Clandestine removal requires corroborative evidence; transporter records and unverified statements alone cannot sustain duty demand or penalties.

Clandestine removal of pan masala was not established because the demand rested mainly on transporter records and statements that lacked independent corroboration. The alleged consignees were not examined, no stock discrepancy was found in the factory, and the transporter's bill register, not relied on in the show cause notice, could not be used against the assessee. The branch incharge's statement was derived entirely from transport records and did not identify who booked the consignments or prove actual duty-free removal, while the authorised signatory's statement was not an admission of clandestine clearance. Duty demand and penalties were therefore unsustainable.

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Issues: Whether clandestine removal of pan masala was proved on the basis of transporter records and statements, and whether the duty demand and penalties could be sustained.

Analysis: The demand was founded mainly on the transporter's records and statements, but those materials were not supported by independent corroborative evidence. The alleged consignees were not examined, no stock discrepancy was found in the factory, and the transporter's bill register, which was not relied upon in the show cause notice, could not be used against the appellants. The statement of the transporter's branch incharge was shown to rest entirely on the transport records, without identifying the person who booked the consignments or establishing actual removal without duty. The authorised signatory's statement also did not amount to an admission of clandestine clearance.

Conclusion: Clandestine removal was not established, and the duty demand and penalties were not sustainable.

Ratio Decidendi: Allegations of clandestine removal must be proved by reliable and corroborative evidence, and transporter records or uncorroborated statements alone are insufficient to sustain duty demand and penalties.

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