Clandine removal demands need corroboration; private note book entries alone were insufficient, while admitted entries required duty re-computation.

Private notebook entries can support clandestine removal only when corroborated by evidence of raw material procurement, production, clearances, electricity use, sales, or receipt of sale proceeds; demands based only on note book Nos. 2 and 3 were therefore set aside. Where note book No. 1 reflected admitted entries, the duty demand was sustained but had to be re-computed after allowing admissible deductions and cum-duty benefit. The penalty on Shri I. Gurusamy under Rule 209A was remanded for fresh consideration because the duty liability and his alleged involvement required further examination.

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Issues: (i) Whether the duty demand based on note book No. 1 required re-computation by allowing legitimate deductions and cum-duty benefit; (ii) Whether the duty demands based on note book Nos. 2 and 3 could be sustained without corroborative evidence; (iii) Whether the penalty on Shri I. Gurusamy under Rule 209A required fresh consideration along with the duty liability.

Issue (i): Whether the duty demand based on note book No. 1 required re-computation by allowing legitimate deductions and cum-duty benefit.

Analysis: The entries in note book No. 1 were ed by the appellants, and they did not dispute the demand arising from that record, except for claiming lawful deductions and the benefit of cum-duty valuation. The duty liability therefore survived, but only after re-working the figures in accordance with the deductions and valuation benefit claimed and recognized as admissible.

Conclusion: The demand based on note book No. 1 was sustained, but it had to be re-computed after allowing the admissible deductions and cum-duty benefit, in favour of the assessee to that limited extent.

Issue (ii): Whether the duty demands based on note book Nos. 2 and 3 could be sustained without corroborative evidence.

Analysis: The demands founded on note book Nos. 2 and 3 rested only on private entries. The record did not show independent corroboration by evidence of raw material procurement, production details, electricity consumption, sales, or realization of sale proceeds. The person who allegedly maintained the records was not examined, and the contents of those note books were not satisfactorily linked to the appellants' manufacturing activity. In the absence of corroborative evidence, clandestine removal could not be established merely from those private note books.

Conclusion: The demands based on note book Nos. 2 and 3 were set aside, in favour of the assessee.

Issue (iii): Whether the penalty on Shri I. Gurusamy under Rule 209A required fresh consideration along with the duty liability.

Analysis: The penalty issue was intertwined with the reassessment of the duty liability and the extent of involvement attributed to Shri I. Gurusamy. Since the duty computation itself required re-examination and the record on personal involvement needed further consideration, the penalty could not be finally fixed at that stage.

Conclusion: The penalty matter was remanded for de novo consideration, in favour of the assessee to that extent.

Final Conclusion: The order partly sustained the demand, set aside the demands founded only on the uncorroborated private note books, and sent the penalty issue back for fresh adjudication.

Ratio Decidendi: A demand of clandestine removal cannot be sustained solely on private note book entries unless supported by corroborative evidence linking the assessee to procurement, production, clearance, and realization of sale proceeds; where admitted clearances exist, duty may be recomputed with admissible deductions and valuation benefits.

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