Clandestine removal requires proof beyond shortage alone; unsupported tobacco stock discrepancy could not sustain duty or penalty.

A mere shortage of coloured tobacco was held insufficient to sustain duty demand and penalty where the alleged clandestine removal was unsupported by cogent evidence. The assessee explained the shortage as stock kept for drying during conversion into branded chewing tobacco, and the record showed no proof of buyers, transport, or consideration. In the absence of evidence of removal without payment of duty, the charge rested only on assumption. The duty demand and penalties were therefore held unsustainable.

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Issues: Whether the demand of duty and penalty based on shortage of coloured tobacco was sustainable in the absence of evidence of clandestine removal.

Analysis: The shortage was explained by the assessee as stock kept for drying, and the manufacturing process required time for conversion of coloured tobacco into branded chewing tobacco. The record contained no cogent evidence of removal without payment of duty, no proof of buyers, transport, or consideration, and the alleged clandestine activity rested only on assumption. A mere shortage, without supporting evidence, was held insufficient to sustain the charge.

Conclusion: The duty demand and penalties were not sustainable and the assessee succeeded.

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