Clandestine manufacture findings require full consideration of production factors; ignoring capacity, labour, power and raw materials vitiates inference.

A finding of clandestine manufacture and removal of tread rubber cannot rest on suspicion or a narrow inference from sulphur shortfall alone where the authority has not considered the relevant factors for estimating normal production. Installed capacity, labour employed, power consumption and raw material utilisation are material considerations in determining production, and omission to assess them vitiates the conclusion. An inferential finding on suppressed production is open to challenge when material evidence is ignored or relevant factors are left out. The matter was therefore required to be remitted for fresh consideration after hearing the assessee.

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Issues: Whether the finding that the assessee clandestinely manufactured and removed tread rubber without payment of duty was vitiated by failure to consider the relevant factors for determining normal production, including installed capacity, labour, power consumption and raw material utilisation.

Analysis: The finding of clandestine manufacture was based substantially on the alleged shortfall of sulphur and the inference drawn from it as to the quantity of tread rubber produced. The statutory scheme required the authority fixing normal production to have regard to installed capacity, raw materials, labour employed, power consumed and other relevant factors. The record showed that these factors were not properly adverted to, and a finding based on suspicion, surmise or irrelevant or omitted material cannot stand. An inferential conclusion on production is open to challenge where material evidence has been ignored or relevant considerations have been left out.

Conclusion: The finding was vitiated for non-consideration of relevant evidence and factors, and the matter had to be restored to the Tribunal for fresh decision after hearing the assessee.

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