Clandestine manufacture demands corroborative evidence; electricity consumption alone is insufficient to sustain excise duty liability.

A demand for excise duty based on alleged clandestine manufacture and removal cannot be sustained on electricity consumption alone. The Department must support such an allegation with corroborative material, such as evidence of raw material procurement, finished goods clearance, transport details, buyers or sellers, cash transactions, or private records. Where there is no proof of excess input purchases or actual removal of goods, mere electricity usage by an induction furnace is insufficient to establish clandestine activity. On that basis, the demand was not sustainable.

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Issues: Whether a demand of excise duty for alleged clandestine manufacture and removal could be sustained solely on the basis of electricity consumption, in the absence of corroborative evidence.

Analysis: The demand was founded only on the consumption of electricity by the induction furnace. For an allegation of clandestine manufacture and removal, the Department was required to adduce corroborative material such as evidence of raw material procurement, finished goods clearance, transport details, buyers and sellers, cash transactions, or private records. Mere reliance on electricity consumption, without any supporting evidence showing excess input purchase or actual removal of goods, was held insufficient to establish clandestine activity.

Conclusion: The demand could not be sustained on electricity consumption alone and the appeal was allowed.

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