Clandestine Removal Must Be Proved by Cogent Evidence; Duty Demand and Penalties Failed for Lack of Reliable Proof

Allegations of clandestine manufacture and removal must be supported by proper, cogent evidence; the Tribunal held that selective statements and doubtful inferences are insufficient to sustain duty demand and penalties. It found that the chemist was not the proper person to speak on grading of sheets, that the statement of Vishnubhai Patel relied upon by the adjudicating authority was not actually on record, and that the department had not established the charge with reliable evidence. The Tribunal also held that the adjudicating authority misapplied the evidentiary standard by shifting the burden to the assessee, and the demand and penalties were set aside.

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Issues: Whether the demand of duty and penalties for alleged clandestine removal of laminated sheets could be sustained on the basis of the chemist's statement and the materials relied upon by the department.

Analysis: The Tribunal held that allegations of clandestine manufacture and removal must be proved by proper and cogent evidence, and that adverse presumptions cannot be drawn merely from selective statements or doubtful inferences. It found that the chemist was not the proper person to speak about grading of sheets, that the supposed statement of Vishnubhai Patel relied upon by the adjudicating authority was not actually on record, and that the department had not established the charge with reliable evidence. The Tribunal also noted that the adjudicating authority had misapplied the evidentiary standard while shifting the burden to the assessee.

Conclusion: The duty demand and penalties were not sustainable, and the appeal succeeded in favour of the assessee.

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