Clandestine removal demands need independent corroboration; third-party records alone cannot sustain excise liability without clinching evidence.

Demand based on excess electricity consumption was not disturbed beyond the relief already granted, as that issue was covered by settled law and no further infirmity was found. The remaining Central Excise demand for alleged clandestine manufacture and clearance of MS ingots was set aside because it rested mainly on third-party records and statements without direct or independent corroboration. The decision reiterates that clandestine removal cannot be sustained on third-party documents alone unless supported by clinching evidence of manufacture and clearance.

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Issues: (i) Whether the demand based on excess electricity consumption could be sustained. (ii) Whether the demand of Central Excise duty based on third-party records and alleged clandestine manufacture and clearance of MS ingots could be sustained.

Issue (i): Whether the demand based on excess electricity consumption could be sustained.

Analysis: The demand founded on excess electricity consumption had already been substantially dropped in the adjudication itself, and the issue stood covered by settled law in favour of the assessee. No infirmity was found in the relief granted on that part of the demand.

Conclusion: The demand based on excess electricity consumption was upheld only to the extent already dropped in favour of the assessee, and no further interference was called for.

Issue (ii): Whether the demand of Central Excise duty based on third-party records and alleged clandestine manufacture and clearance of MS ingots could be sustained.

Analysis: The entire case on the remaining demand rested on records recovered from third parties and statements linked to those records. The recovered material was not supported by direct or independent corroboration, and no clinching evidence of clandestine manufacture or removal was brought on record. The legal position applied was that third-party documents, by themselves, cannot sustain a finding of clandestine removal in the absence of corroborative evidence.

Conclusion: The confirmed demand, interest, and penalty relating to alleged clandestine manufacture and clearance were set aside in favour of the assessee.

Final Conclusion: The appeal was allowed, with the substantial electricity-based demand left undisturbed to the extent already dropped and the remaining excise demand and penalty set aside for want of corroboration.

Ratio Decidendi: A finding of clandestine manufacture or removal cannot be sustained solely on third-party records unless supported by independent clinching evidence.

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