Clandestine removal demands independent corroboration; private slips and statements alone were insufficient to sustain duty and penalty.

Clandestine manufacture and removal cannot be sustained on private slips and statements alone unless corroborated by independent evidence showing manufacture, removal and movement of goods or funds. Here, the Tribunal found no proof of excess electricity consumption, clandestine purchase or sale of raw materials or finished goods, stock discrepancies, or flow back of funds. The PLA deposit did not cure the evidentiary gap. As the revenue failed to establish the alleged clandestine activity with supporting material, the duty demand and penalty were set aside.

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Issues: Whether the demand of duty and penalty for alleged clandestine manufacture and removal could be sustained on the basis of private slips, statements and a PLA deposit, without corroborative evidence.

Analysis: The Tribunal held that allegations of clandestine removal require supporting material such as receipt and consumption of raw materials, evidence of manufacture, electricity consumption, purchases and sales, shortages or excess stock, and flow back of funds. On the facts, there was no evidence of excess electricity use, no proof of clandestine purchase or sale of raw materials or finished goods, and no material showing flow back of funds. The private slips and statements alone were found insufficient, and the PLA deposit was held not to supply the missing proof.

Conclusion: The duty demand and penalty were not sustainable and were set aside in favour of the assessee.

Ratio Decidendi: Clandestine manufacture and removal cannot be upheld on the basis of private documents and statements alone unless they are corroborated by independent evidence establishing manufacture, removal, and movement of goods or funds.

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