Clandestine manufacture demands fail where electricity norms and third-party records are unreliable and unsupported by corroboration.

Allegations of clandestine manufacture and removal of MS ingots based on electricity consumption norms, technical opinion, an outdated article, and third-party records were not supported by cogent evidence. The consumption norm adopted by Revenue was found unreliable because power use varied with operational factors and ancillary consumption was not accounted for. The technical opinion was not shown to be an authoritative institutional report, and the weighbridge and transporter statements were uncorroborated with cross-examination denied. In the absence of evidence of extra raw material, unaccounted transport, buyers, flow-back of funds, or statutory record discrepancies, the duty demand and penalties could not be sustained.

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Issues: Whether the demand of central excise duty and penalties for alleged clandestine manufacture and removal of MS ingots was sustainable on the basis of electricity consumption norms, technical opinions, and third-party weighbridge and transporter records.

Analysis: The case rested mainly on alleged excess production inferred from electricity consumption, letters to the furnace supplier, an individual technical opinion, a journal article, and certain third-party records. The electricity consumption figures obtained from the department's own two heats showed variation, and the record disclosed that power use depended on multiple operational factors. The consumption norm adopted by Revenue was not supported by reliable evidence and did not account for ancillary power usage. The technical opinion of Dr. Batra was not shown to be an authoritative institutional report, while the article relied upon was admitted to be outdated. The weighbridge and transporter statements were not independently corroborated and cross-examination was denied, rendering those statements unsafe for reliance. There was also no satisfactory evidence of extra raw material, unaccounted transport, buyers, flow-back of funds, or discrepancies in statutory records.

Conclusion: The allegations of clandestine manufacture and removal were not proved by cogent and reliable evidence, and the duty demand and penalties could not be sustained.

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