Clandestine removal claims need corroborative evidence; untested statements and private records alone cannot justify penalties.

Penalties for alleged clandestine receipt and removal of goods cannot be sustained on the basis of an uncross-examined third-party statement, private diary entries or loose papers alone. The department produced no independent corroboration such as invoices, gate passes, transport records, buyer statements or recovered goods, and the search at the assessee's premises yielded no incriminating material. In the absence of tested and cogent evidence, adverse findings cannot rest on conjecture or assumption. The penalties were therefore set aside.

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Issues: Whether penalties under Rule 209A of the Central Excise Rules were sustainable on the basis of an uncross-examined statement, private diary entries and other uncorroborated documents to prove clandestine receipt and removal of goods.

Analysis: The evidence relied upon by the department consisted mainly of the statement of a third party and entries in his private diary, loose papers and packing slips. That witness did not subject himself to cross-examination, did not disclose the source of the alleged entries, and no independent material corroborated the alleged movement, receipt or sale of goods. No invoices, gate passes, transport details, buyer statements, or recovered goods supported the charge, and the raid at the appellants' premises did not yield incriminating material. The prior Tribunal decision on substantially similar facts, based on the same set of evidence, also negated the department's case. Penalty and clandestine removal allegations cannot rest on conjecture, assumptions or untested testimony.

Conclusion: The penalties were not sustainable and were set aside in favour of the assessee.

Ratio Decidendi: Clandestine removal and related penalties must be proved by cogent and corroborative evidence, and an uncross-examined, uncorroborated statement or private record cannot by itself justify adverse findings.

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