Clandestine removal demands need corroboration and cross-examination; private diaries and untested statements alone are insufficient.

A charge of clandestine removal cannot be sustained on private diaries, loose papers or statements alone unless the department produces corroborative evidence of manufacture, clearance, buyers, transport or sale proceeds and complies with the statutory safeguard of cross-examination under Section 9D of the Central Excise Act, 1944. Here, the chemist diaries only recorded issue of raw material and did not by themselves prove actual manufacture or clearance of excisable goods. The relevant statement was not properly tested through examination and cross-examination, causing a breach of natural justice. The alleged clandestine removal was therefore not proved, and the duty demand, confiscation and penalties failed.

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Issues: Whether the demand of duty, confiscation and penalties for alleged clandestine removal could be sustained on the basis of chemist diaries, loose papers, statements and other seized documents without corroborative evidence and without compliance with the requirement of cross-examination.

Analysis: The material relied upon by the department mainly consisted of chemist diaries and statements. The diaries were found to record issue of raw material, but they did not by themselves establish actual manufacture and clearance of excisable goods. The Chief Chemist had joined later, while the earlier diaries were maintained by another person who was not examined. The statement of the Chief Chemist was not put through examination-in-chief and cross-examination as required under Section 9D of the Central Excise Act, 1944, resulting in violation of natural justice. The allegations of clandestine removal were also unsupported by the type of tangible corroboration required in such cases, such as evidence of unaccounted raw material consumption, actual removal, buyers, transport, or sale proceeds.

Conclusion: The charge of clandestine removal was not proved and the demands, confiscation and penalties could not be sustained.

Ratio Decidendi: A demand for clandestine removal cannot rest solely on private diaries or statements unless supported by corroborative evidence and tested through the statutory safeguard of cross-examination.

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