Clandestine removal demands period-specific, corroborated evidence; outdated electricity norms and shortages alone cannot sustain duty demand.

Clandestine removal allegations cannot be sustained on outdated electricity-consumption norms, private slips from an earlier period, or uncorroborated raw-material shortages. The evidence must be period-relevant, reliable, and supported by proof of actual clearance or receipt of sale proceeds; otherwise, the duty demand fails.

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Issues: (i) Whether the allegation of clandestine manufacture and clearance of mild steel ingots could be sustained on the basis of electricity-consumption norms and private production slips. (ii) Whether shortage of raw materials and other circumstantial material were sufficient to confirm duty demand for the disputed period.

Issue (i): Whether the allegation of clandestine manufacture and clearance of mild steel ingots could be sustained on the basis of electricity-consumption norms and private production slips.

Analysis: The demand was founded on an average electricity-consumption norm derived from earlier private slips and a study that was not shown to be applicable to the disputed period under the Central Excise Rules, 2002. The seized slips related to 2001 and 2002, whereas the demand covered a later period. The trial production conducted by the departmental officers showed materially higher power consumption, and the rejection of that experiment was found unacceptable.

Conclusion: The allegation of clandestine clearance on the basis of electricity-consumption norms and private slips was not sustained.

Issue (ii): Whether shortage of raw materials and other circumstantial material were sufficient to confirm duty demand for the disputed period.

Analysis: Shortage of raw materials by itself did not unerringly establish clandestine manufacture and removal in the absence of evidence of actual clearance or receipt of sale proceeds. The circumstantial material relied upon was held to be insufficient and unsupported for the relevant period. The earlier reference to norms under rule 173E of the Central Excise Rules, 1944 did not govern the later dispute period.

Conclusion: The demand could not be confirmed on the basis of shortages and ancillary circumstances.

Final Conclusion: The impugned orders were set aside and the appeals were allowed, leaving the duty demand unsustainable.

Ratio Decidendi: A finding of clandestine removal must rest on reliable, period-relevant and corroborated evidence, and cannot be sustained solely on outdated electricity norms, private records from an earlier period, or uncorroborated shortages of raw materials.

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