Clandestine removal cannot be proved by private record mismatch alone; absence of independent evidence defeated duty demand and penalty.

Duty demand and penalty based only on discrepancies between a private production record and the statutory RG-1 register were not sustainable where stock tallied with recorded balances and there was no independent evidence of excess raw material consumption, higher electricity use, or actual clandestine manufacture and removal. A single explanation for one date could not be extended to the entire period without supporting proof, and mere record mismatch did not establish suppression or mens rea. The extended period of limitation was therefore not invocable, and the demand and penalty failed.

---

---

Issues: Whether duty demand and penalty could be sustained on the basis of a private production record, in the absence of positive evidence of clandestine manufacture and removal, and whether the extended period of limitation was invocable.

Analysis: The demand was founded mainly on a difference between entries in the private Daily Production Report and the RG-1 register. The physical stock was found to tally with the RG-1 balance, and there was no evidence of excess consumption of raw materials or electricity, nor any independent proof of actual production and clearance of the disputed quantity. A single explanation relating to one date could not, without further inquiry or supporting evidence, be extended to the entire period. Mere discrepancy between a private record and the statutory register was held insufficient to establish clandestine production or removal, and the finding of suppression was unsupported by any proof of mens rea.

Conclusion: The demand of duty, the invocation of the extended period, and the penalty were not sustainable.

---