Clandestine removal demands corroborative evidence; stock shortage and statements alone could not sustain the duty demand.

Clandestine removal cannot be sustained on stock shortage alone; the Tribunal required tangible, corroborative evidence linking the shortage to unaccounted clearance. Statements of the persons examined admitted the shortage but not clandestine removal, and duty payment was treated as made to avoid further dispute rather than as an admission of liability. Because the Revenue produced no evidence of buyers, suppliers, transport, cash flow, excess power use, extra labour, seizure, or other positive material, suspicion and assumptions were held insufficient. The duty demand was therefore unsustainable and the assessee succeeded.

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Issues: Whether duty demand based only on stock shortage and statements, without independent corroborative evidence of clandestine removal, was sustainable.

Analysis: The shortage of finished goods and inputs by itself did not establish clandestine clearance. The persons examined admitted only the shortage, not clandestine removal, and the payment of duty was treated as made to avoid further dispute rather than as an admission of liability. The Revenue did not investigate the buyers or suppliers, did not bring evidence of transportation, cash flow, excess power consumption, extra labour, seizure of goods, or other positive material to connect the alleged shortage with unaccounted removal. The Tribunal held that clandestine removal is a serious allegation that must be proved by tangible and corroborative evidence, and that suspicion or assumptions cannot substitute proof.

Conclusion: The duty demand was not sustainable and the assessee succeeded.

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