Clandestine removal demands fail when based on suspicion alone and unsupported by independent corroborative evidence.

Allegations of clandestine removal of vanaspati and stock shortage failed before CESTAT because the duty demand and penalty were based only on suspicion, assumptions from records, and uncorroborated inferences. The three principal bases-substitution of filled tins by empty tins, alleged shortage vis-a -vis RG 1 entries, and presumed unaccounted receipt of vegetable oil-were not supported by independent evidence such as transport records, direct detection, or other surrounding material. The assessee's explanation of a recording mistake, labour unrest, and production stoppage further weakened the Department's case. The demand and penalty were therefore held unsustainable for want of corroborative evidence.

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Issues: Whether the demand of central excise duty and penalty based on alleged clandestine removal of vanaspati and shortage of raw material/stock was sustainable in the absence of corroborative evidence.

Analysis: The demand rested on three strands: alleged substitution of filled tins by empty tins, alleged shortage in finished stock as compared with RG 1 entries, and alleged unaccounted receipt of vegetable oil leading to a derived quantity of unaccounted vanaspati. The first allegation was found inherently illogical and unsupported by any independent evidence. The second allegation, though ordinarily capable of raising an inference of evasion, required closer scrutiny because the assessee explained the entries as a recording mistake and pointed to labour unrest and production stoppage. The third allegation failed because the manufacturing process required time and no corresponding finished goods were found in storage. In all three respects, the Department relied only on suspicion and inferences from records, without corroboration such as truck movement evidence, independent detection, or other surrounding material.

Conclusion: The duty demand and penalty were not sustainable; the allegation of clandestine removal failed for want of corroborative evidence and the appeal was allowed.

Ratio Decidendi: Allegations of clandestine removal cannot be upheld on suspicion alone and must be supported by independent and corroborative evidence before duty and penalty can be confirmed.

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