Clandestine removal claims require corroborated evidence across the full chain of manufacture, clearance, transport and consideration.

Clandestine removal allegations against an assessee in MS ingots were said to fail because the Revenue did not produce cogent, corroborated evidence of procurement, manufacture, clearance, transport and receipt of consideration. Private notebooks and pads were not sufficiently proved, employee and director statements were retracted and lacked independent support, and the theories based on raw material use, electricity consumption and furnace capacity were not reliably established. No discrepancy in stock or dependable financial or transport trail was shown. On that basis, the note states that confiscation-related consequences and penalties were not sustainable.

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Issues: Whether the Revenue had established clandestine manufacture and removal of MS ingots so as to sustain the demand of duty and penalties, and whether the evidence relied upon, including private records, statements and electricity consumption, was legally sufficient.

Analysis: The demand rested principally on private notebooks and pads, statements of employees and directors, alleged excess raw material consumption, electricity usage and furnace capacity. The statements were retracted and were not effectively sustained by independent corroboration. The private records were not proved through their authorship or contents with sufficient certainty, and the same materials were not consistently relied upon in the connected proceedings against sister concerns and other noticees. No discrepancy in raw material or finished stock was established, no reliable financial trail or transport chain was proved, and the electricity and furnace-capacity theories were found to be inadequately supported. In a case of clandestine removal, the burden lies on the Revenue to produce cogent and positive evidence of procurement, manufacture, removal and receipt of consideration.

Conclusion: The allegation of clandestine manufacture and removal was not proved. The demand, confiscation-related consequences and penalties were not sustainable.

Ratio Decidendi: A serious allegation of clandestine removal cannot be upheld on unproved private records and retracted statements unless the Revenue establishes the charge by reliable, corroborated evidence showing the full chain of illicit procurement, manufacture, clearance, transport and consideration.

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