Clandestine removal demand fails without corroborative evidence, and extended limitation cannot apply without proof of suppression.

Clandestine removal of central excise goods cannot be sustained merely on the basis of electricity-consumption norms or estimated output figures when there is no corroborative evidence such as raw-material procurement, transport, private records, or buyer and seller statements; the demand on merits was therefore unsustainable. The extended period of limitation also cannot be invoked unless suppression, fraud, wilful misstatement, or similar intent to evade duty is established on record; where the assessee is registered and subject to departmental scrutiny, that threshold is not met. The duty demand was accordingly set aside with consequential relief.

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Issues: (i) Whether demand of central excise duty for alleged clandestine manufacture and clearance could be sustained solely on the basis of electricity consumption norms and the report relied upon by the Revenue. (ii) Whether the extended period of limitation could be invoked in the absence of evidence of suppression or other intent to evade duty.

Issue (i): Whether demand of central excise duty for alleged clandestine manufacture and clearance could be sustained solely on the basis of electricity consumption norms and the report relied upon by the Revenue.

Analysis: The demand was founded only on the mismatch between electricity consumption and declared production. No corroborative material was brought on record regarding procurement of raw materials on cash basis, movement of inputs or finished goods, private records, or statements of buyers or sellers. In clandestine removal matters, the allegation must be supported by clinching evidence and cannot rest merely on assumptions drawn from electricity usage or estimated output norms.

Conclusion: The issue was decided in favour of the assessee. The demand on merits was held unsustainable.

Issue (ii): Whether the extended period of limitation could be invoked in the absence of evidence of suppression or other intent to evade duty.

Analysis: The record did not disclose any evidence showing suppression of production or clearance, fraud, or wilful misstatement. The assessee was a registered central excise unit subject to departmental verification and audit, and the Revenue failed to establish the conditions necessary for invocation of the proviso to Section 11A(1) of the Central Excise Act, 1944.

Conclusion: The issue was decided in favour of the assessee. Invocation of the extended period was not justified.

Final Conclusion: The appeal succeeded on both merits and limitation, and the duty demand was set aside with consequential relief as permissible in law.

Ratio Decidendi: A demand for clandestine removal cannot be sustained solely on electricity-consumption-based estimates without corroborative evidence, and the extended limitation period cannot be invoked unless suppression or similar culpable conduct is proved.

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