Clandestine removal claims may be cut to proved quantity, while personal penalty needs active involvement in evasion.

Connected clandestine removal proceedings based on the same seized records can limit the extent of duty demand where the evidence supports only a restricted quantity, rather than the full alleged removal. Here, the larger alleged clearance of MS ingots was not fully proved, but admissions and documentary material still justified duty on a limited quantity of 2,782.91 MT, with Section 11AC penalty confined to the duty so recomputed. Personal penalty required proof of active involvement in evasion: the Managing Director's penalty was set aside for lack of such material, while the Director's penalty was maintained.

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Issues: (i) Whether the demand of duty for alleged clandestine removal of MS ingots could be sustained in full when the connected proceedings against the principal buyer on the same evidence had resulted in a materially different finding; (ii) whether the penalties imposed on the Managing Director and Director of the appellant company were sustainable.

Issue (i): Whether the demand of duty for alleged clandestine removal of MS ingots could be sustained in full when the connected proceedings against the principal buyer on the same evidence had resulted in a materially different finding.

Analysis: The evidence consisted of seized documents, weighment slips, parallel invoices, electricity-consumption material and statements of persons connected with the manufacture and clearance of ingots. The proceedings against the appellant and the connected buyer arose from the same investigation and substantially the same documentary record. The finding in the connected matter showed that only a limited quantity of ingots was actually established to have moved to that buyer, whereas the larger alleged quantity was not fully supported by clear, tangible evidence. In such circumstances, the demand could not be sustained for the entire quantity alleged against the appellant. At the same time, the remaining evidence, including admissions of unaccounted scrap purchase, production and clearances to other units, was sufficient to sustain clandestine removal to a restricted extent.

Conclusion: The full demand was not sustainable. The matter was remanded for recalculation of duty on 2,782.91 MT of ingots only, with penalty under Section 11AC to be confined to the duty so determined.

Issue (ii): Whether the penalties imposed on the Managing Director and Director of the appellant company were sustainable.

Analysis: No material showed active involvement of the Managing Director in the day-to-day operations or in the acts leading to duty evasion, so the penalty on her could not stand. The Director, however, was found to have a role in the affairs of the company, and the penalty imposed on him was already modest and called for no interference.

Conclusion: The penalty on the Managing Director was set aside, while the penalty on the Director was sustained.

Final Conclusion: The appeal was partly allowed with remand for limited recomputation of duty, one personal penalty being annulled and the other maintained.

Ratio Decidendi: Where two connected adjudications rest on the same evidentiary foundation, a materially inconsistent finding in one proceeding may limit the extent of clandestine removal that can be sustained in the other, and personal penalty requires proof of active involvement in the evasion.

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