Clandestine removal demand fails when built only on mathematical projection without corroborative evidence of unaccounted clearance.

Clandestine removal demands cannot be sustained on input-output ratio and mathematical projection alone unless supported by tangible investigative evidence. The assessee challenged the estimated yield by pointing to process loss, a chartered engineer's assessment, and comparisons with similar units, while the department failed to conduct buyer-side inquiries or place corroborative material on record to prove actual unaccounted clearance. In the absence of independent evidence of clandestine removal, the projected demand was held unsustainable and set aside, with relief granted to the assessee.

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Issues: Whether a duty demand for alleged clandestine removal could be sustained merely on the basis of input-output ratio and mathematical projection without corroborative evidence.

Analysis: The demand was founded on a projected estimate of production derived from the quantity of inputs issued, while the assessee disputed the estimated yield and pointed to process loss, chartered engineer's assessment, and comparable verifications from similar units. The determining factor was that clandestine removal must be supported by tangible evidence gathered through investigation. No buyer-side inquiry or other corroborative material was brought on record to establish actual unaccounted clearance. In these circumstances, a demand built only on mathematical projection could not be upheld.

Conclusion: The demand was not sustainable and was set aside, with the appeal allowed in favour of the assessee.

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