Clandestine removal demands need corroborative evidence; private notebooks alone fail, while surviving duty must be recomputed on cum-duty basis.

Private pocket diaries alone cannot sustain a clandestine removal demand without independent corroborative evidence such as transport records, raw material purchases, invoice trail, electricity data, or sales receipts; the demand under Annexure D1 is therefore set aside. Where liability is accepted for Annexures D2 and D3, the duty must be recomputed after granting cum-duty benefit, and the matter is remanded for fresh quantification. The demand under Annexure D4 is also set aside because removal without duty payment was not established on the record. Consequential penalty on the main appellant is confined to the duty finally payable after recomputation of the surviving demand.

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Issues: (i) Whether the demand under Annexure D1 based only on private pocket note books could be sustained without corroborative evidence; (ii) whether the demand under Annexures D2 and D3 required recomputation after granting cum-duty benefit; (iii) whether the demand under Annexure D4 was sustainable; (iv) whether the penalty on the main appellant required modification in view of the restricted duty liability.

Issue (i): Whether the demand under Annexure D1 based only on private pocket note books could be sustained without corroborative evidence.

Analysis: The entries in the pocket diaries were not supported by transport records, raw material purchase evidence, invoice trail, electricity consumption data, sales receipts, or other independent material showing manufacture and clearance. The earlier remand order had already noted the absence of corroboration, and the de novo order did not address that deficiency by bringing in legally acceptable supporting evidence. In clandestine removal cases, the demand must rest on tangible evidence and not on uncorroborated private notings or assumptions.

Conclusion: The demand under Annexure D1 is unsustainable and is set aside.

Issue (ii): Whether the demand under Annexures D2 and D3 required recomputation after granting cum-duty benefit.

Analysis: The appellant accepted liability for the amounts relatable to Annexures D2 and D3, but sought the benefit of cum-duty valuation. Since cum-duty treatment is required while arriving at the assessable value, the computation of the exact duty payable had to be redone by the original authority.

Conclusion: The demand under Annexures D2 and D3 is remanded for fresh computation after allowing cum-duty benefit.

Issue (iii): Whether the demand under Annexure D4 was sustainable.

Analysis: The record did not establish that the goods covered by Annexure D4 had been removed from the factory without payment of duty. On the facts found, the basis for fastening duty on that item was not made out.

Conclusion: The demand under Annexure D4 is set aside.

Issue (iv): Whether the penalty on the main appellant required modification in view of the restricted duty liability.

Analysis: Once the duty liability stood confined only to the items under Annexures D2 and D3, the penalty could not exceed the duty finally found payable after recomputation with cum-duty benefit. The penalty therefore had to track the recalculated duty amount.

Conclusion: The penalty on the main appellant is confined to the duty finally payable on Annexures D2 and D3 after recomputation.

Final Conclusion: The impugned order does not survive in its entirety, and the matter stands partly allowed with major portions of the demand set aside and the surviving component remitted for recomputation.

Ratio Decidendi: A demand for clandestine removal cannot be sustained on private records alone unless supported by independent corroborative evidence, and where only part of the demand survives, valuation must be redetermined on a cum-duty basis before consequential penalty is worked out.

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