Clandestine clearance allegation failed where records matched the duty-paid quantity and no corroboration supported extra removal.

Duty demand for alleged clandestine clearance of pig iron was rejected because the documentary record supported only the diverted export consignment and its duty-paid sale. The railway receipt showed movement of 2400 MT from Paradip Port, the quantity was reflected in the RG-1 register, and the two invoices together accounted for that same clearance. The allegation of an additional 2400 MT clearance was not backed by corroborative evidence, and there was no material to show receipt or transport of any further quantity to the consignee. An unexplained RG-1 credit entry, without supporting proof, was held insufficient to sustain the charge.

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Issues: Whether the duty demand and consequential penalties were sustainable on the allegation that an additional quantity of pig iron had been cleared in excess of the diverted export consignment.

Analysis: The dispute turned on whether the records supported the Revenue's allegation of an extra clearance beyond the 2400 MT permitted for diversion to DTA sale. The Tribunal noted that the railway receipt evidenced movement of 2400 MT from Paradip Port, the appellant had accounted for the same quantity in the RG-1 register, and the two invoices together covered the 2400 MT cleared on payment of duty. The allegation that a further 2400 MT had been clandestinely cleared was found unsupported by documentary evidence. There was no material to show receipt of 4800 MT by the consignee or transport of an additional huge quantity. The credit entry in RG-1, without corroboration, could at best create suspicion but could not establish the charge.

Conclusion: The duty demand was unsustainable and the appellant succeeded on merits.

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