Clandestine removal demands need reliable corroboration, and extended limitation applies only when statutory ingredients are proved.

A demand for central excise duty, confiscation of goods and penalty based on seized GRs and allegations of clandestine removal requires reliable corroborative evidence; where affidavits and bank records supported disclosed transactions and no meaningful enquiry was made from consignees, such action is not sustainable. The note also states that the extended period of limitation can be invoked only when the statutory ingredients are established; where the dispute was old and RT-12 returns had been finalized, the longer period was unjustified and the demand was time-barred.

---

---

Issues: (i) Whether the demand of central excise duty, confiscation of goods and penalty could be sustained on the basis of the seized GRs and the material relied upon by the department. (ii) Whether invocation of the extended period of limitation was justified.

Issue (i): Whether the demand of central excise duty, confiscation of goods and penalty could be sustained on the basis of the seized GRs and the material relied upon by the department.

Analysis: The demand was founded on allegations of clandestine removal and excess stock, but the record did not establish those ions with reliable evidence. The affidavits and bank records produced in respect of the consignors were found to support the disclosed transactions, and no meaningful enquiry was shown to have been made from the consignees. The circumstances also indicated that the trading units were functioning separately and were dealing in different commodities. The finding of the adjudicating authority was therefore held to rest on insufficient and unreliable material.

Conclusion: The demand, confiscation and penalty were not sustainable and were set aside in favour of the assessee.

Issue (ii): Whether invocation of the extended period of limitation was justified.

Analysis: The Tribunal held that the facts did not justify resort to the extended limitation period. The dispute was old, the RT-12 returns had stood finalized, and the department failed to establish the ingredients necessary for invoking the longer period under the statute.

Conclusion: Invocation of the extended period of limitation was held to be unjustified and the demand was time-barred.

Final Conclusion: The impugned adjudication order was quashed, and the appeal was allowed with consequential relief to the assessee.

Ratio Decidendi: A demand for clandestine removal and allied confiscatory or penal action cannot be sustained without reliable corroborative evidence, and the extended period of limitation cannot be invoked unless the statutory ingredients for such invocation are established.

---