Clandestine removal supported duty demand and full statutory penalty where admissions were unretracted and no bona fide explanation was shown.

Unretracted admissions by the authorised signatory, director and clerk established that processed fabrics were received, processed and removed outside statutory records without payment of duty, so the duty demand was supportable. Where clandestine removal is proved and no bona fide explanation is shown, the statutory penalty under Section 11AC need not be reduced and may be applied in full. The impugned order was sustained in full.

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Issues: (i) Whether the duty demand was sustainable on the basis of the evidence of clandestine removal of processed fabrics. (ii) Whether the penalty under Section 11AC was liable to be reduced.

Issue (i): Whether the duty demand was sustainable on the basis of the evidence of clandestine removal of processed fabrics.

Analysis: The statements of the authorised signatory, the director and the clerk consistently admitted that the fabrics found outside the statutory records were genuinely received, processed and removed without accounting in the prescribed registers and without payment of duty. Those statements were neither retracted nor modified. On that evidence, the allegation of clandestine removal stood established and the duty demand was supportable.

Conclusion: The demand of duty was upheld.

Issue (ii): Whether the penalty under Section 11AC was liable to be reduced.

Analysis: The case involved proved clandestine removal without payment of duty. In such circumstances, no bona fide mistake or other valid ground was shown to justify reduction of the statutory penalty. The penal provision was required to be applied in full force.

Conclusion: The penalty under Section 11AC was not liable to be reduced.

Final Conclusion: The impugned order was sustained in full and the appeal failed on merits.

Ratio Decidendi: Unretracted admissions establishing clandestine removal can sustain the duty demand, and where clandestine removal is proved, the statutory penalty may be imposed without reduction absent a bona fide explanation.

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