Clandestine removal allegation failed where retracted statements and corroborative transport evidence did not prove non-use of inputs.

A demand of duty based on alleged non-use of duty-free chemicals and invalid clearance of pesticides was held unsustainable where the Revenue relied mainly on a promptly retracted statement, asserted non-existence of a supplier, and alleged absence of machinery. The tribunal found that the retraction was timely, the deponent's inability to understand English was not rebutted, and the later statement, customer confirmations, and transporter evidence supported receipt of the chemicals at the factory and clearance through the trading concern. In the absence of tangible evidence of clandestine removal or non-use of inputs, findings based on doubt and conjecture could not sustain the demand, and the assessee succeeded.

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Issues: Whether the demand of duty could be sustained on the allegation that duty-free chemicals were not used in the manufacture of pesticides and that the final goods were not validly cleared.

Analysis: The demand rested primarily on a retracted statement of the proprietor, the alleged non-existence of one supplier, and the absence of machinery. The retraction was made within a short time and the deponent's lack of familiarity with English was not rebutted. The subsequent statement, together with customer confirmations and transporter evidence, supported the assessee's case that the chemicals reached the factory and the pesticides were cleared through the trading concern. The adverse findings were based on doubt, assumption, and conjecture, while the Revenue did not produce sufficient tangible evidence to establish clandestine removal or non-use of the inputs.

Conclusion: The demand was not sustainable and the issue was decided in favour of the assessee.

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