Clandestine removal requires direct or corroborative evidence; stock shortage and presumption alone cannot sustain duty demand or penalties.

Clandestine removal under Central Excise cannot be inferred from a mere stock discrepancy between RG-1 balance and physical stock. The Tribunal held that the Department must produce direct, tangible evidence or at least sufficiently corroborative circumstantial material; a presumption based only on shortage and the nature of the goods is not enough, especially where no independent enquiry or supporting record is shown. On that basis, the duty demand and penalties could not be sustained, and the impugned order was set aside.

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Issues: Whether the charge of clandestine removal was proved so as to sustain the duty demand and penalties under the Central Excise law.

Analysis: The demand and penalties were founded on a shortage between the RG-1 balance and the physical stock. The Tribunal held that, to establish clandestine removal, the Department must adduce direct and tangible evidence or at least sufficient corroborative circumstantial evidence. Mere shortage and a presumption based on the nature of the goods were found insufficient, particularly when the lower orders themselves rested on presumption and no independent enquiry or supporting material was brought on record.

Conclusion: The charge of clandestine removal was not proved, and the duty demand and penalties could not be sustained.

Final Conclusion: The impugned order was set aside and the appeals were allowed.

Ratio Decidendi: A finding of clandestine removal cannot rest on mere stock discrepancy or presumption alone and must be supported by direct or sufficiently corroborative tangible evidence.

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