Clandestine removal requires independent corroboration; assumptions from raw material use and a statement were insufficient.

Demand, penalties and confiscations based on alleged clandestine manufacture and clearance were held unsustainable where the case rested on rutile sand consumption, an annual capacity certificate and a managing director's statement without independent corroboration. Rutile sand was not shown to be the sole or principal raw material for welding electrodes, and no excess electricity consumption, excess procurement of other inputs, or buyer-side evidence of clandestine removals was established. The statement alone did not prove clandestine clearance, and the record reflected assumptions rather than a complete investigation. The appeals were therefore allowed.

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Issues: Whether the demand of duty, penalties and confiscations could be sustained on the basis of rutile sand consumption, annual capacity assessment and the statement of the managing director, without independent corroborative evidence of clandestine manufacture and clearance.

Analysis: The demand was founded mainly on the alleged correlation between rutile sand consumption and production of welding electrodes, together with a capacity certificate and a statement said to have been made by the managing director. Rutile sand was found not to be the sole or principal raw material for welding electrodes, and the materials required for manufacture also included other inputs whose alleged excess procurement or consumption was not established. There was no supporting evidence of excess electricity consumption, no proof of excess purchase of other raw materials, and no evidence from buyers showing clandestine clearances. The statement relied upon did not, by itself, establish clandestine removal, and the record showed that the case rested on assumptions and presumptions rather than a complete investigation.

Conclusion: The demand, penalties and confiscations were not sustainable and the appeals were allowed.

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