Clandestine removal as a factual issue barred revenue challenge, and contradictory statements could not sustain penalty.

A revenue appeal under Section 35-G of the Central Excise Act could not succeed because the alleged clandestine removal turned on a pure question of fact, and the HC declined to re-appreciate evidence or disturb the Tribunal's finding that no material proved such removal. The two statements recorded under Section 14 were contradictory, and no additional evidence supported the department's case. On that factual basis, the Tribunal's deletion of penalty under Section 11AC was sustained, and the appeal failed on merits.

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Issues: Whether a revenue appeal under Section 35-G of the Central Excise Act, 1944 could succeed on a challenge to the Tribunal's finding that there was no material proving clandestine removal, and whether penalty under Section 11AC could be sustained on the basis of contradictory statements recorded under Section 14.

Analysis: The issue of clandestine removal was held to be a pure question of fact. In an appeal under Section 35-G, the Court declined to re-appreciate the evidence or disturb the Tribunal's factual finding. The two statements relied upon by the revenue were found to be contradictory, and no other material had been placed on record to support clandestine removal.

Conclusion: The appeal failed on merits and the penalty deletion by the Tribunal was upheld.

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