Clandestine removal demands require direct corroborative evidence; theoretical calculations and retracted statements cannot sustain excise liability.

Clandestine removal of excise goods cannot be established through theoretical calculations, presumptions or retracted statements alone. The department must adduce direct, tangible and corroborative evidence of excess manufacture, removal, transport, sale or receipt of unaccounted proceeds, and mere arithmetical inference is insufficient. Here, the demand was based mainly on calculations from printed laminated rolls and investigation statements, but no independent evidence supported actual unaccounted clearance. The duty demand and allied penalties were therefore unsustainable, and the appeals succeeded with the impugned order set aside.

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Issues: Whether the demand of central excise duty alleging clandestine removal of Star Gutkha could be sustained on the basis of theoretical calculations, statements and presumptions in the absence of direct, tangible and corroborative evidence.

Analysis: The demand rested mainly on calculations derived from printed laminated rolls and on statements recorded during investigation. The appellants disputed those calculations by pointing to the role of other raw materials, normal manufacturing losses, declared wastage, and the practical conditions of production in the trade. The statements relied upon by the department had been retracted, and no independent evidence was produced to show actual excess manufacture, removal, transport, sale, or receipt of unaccounted sale proceeds. In a charge of clandestine removal, the burden remained on the department to establish the allegation with strict, positive and corroborative evidence; mere arithmetical inference and suspicion were insufficient.

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

Final Conclusion: The appeals succeeded and the impugned order was set aside because the revenue failed to discharge the burden of proving clandestine removal by reliable evidence.

Ratio Decidendi: A charge of clandestine removal must be proved by direct, tangible and corroborative evidence, and cannot be sustained merely on theoretical calculations, presumptions or retracted statements.

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