Clandestine removal allegations need corroboration and fair cross-examination; unsupported statements alone cannot sustain duty, interest, or penalty.

Allegations of clandestine removal require independent corroboration; retracted statements and third-party material alone were insufficient where no search, seizure, excess raw material, transport trail, or clearance evidence was found. Denial of cross-examination of relied-upon witnesses breached natural justice and weakened the evidentiary basis for the demand. On that footing, the duty, interest and penalty confirmed against the assessee were set aside, and consequential relief followed.

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Issues: Whether the demand of duty, interest and penalty for alleged clandestine removal was sustainable in the absence of recovery of unaccounted goods or other corroborative evidence, and where cross-examination of relied-upon witnesses had been denied.

Analysis: The demand rested principally on statements and third-party material, while the factory was not searched, no goods or documents were seized from the appellant's premises, and no independent evidence of excess raw material, production, transport or clearance of finished goods was brought on record. The denial of cross-examination of witnesses whose statements formed the basis of the demand was a serious procedural defect, and the retracted statement of the director could not, by itself, establish clandestine removal. In such circumstances, the evidentiary foundation for confirming duty, interest and penalty was found to be lacking.

Conclusion: The demand could not be sustained and the findings confirming clandestine removal were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded, and the duty demand, equal penalty and interest confirmed by the appellate authority were annulled with consequential relief.

Ratio Decidendi: Allegations of clandestine removal cannot be upheld merely on retracted statements or third-party evidence without independent corroboration, and denial of cross-examination of relied-upon witnesses vitiates the adjudication for breach of natural justice.

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