Penalty for alleged clandestine removal requires positive evidence; an uncorroborated retracted statement is not enough.

Penalty under Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002 could not be sustained where the alleged clandestine sale of pig iron was based only on presumption, without identifying any purchaser or proving any actual sale or consignment route. A retracted statement was held insufficient by itself for penalty in the absence of independent corroboration in material particulars. The settled principle applied was that allegations of clandestine removal or related contravention must rest on positive, tangible evidence, and the penalty was therefore set aside.

---

---

Issues: Whether penalty under Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002 could be sustained on the basis of alleged clandestine sale of pig iron and a retracted statement, in the absence of corroborative evidence.

Analysis: The allegation of clandestine sale was treated as presumptive because the record did not identify any purchaser or any concrete instance of sale by the appellant. The alleged consignment route of pig iron was also not established by tangible evidence. The appellant had retracted the statement relied upon by the department, and such retracted confession was found insufficient for imposing penalty without independent corroboration in material particulars. The reasoning applied the settled principle that serious allegations of clandestine activity must rest on positive evidence and not on assumptions.

Conclusion: Penalty was not sustainable and was set aside in favour of the assessee.

Ratio Decidendi: Penalty for alleged clandestine removal or related contravention cannot rest solely on an uncorroborated or retracted statement and must be supported by positive, tangible evidence.

---