Clandestine removal and Cenvat credit disputes require corroborative evidence, not assumptions or unverified statements.

Clandestine removal of excisable goods cannot be sustained on theoretical production calculations, assumptions, loose papers or uncorroborated statements; independent evidence such as excess raw material procurement, transport, buyers or other supporting material is required, and in its absence the allegation remains unproved. Denial of Cenvat credit on alleged non-utilisation of imported inputs also fails where the record shows import, movement to a job worker, payment of transportation charges, job-work billing and receipt of goods, with no material proving wrongful availment. On these facts, the demand, penalty and interest were set aside with consequential relief.

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Issues: (i) whether the charge of clandestine removal of excisable goods could be sustained on the basis of theoretical production calculations, statements and uncorroborated material, and (ii) whether the denial of Cenvat credit on the allegation of non-utilisation of imported inputs was justified.

Issue (i): whether the charge of clandestine removal of excisable goods could be sustained on the basis of theoretical production calculations, statements and uncorroborated material.

Analysis: The demand was founded mainly on statements, assumed standard production, batch calculations and certain loose papers, without supporting evidence of excess procurement of raw material, transportation, buyers, or any other independent corroboration. Clandestine removal is a serious allegation and cannot be established by conjecture, assumptions or a single factor. In the absence of tangible and corroborative evidence, the allegation remained unproved.

Conclusion: The issue was decided in favour of the assessee and against the department.

Issue (ii): whether the denial of Cenvat credit on the allegation of non-utilisation of imported inputs was justified.

Analysis: The record showed import of the material, movement to the job worker, payment of transportation charges, raising of job-work bills and subsequent receipt of goods by the assessee. No documentary material or statements established that the inputs were not utilised or that credit had been wrongly taken. The available records indicated compliance with the requirements for availing credit.

Conclusion: The issue was decided in favour of the assessee and against the department.

Final Conclusion: The demand, penalty and interest could not be sustained, and the impugned order was set aside with consequential relief.

Ratio Decidendi: Allegations of clandestine removal and wrongful credit cannot be sustained without independent corroborative evidence and cannot rest merely on assumptions, presumptions or unverified statements.

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