Clandestine removal penalties require direct corroborative evidence; absent that, penalties on company and directors were set aside.

Penalties for alleged clandestine removal were held unsustainable because the record lacked reasonable basis and direct corroborative evidence. The Tribunal noted that no interception of goods removed without invoices or challans was established, and the available material, including installed production capacity and declared clearances, did not justify penal consequences under Section 11AC for the company or Rule 209A for the directors. The penalty portion was therefore set aside, while the duty-related determination already worked out in remand proceedings was left undisturbed.

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Issues: Whether the penalties imposed on the appellant company under Section 11AC and on the directors under Rule 209A were sustainable when the allegation of clandestine removal was not supported by a reasonable basis or direct corroborative evidence.

Analysis: The demand for duty on shortages and alleged clandestine removals had already been worked out in the remand proceedings, but the Tribunal found no reasonable explanation for sustaining penalty on the basis of the alleged quantity of clandestine clearance. The installed production capacity and declared clearances showed prejudice in the manner the allegation was pursued. No instance of interception of goods removed without invoices or challans was established, and the record did not provide the level of direct evidence ordinarily required to justify penal consequences for clandestine removal.

Conclusion: The penalties under Section 11AC and Rule 209A were not sustainable and were set aside.

Final Conclusion: The appeal succeeded to the extent of deletion of penalties, while the duty-related determination was not disturbed in this order.

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