Clandestine removal demands need independent excise evidence, and Income Tax material alone is insufficient to sustain liability.

A central excise demand for clandestine removal cannot be sustained when it rests only on information, stock verification, or alleged discrepancies gathered by the Income Tax Department. Independent investigation by the excise authorities, along with affirmative and corroborative evidence of clandestine manufacture and removal, is required to support such a demand. Where excise officers do not conduct their own verification or collect supporting material, findings from proceedings under another statute are insufficient by themselves to establish liability under central excise law.

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Issues: Whether a demand of central excise duty based solely on information and stock verification by the Income Tax Department, without any independent investigation or corroborative evidence by the Central Excise authorities, could be sustained on a charge of clandestine removal.

Analysis: The demand rested entirely on the investigation conducted by the Income Tax authorities and the excess stock allegedly noticed therein. The Central Excise officers did not undertake any independent stock verification, further inquiry, or collection of evidence to establish clandestine manufacture and removal of finished goods. In the absence of positive corroborative material, a demand under the Central Excise law cannot be upheld merely because some discrepancy or admission emerged in proceedings under another statute. The settled position reflected in the cited decisions is that clandestine removal must be proved by independent and affirmative evidence and cannot be inferred only from material gathered by another department.

Conclusion: The demand was not sustainable and the appeals were allowed in favour of the assessee.

Ratio Decidendi: A central excise demand alleging clandestine removal cannot be sustained when it is founded only on Income Tax Department material and is unsupported by independent investigation or corroborative evidence from the excise department.

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