Clandestine removal demands require corroborative evidence; third-party transport records and retracted statements were found insufficient.

A charge of clandestine removal, carrying serious civil consequences, must be proved by tangible and corroborative evidence. Third-party transport records and retracted statements, without reliable proof of excess raw material procurement, abnormal electricity use, actual removal, identified buyers, receipt of sale proceeds, or interception of goods, were insufficient. The officers' statements were treated as inadmissible for non-compliance with the governing statutory requirement, and the absence of meaningful consignee verification and failure to join transporters as noticees further weakened the case. The demand was therefore not sustainable in law.

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Issues: Whether the demand of duty of Rs. 9,94,65,997/- alleged on clandestine removal was sustainable on the basis of the transporter's bilty nakal register, allied statements, and surrounding circumstances.

Analysis: The alleged demand rested mainly on third-party transport records and statements of transporters and employees. The statements of the assessee's officers were held inadmissible for want of compliance with the statutory requirement governing use of such statements, and the remaining statements were found to be retracted and not to amount to a categorical admission of clandestine removal. The record also lacked corroboration on essential links such as excess procurement of raw materials, abnormal electricity consumption, actual removal of goods, identification of buyers, receipt of sale proceeds, or interception of transported goods. The absence of meaningful verification from the consignee side and the failure to join the transporters as noticees further weakened the evidentiary value of the material relied upon by Revenue.

Conclusion: The alleged clandestine removal was not proved by cogent and corroborative evidence, and the dropping of the demand was in law. The Revenue's challenge failed.

Final Conclusion: The demand for Rs. 9,94,65,997/- could not be sustained, and the order dropping that demand was upheld.

Ratio Decidendi: A charge of clandestine removal, being a serious allegation with civil consequences, must be established by tangible and corroborative evidence; third-party transport records and retracted statements, without proof of the essential manufacturing and removal chain, are insufficient.

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