Cumulative evidence for clandestine removal, extended limitation, director penalty reduction, and remand for fresh quantification.

Clandestine removal of excisable goods may be established on the cumulative effect of seized slips, notebooks, third-party records, statements, and contemporaneous corroboration, even if every entry is not independently signed or each statement is later retracted. The extended period of limitation is available where suppression of clearances is revealed only through investigation and statutory records do not disclose the evasion. Penalty on directors is sustainable where they led the company's affairs, though the quantum may be moderated on equitable considerations. Quantification of the removed quantity may be remanded for fresh verification where the assessee raises an unexamined plea regarding accounted production and job-work clearances.

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Issues: (i) Whether clandestine removal of excisable goods was established on the basis of seized slips, notebooks and corroborative material; (ii) whether the extended period of limitation was invocable; (iii) whether penalty on the concerned directors was justified and whether the quantum required reduction; (iv) whether the quantity allegedly removed required fresh quantification by the original authority after taking into account the appellants' accountal and job-work clearances.

Issue (i): Whether clandestine removal of excisable goods was established on the basis of seized slips, notebooks and corroborative material.

Analysis: The evidentiary record consisted of documents recovered from the appellants' premises, third-party records, notebooks maintained by persons connected with the appellants, and statements linking the entries with production and clearances. The seized material was not treated as isolated scraps; it was cross-checked with parallel invoices, payment vouchers and other contemporaneous documents. The absence of signatures on every slip, non-recording of some statements, or later retraction did not displace the overall evidentiary chain. In a case of clandestine removal, proof is to be gathered from the cumulative effect of the materials and not by arithmetical certainty.

Conclusion: Clandestine removal was established against the appellants.

Issue (ii): Whether the extended period of limitation was invocable.

Analysis: The evasion came to light only through investigation, and the facts showed suppression of clearances not reflected in the statutory records. On that basis, the ingredients for invoking the extended period were satisfied.

Conclusion: The extended period of limitation was correctly invoked.

Issue (iii): Whether penalty on the concerned directors was justified and whether the quantum required reduction.

Analysis: Once the clandestine removal was found to be established, the directors, being in charge of the affairs of the company, became liable to penalty. At the same time, the matter had remained under litigation for a long period and a substantial part of the demand had already been dropped, which justified moderation of the penalty quantum.

Conclusion: Penalty was warranted, but the quantum was reduced to Rs. 5 lakhs each.

Issue (iv): Whether the quantity allegedly removed required fresh quantification by the original authority after taking into account the appellants' accountal and job-work clearances.

Analysis: The appellants raised a specific quantification plea based on accounted production and job-work/conversion clearances, including quantities allegedly omitted from the Commissioner's working. As this plea had not been examined earlier and went to the correctness of the final quantification, it required consideration on remand. The evidentiary material on actual accounted quantity was therefore directed to be re-assessed by the original authority.

Conclusion: The matter was remanded for fresh quantification.

Final Conclusion: The finding of clandestine removal was sustained, the demand was not finally quantified, the directors' penalties were reduced, and the matter was sent back only for recomputation of the quantity after accounting for the appellants' claimed figures.

Ratio Decidendi: Clandestine removal may be proved on the basis of cumulative circumstantial and documentary evidence assessed on a preponderance of probability, and such evidence need not be independently corroborated in every detail or established with arithmetical precision.

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