Clandestine removal cannot be proved on uncorroborated third-party records where cross-examination is denied and no independent evidence exists.

A charge of clandestine removal cannot be sustained solely on diaries, private records, and statements of brokers or transporters when cross-examination is denied and no independent corroboration exists. The demand here rested on third-party material, but there was no supporting evidence from buyers, transport documents, receipt of sale proceeds, excess raw material consumption, or abnormal electricity use. In the absence of such corroboration, the third-party statements could not be treated as the sole basis for confirming duty, interest, and penalties. The impugned order was set aside and the appeals were allowed.

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Issues: Whether the demand of central excise duty, interest and penalties for alleged clandestine removal could be sustained on the basis of third-party records and statements of brokers and transporters without allowing cross-examination and without independent corroboration.

Analysis: The demand was founded on diaries and private records recovered from brokers and on statements recorded from such third parties. The appellant's request for cross-examination was rejected. The evidence from the brokers and transporters was not supported by any independent material such as buyers' statements, proof of transport, receipt of sale proceeds, excess consumption of raw material, or abnormal electricity consumption. In the absence of corroboration, and in view of the denial of cross-examination, the third-party statements could not be relied upon as the sole basis for concluding clandestine removal.

Conclusion: The allegation of clandestine removal was not proved, and the duty demand, interest and penalties were unsustainable.

Final Conclusion: The impugned order was set aside and the appeals were allowed.

Ratio Decidendi: A charge of clandestine removal cannot be sustained solely on uncorroborated third-party records and statements when cross-examination is denied and no independent evidence links the assessee to the alleged clearances.

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