidence of clandestine removal or other material justifying the levy.

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