Clandestine removal demands reliable evidence, cross-examination rights and independent corroboration before duty and penalties can stand.

Clandestine removal allegations based on private diaries, transporter records and third-party statements require reliable proof of authorship, possession and genuineness before they can be acted upon. Where the assessee disputes the authenticity of such material, the evidentiary value of those records is weakened unless the witnesses are examined and cross-examination is allowed. The case also highlights the need for independent corroboration, such as capacity, electricity use or other physical indicators, to support the alleged scale of unaccounted production and clearance. In the absence of such compliance and corroboration, duty demand, confiscation, redemption fine and penalties cannot be sustained.

---

---

Issues: Whether the demand of duty, confiscation, redemption fine and penalties for alleged clandestine removal were sustainable when the case rested substantially on diaries, transporter records and witness statements and the assessee disputed the authorship and genuineness of the material and was denied cross-examination of third-party witnesses.

Analysis: The entire case of clandestine removal was founded on private diaries said to have been recovered from the factory, documents from transporters and weighbridges, and statements of transporters, dealers and suppliers. The director of the appellant categorically denied ownership and authorship of the diaries, and the recovery itself was treated as doubtful because the record did not clearly establish from whose possession the diaries were seized. In such circumstances, the evidentiary value of third-party statements and documents could not be relied upon without compliance with the mandatory requirements for admitting such evidence, including examination of the witnesses and opportunity of cross-examination. The record also lacked independent corroboration regarding manufacturing capacity, electricity consumption or other physical indicators capable of supporting the alleged scale of clandestine production and clearance.

Conclusion: The charge of clandestine removal was not established, and the demand of duty, confiscation, redemption fine and penalties could not survive.

Ratio Decidendi: Where a clandestine removal case is based on third-party statements and private records whose authorship is disputed, those materials cannot be treated as reliable evidence unless the statutory requirements for examination and cross-examination of witnesses are complied with and the allegation is independently corroborated.

---