Clandestine removal demands need corroborative evidence; private records alone cannot sustain duty, penalty, or valuation-based duty demands.

Clandestine removal demands cannot rest on packing slips or private records alone; corroborative evidence such as raw material consumption, electricity usage, buyer identification, or other surrounding proof is required, and the absence of such evidence makes the demand and penalty unsustainable. A valuation-based differential duty demand must also be supported by a demonstrated factual and legal basis showing higher-price clearances through depots. The commentary underscores that adjudication fails where allegations are built on assumptions rather than a complete evidentiary chain.

---

---

Issues: (i) Whether the demand of duty and penalty for alleged clandestine manufacture and removal of excisable goods could be sustained on the basis of packing slips alone without corroborative evidence. (ii) Whether the differential duty confirmed on the basis of depot clearances was justified.

Issue (i): Whether the demand of duty and penalty for alleged clandestine manufacture and removal of excisable goods could be sustained on the basis of packing slips alone without corroborative evidence.

Analysis: The charge of clandestine production rested substantially on packing slips and related records. No meaningful investigation was shown regarding excess consumption of raw materials, electricity consumption, or identification of buyers who allegedly received unaccounted goods. The order-in-original itself reflected that the conclusions were built on assumptions rather than on a complete evidentiary chain. In matters of clandestine manufacture and removal, private records require corroboration by surrounding evidence.

Conclusion: The demand and penalty on this issue were not sustainable and were set aside in favour of the assessee.

Issue (ii): Whether the differential duty confirmed on the basis of depot clearances was justified.

Analysis: The finding on differential duty based on the value of goods cleared through depots was not supported by any discussion showing that the goods were in fact cleared at a higher price. The record did not contain sufficient evidentiary basis for the adopted valuation.

Conclusion: The differential duty on this issue was not justified and was set aside in favour of the assessee.

Final Conclusion: The adjudication failed for want of proper investigation and evidentiary support, and the impugned order was quashed in full.

Ratio Decidendi: Allegations of clandestine removal and related duty demands must be supported by corroborative evidence beyond private records or presumptions, and a valuation-based duty demand must rest on a demonstrated factual and legal foundation.

---