Clandestine removal requires independent corroboration; doubtful lorry receipts alone cannot sustain duty demand or full penalties.

Admitted removal of goods without payment of duty supported duty liability to the extent of the proved evasion, and a separate stock shortage was treated as independently confirmable. Alleged clandestine removal based only on transport lorry receipts was not sustainable where the documents described different goods and no independent corroboration from buyers or other material was produced. Penalties were confined to the extent of the established duty evasion, while additional penalties on the firm and partners could not survive beyond the proved liability.

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Issues: (i) Whether duty demand and penalty were sustainable in respect of 85 kg of goods removed without payment of duty and the related 25 kg shortage; (ii) Whether duty demand for alleged clandestine removal of 345 kg could be sustained on the basis of transport lorry receipts without further corroboration; (iii) Whether the penalties imposed on the firm and its partners were liable to be sustained in full.

Issue (i): Whether duty demand and penalty were sustainable in respect of 85 kg of goods removed without payment of duty and the related 25 kg shortage.

Analysis: The removal of 85 kg without payment of duty was admitted. Mere availability of balance in the RG 23A account did not negate the duty violation. However, the duty already paid at the small-scale unit rate was accepted, as no finding had been recorded that such rate was inapplicable. The alleged shortage of 25 kg was treated as a separate shortage on record and not as part of the earlier removal.

Conclusion: The duty demand relatable to 85 kg stood only to the extent of the duty already admitted and paid at the small-scale rate, while the shortage of 25 kg was confirmed.

Issue (ii): Whether duty demand for alleged clandestine removal of 345 kg could be sustained on the basis of transport lorry receipts without further corroboration.

Analysis: The transport documents, though bearing the appellant's name, described goods different from those manufactured by the appellant. The Department relied only on the lorry receipts and one supporting statement, but did not produce corroborative evidence from buyers or other material linking those receipts to the appellant's goods. In these circumstances, the receipts were treated as doubtful and insufficient to establish clandestine removal even on a preponderance of probability.

Conclusion: The duty demand on 345 kg was set aside.

Issue (iii): Whether the penalties imposed on the firm and its partners were liable to be sustained in full.

Analysis: Penalty was sustained only to the extent of the admitted duty evasion of 85 kg, and the balance penalty was set aside. Once penalty was imposed under Section 11AC, the additional penalties imposed under Rule 173Q and allied provisions could not survive. The partner penalties also could not stand once the firm's penalty was confined to the admitted amount.

Conclusion: Penalty was sustained only to the extent of Rs. 5,508 against the firm, and the remaining penalties, including those on the partners, were set aside.

Final Conclusion: The adjudication sustained only the admitted duty-related liability on 85 kg and the shortage of 25 kg, while rejecting the major demand based on uncorroborated transport documents and reducing the penal consequences accordingly.

Ratio Decidendi: Clandestine removal cannot be sustained on doubtful transport documents alone when the documents themselves describe different goods and no independent corroboration is produced; penalty follows only to the extent of the proved duty evasion.

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