Contemporaneous records can prove clandestine removal, while admitted tariff coverage makes glass wool waste and scrap dutiable.

Reliable contemporaneous records maintained by an assessee can establish clandestine removal when the entries are not disproved and the supporting explanation lacks statutory records or credible evidence. On that basis, removal of spun yarn and glass wool was treated as proved where loading books and outward gate registers showed quantities cleared in excess of duty-paid stock and the defence of rejected goods or repacking was rejected as unsupported. Waste and scrap of glass wool was also held dutiable because it was covered under the tariff heading and its excisability was admitted. The duty demand and penalty were therefore sustained.

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Issues: (i) whether clandestine removal of 76 packets of spun yarn was proved on the basis of the appellants' own records; (ii) whether clandestine removal of 37 packets of glass wool was proved on the basis of the loading book and outward gate register; and (iii) whether waste and scrap of glass wool was liable to duty.

Issue (i): whether clandestine removal of 76 packets of spun yarn was proved on the basis of the appellants' own records.

Analysis: The loading book and outward gate register, seized from the appellants' premises, showed clearance of 126 packets, while duty had been paid only on 50 packets. The entries in those records were not shown to be incorrect, and the plea that the goods were rejected goods was unsupported by any credible evidence. No compliance with the procedure applicable to receipt and clearance of rejected goods was shown, and there was no proper statutory record reflecting such receipt or re-clearance. The defence was therefore treated as an afterthought.

Conclusion: Clandestine removal of 76 packets of spun yarn stood proved against the appellants.

Issue (ii): whether clandestine removal of 37 packets of glass wool was proved on the basis of the loading book and outward gate register.

Analysis: The appellants' own loading book and outward gate register showed removal of 121 packets, whereas the defence of repacking from 84 packets into 121 packets was not supported by any convincing material. No statutory entry, intimation, or contemporaneous record showed the alleged repacking or damage to original packing. The Tribunal found no reason to doubt the correctness of the entries made in the appellants' own records and rejected the explanation as afterthought.

Conclusion: Clandestine removal of 37 packets of glass wool stood proved against the appellants.

Issue (iii): whether waste and scrap of glass wool was liable to duty.

Analysis: The appellants failed to substantiate that the goods were of some other material. More importantly, their Accounts Officer admitted that the goods were covered under sub-heading 7014 of the tariff. In view of that admission, the contention that the waste and scrap was not excisable because it was not separately named in the tariff was rejected.

Conclusion: Waste and scrap of glass wool was held dutiable and the duty demand was upheld.

Final Conclusion: The duty demand and penalty were sustained in full, and the appeal failed on all substantive grounds.

Ratio Decidendi: Clandestine removal can be established from reliable contemporaneous records maintained by the assessee when the entries are not disproved, and waste or scrap is dutiable where it is covered by the tariff and its excisability is admitted.

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