Clandestine removal requires strict proof; investigation deposits may be refundable without unjust enrichment or refund limitation applying.

Clandestine removal must be proved by strict, direct, and corroborated evidence; unauthenticated register entries or assumptions are insufficient, so a demand and penalty cannot rest on an unproven allegation. Amounts deposited during investigation may be treated as refundable deposits, not duty paid under adjudication, where no collection from buyers is shown. In that situation, the bar of unjust enrichment does not apply, and the ordinary limitation for statutory refund claims is also inapplicable. The result described is that the excess demand fails and refund-related relief follows for the balance amount.

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Issues: (i) Whether the demand and penalty could be sustained on the allegation of clandestine removal in the absence of direct documentary evidence. (ii) Whether the amount deposited during investigation was refundable and whether the claim was barred by time or defeated by unjust enrichment.

Issue (i): Whether the demand and penalty could be sustained on the allegation of clandestine removal in the absence of direct documentary evidence.

Analysis: The demand was founded on alleged non-accountal and clandestine clearance, but the record did not contain concrete and direct evidence proving removal of excisable goods without payment of duty. The decision emphasised that clandestine production and removal must be established by authoritative material and that unauthenticated register entries or assumptions are insufficient. The findings of the adjudicating authority were accepted because they were based on evidence and calculations, while the broader allegation of clandestine removal was not proved to the standard required in such matters.

Conclusion: The allegation of clandestine removal was not proved and the demand beyond the amount sustained by the adjudicating authority could not stand.

Issue (ii): Whether the amount deposited during investigation was refundable and whether the claim was barred by time or defeated by unjust enrichment.

Analysis: The amount was treated as a deposit made under coercive circumstances during investigation and not as duty paid pursuant to an adjudicated demand. Since the amount was not shown to have been collected as duty from buyers, the doctrine of unjust enrichment was held inapplicable. For the same reason, the claim could not be rejected as time-barred in the manner applicable to a statutory refund of duty. The balance amount was therefore held refundable with consequential relief.

Conclusion: The deposited amount was refundable and the objections of time-bar and unjust enrichment were rejected.

Final Conclusion: The common order resulted in dismissal of the Revenue's challenge and allowance of the assessee's appeal, with refund-related relief granted.

Ratio Decidendi: Clandestine removal must be proved by strict, direct and corroborated evidence, and an amount taken during investigation without a statutory adjudication is to be treated as a refundable deposit rather than duty, so that unjust enrichment and the ordinary refund limitation do not apply.

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