Clandestine removal allegations fail where private records, retracted statements and uncorroborated estimates do not prove manufacture or stock mismatch.

Clandestine manufacture and removal of steel ingots could not be sustained where the demand rested on private notebooks, retracted statements, electricity consumption figures and an alleged understatement of furnace capacity. The private records were not proved to be reliable, the statements lacked effective corroboration, and no discrepancy was found in stock of raw materials or finished goods during search. Confiscation of 4.544 MT of MS ingots from a sister unit also failed because the quantity was only estimated, not actually weighed, and no independent evidence linked the stock to proved clandestine removal. The Revenue's case therefore failed for want of reliable corroboration.

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Issues: (i) Whether the allegation of clandestine manufacture and removal of steel ingots was sustainable on the basis of private notebooks, statements, electricity consumption and alleged suppression of furnace capacity; (ii) Whether confiscation of 4.544 MT of MS ingots seized from the premises of the sister unit was sustainable.

Issue (i): Whether the allegation of clandestine manufacture and removal of steel ingots was sustainable on the basis of private notebooks, statements, electricity consumption and alleged suppression of furnace capacity.

Analysis: The demand rested mainly on private notebooks said to have been maintained by the chemist and the cashier, along with statements of officers and transporters, electricity consumption figures and an allegation that the furnace capacity had been understated. The statements were retracted and were not effectively corroborated. The authorship and reliability of the private records were not proved, and the same records were treated inconsistently in proceedings against sister concerns and another alleged recipient. No discrepancy was found in the physical stock of raw materials or finished goods at the time of search. The evidence on electricity consumption and furnace capacity was also found insufficient to sustain the serious charge of clandestine manufacture and removal.

Conclusion: The allegation of clandestine manufacture and removal was not proved and the duty demand could not be sustained.

Issue (ii): Whether confiscation of 4.544 MT of MS ingots seized from the premises of the sister unit was sustainable.

Analysis: The alleged excess quantity was arrived at on estimation based on an assumed average weight per ingot, without actual weighment. The variation was negligible and the seizure was not supported by reliable independent evidence connecting the stock with any proved clandestine removal. In the absence of a sustainable finding on the main allegation, the basis for confiscation also failed.

Conclusion: The confiscation of 4.544 MT of MS ingots was not sustainable.

Final Conclusion: The impugned order could not stand because the Revenue failed to establish clandestine manufacture, removal and related confiscation with reliable and corroborated evidence.

Ratio Decidendi: A serious allegation of clandestine manufacture and removal cannot be upheld on uncorroborated retracted statements and unproved private records, especially where the documentary basis is inconsistently relied upon and no independent evidence establishes the chain of manufacture, removal and receipt.

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