Clandestine removal proved through balance sheet and excise records, with duty demand and penalty sustained.

Audited balance sheets read with the assessee's statutory excise records were treated as sufficient evidence of production and clearances exceeding what was disclosed in the excise returns, supporting a finding of clandestine removal of excisable goods. The objection on valuation defects was not entertained because it had not been raised before the lower authorities. The penalty-related objections under Sections 11AC and 11AB did not displace the demand, and penalty was upheld under Rule 173Q(1).

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Issues: Whether clandestine removal of excisable goods was established on the basis of the balance sheet and statutory excise records, and whether the duty demand and penalty could be sustained.

Analysis: The balance sheet, being a statutory document, along with the assessee's own excise records, showed that production and clearances were higher than what was reflected in the statutory records. The discrepancy between the audited financial statements and the Central Excise records was treated as sufficient evidence of unaccounted manufacture and removal. The challenge based on alleged defects in valuation was not entertained as it had not been raised before the lower authorities. The penalty-related objections under Sections 11AC and 11AB did not affect the sustenance of the demand, and penalty was justified under Rule 173Q(1).

Conclusion: Clandestine removal was held to be established, the duty demand was sustained, and the appeal failed.

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