Clandestine removal demands positive proof; suspicion alone cannot sustain a duty demand where records and stock tallies match.

Clandestine manufacture and removal must be proved by positive, reliable evidence and cannot rest on suspicion or conjecture. The record showed no proof that raw materials bought in the names of five units reached the factory or were used for unaccounted production, no seizure of excess finished goods or raw materials, no evidence of receipt of sale proceeds or payment for the alleged inputs, and stock records tallied with the registered accounts. The Department also failed to establish the respondent's alleged capacity for large-scale clandestine production. The duty demand was therefore not sustainable and was dropped.

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Issues: Whether the Revenue established clandestine manufacture and removal of tread rubber so as to sustain the duty demand.

Analysis: The evidence on record did not show that raw materials purchased in the names of the five units had reached the respondent's factory or were used for unaccounted manufacture and clearance. There was no seizure of excess finished goods or raw materials, no proof of receipt of sale proceeds or payment for the impugned inputs, and the stock records checked by the officers tallied with the registered accounts. The Department also failed to examine and prove the respondent's alleged capacity for such large-scale clandestine production. The finding below was that clandestine removal is a positive act and cannot be inferred merely from suspicion, associations, or conjectures.

Conclusion: The Revenue failed to prove clandestine removal, and the duty demand was rightly dropped.

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