Clandestine removal demands fail without corroborative evidence of manufacture, clearance, buyers, stock variance, or other supporting proof.

Demand for duty, interest and penalties based on alleged clandestine manufacture and removal of cut tobacco was rejected because the rested only on private documents and theoretical computations. The record showed no corroborative evidence of actual manufacture or clearance, no excess electricity consumption, no identified buyers, no unaccounted stock at the factory, and no indication of collusion by the officers posted at the unit. On these facts, clandestine removal could not be inferred from assumptions or presumptions alone, and the demand and penalties were held unsustainable.

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Issues: Whether the demand of duty, interest and penalties based on alleged clandestine manufacture and removal of cut tobacco was sustainable in the absence of corroborative evidence.

Analysis: The allegations rested on private documents and theoretical working out, without supporting evidence of actual manufacture and clearance. There was no proof of excess electricity consumption, no identification of buyers who allegedly received the goods, no unaccounted stock was found when the officers visited the factory, and no indication of collusion by the officers posted at the unit. The finding of clandestine removal could not, therefore, be sustained on assumptions and presumptions alone.

Conclusion: The demand and penalties were not sustainable and the assessee succeeded on the issue.

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