Clandestine removal demands may rest on private records and statements, but duplicate duty cannot be raised on the same goods twice.

Private notebooks, seizure material, panchanama evidence and corroborative statements can support a finding of clandestine removal, and late retractions do not necessarily erase their evidentiary value; the demand based on these materials and the shortage of Sodium Bichromate Mother Liquor was upheld. However, where the same goods were alleged to have been both clandestinely manufactured and clandestinely cleared during the same period, the demand could not be duplicated, so the Annexure D figures had to be set off against the clearance-based demand. The demand based on unproved, unquantified labour contractor records was found unsustainable and was set aside, with limited re-quantification directed only for the sustained portion.

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Issues: (i) Whether the demands based on Annexures A, B and C and the shortage of Sodium Bichromate Mother Liquor were sustainable on the basis of private records, statements and panchanama evidence; (ii) Whether the demand based on Annexure D required set-off against the alleged clandestine clearances and whether the demand based on Annexure E was sustainable.

Issue (i): Whether the demands based on Annexures A, B and C and the shortage of Sodium Bichromate Mother Liquor were sustainable on the basis of private records, statements and panchanama evidence.

Analysis: The demand for clandestine removal was founded on seizure of private notebooks and records during investigation, panchanama evidence, and statements of company officials and alleged buyers. The Tribunal held that such material could form a sound basis for inferring clandestine clearances, and that the late retractions made during cross-examination did not dislodge the evidentiary value of the original statements. The shortage noticed during stock taking was also treated as a valid demand head.

Conclusion: The demands under Annexures A, B and C, and the demand arising from the shortage of Sodium Bichromate Mother Liquor, were upheld.

Issue (ii): Whether the demand based on Annexure D required set-off against the alleged clandestine clearances and whether the demand based on Annexure E was sustainable.

Analysis: Annexure D was based on alleged excess unrecorded production derived from differences between statutory records and private notebooks. The Tribunal held that where the same goods are alleged to have been clandestinely manufactured and clandestinely removed during the same period, the demand cannot be duplicated on both manufacture and removal, and the Annexure D figures had to be adjusted against the clearance-based demands. Annexure E rested on labour contractor reports, but the Tribunal found the records unproved, the author of the records insufficiently reliable, and the demand itself unquantified, making it unsustainable.

Conclusion: Annexure D was directed to be set off against the clandestine clearance demand, and Annexure E was set aside.

Final Conclusion: The duty and penalty demands were sustained only to the extent of proven clandestine clearances and shortage, while the remaining portion was excluded from the computation and the matter was remanded for limited re-quantification of duty, interest and penalties.

Ratio Decidendi: Private records, corroborative statements and seizure material can sustain a finding of clandestine removal, but duty cannot be demanded twice for the same goods on both alleged unrecorded manufacture and alleged removal during the same period.

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