Clandestine removal demands need corroboration; inconsistent register entries alone were insufficient to justify pre-deposit and recovery stay.

Waiver of pre-deposit and stay of recovery were granted where the demand rested mainly on discrepancies between private log books and RG-1 records, without corroborative evidence of clandestine manufacture or removal. The Tribunal noted the absence of proof of unaccounted raw material procurement, excess electricity consumption, sale proceeds, buyers, transporters, statements from responsible officers, or seizure, and treated these missing links as material to the prima facie case. As the allegation was unsupported by independent investigation, the assessees were found entitled to interim relief pending disposal of the appeal.

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Issues: Whether waiver of pre-deposit and stay against recovery should be granted where the demand was founded mainly on discrepancies between private log books and RG-1 records, without supporting evidence of excess production, procurement of raw materials, electricity consumption, sale proceeds, buyers, transporters, or seizure.

Analysis: The demand was initiated essentially on the basis of private register entries said to be inconsistent with the statutory RG-1 register. No investigation was shown regarding unaccounted procurement of raw materials, excess electricity consumption, receipt of sale consideration, statements from responsible officers, buyers, or transporters, nor was any seizure made to corroborate the allegation of clandestine manufacture and removal. In these circumstances, the Tribunal found that the appellants had made out a prima facie case and that the Commissioner had not adequately dealt with the material considerations raised in support of the defence.

Conclusion: Waiver of pre-deposit was granted and stay of recovery was ordered in favour of the assessees pending disposal of the appeal.

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