Clandestine removal demands fail when based only on third-party records without independent corroborative evidence linking the noticee to goods movement.

Clandestine removal cannot be sustained on the basis of third-party records alone unless supported by independent, clinching corroborative evidence linking the noticee to actual manufacture, movement, and removal of goods. Here, the demand for central excise duty and penalty rested only on documents and statements recovered from another unit, while the record showed no search, seizure, stock verification, transport evidence, or other independent material from the noticee's premises. On that basis, the demand and consequential penalties were held unsustainable and set aside in favour of the assessee.

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Issues: Whether a demand for central excise duty and penalty could be sustained solely on the basis of documents recovered from a third party, without independent corroborative evidence against the noticee.

Analysis: The noticee was alleged to have supplied unaccounted raw material to facilitate clandestine removal by another unit, but the record disclosed no search, seizure, stock verification, transport evidence, or other independent material from the noticee's own premises. The only basis for the demand was the third party's records and statements. In matters of alleged clandestine manufacture and removal, third party documents may have evidentiary value only when supported by clinching corroboration showing actual manufacture, movement, and removal of goods. In the absence of such corroboration, the material recovered from the third party cannot, by itself, establish liability against the noticee.

Conclusion: The demand and penalty were not sustainable and the finding was in favour of the assessee.

Final Conclusion: The duty demand and consequential penalties were set aside because the allegation of clandestine clearance was not proved by reliable independent evidence.

Ratio Decidendi: Clandestine removal cannot be upheld on third party records alone unless they are supported by independent, clinching corroborative evidence linking the noticee to manufacture, movement, and removal of goods.

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