Clandestine removal demands fail when third-party records lack independent corroboration of manufacture, transport, and clearance.
Clandestine removal cannot be sustained on third-party records and statements alone when there is no corroborative material from the assessee's own premises. The absence of search or recovery from the appellant's premises, stock verification of raw materials, transport evidence, or other independent material linking the assessee to unaccounted clearances meant the alleged suppression was not proved. The demand and penalty were therefore set aside, and the original order was restored because the revenue failed to establish clandestine manufacture, transport, and removal by independent evidence.
Issues: Whether clandestine removal and duty demand could be sustained solely on the basis of third-party records and statements, in the absence of corroborative evidence from the appellant's own premises.
Analysis: The demand arose from documents recovered from a buyer and statements recorded during investigation. However, there was no search or recovery from the appellant's premises, no stock verification of the appellant's raw materials, and no evidence of transport or other independent material linking the appellant to the alleged unaccounted clearances. The recorded principle applied is that third-party documents, by themselves, do not establish clandestine manufacture or removal unless supported by clinching corroborative evidence.
Conclusion: The allegation of clandestine removal was not proved and the duty demand and penalty could not be sustained on the third-party material alone; the order in appeal was set aside and the original order was restored.
Final Conclusion: The assessee succeeded because the revenue failed to establish clandestine clearance by independent and corroborative evidence.
Ratio Decidendi: A finding of clandestine removal cannot rest solely on third-party records or statements unless supported by independent corroborative evidence establishing clandestine manufacture, transport, and removal.
TaxTMI 
AI Drafter ✕
TaxTMI 
