Cross-examination and corroboration are essential before sustaining clandestine removal demands based on statements and a lone test report.

Statements relied on to support a demand lose evidentiary value where cross-examination is denied under the statutory scheme governing relevancy of statements, so they cannot sustain adjudication. Allegations of clandestine removal also require independent tangible corroboration; a difference in fabric weight, without proof of transportation, identified buyers, financial flowback, or buyer complaints, is insufficient. A single test report for one lot cannot be extended to the entire stock without evidence that all goods were materially identical. On that basis, the discussion concludes that demands, confiscation, penalties and interest are not sustainable where the factual foundation is unproved.

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Issues: (i) whether statements relied upon by the adjudicating authority could be used in evidence despite denial of cross-examination under the statutory scheme governing relevancy of statements; (ii) whether the demands, confiscation, penalties and interest could be sustained on the basis of alleged clandestine removal and a single test report, in the absence of tangible corroborative evidence.

Issue (i): whether statements relied upon by the adjudicating authority could be used in evidence despite denial of cross-examination under the statutory scheme governing relevancy of statements

Analysis: The remand order had required compliance with principles of natural justice. The requested cross-examination of the witnesses, including the buyers whose statements formed a major part of the case, was not granted. The statutory framework treated such statements as relevant only subject to the conditions of examination and cross-examination contemplated by the provision governing relevancy of statements. Since those conditions were not satisfied, the statements could not be treated as admissible evidence for adjudication.

Conclusion: The statements relied upon in support of the demand were correctly discarded and could not sustain the adjudication.

Issue (ii): whether the demands, confiscation, penalties and interest could be sustained on the basis of alleged clandestine removal and a single test report, in the absence of tangible corroborative evidence

Analysis: The alleged shortage was founded on a difference in weight of finished grey fabrics, while the recorded linear meters tallied. The reasoning proceeded on an inference that the same weight of raw material had been removed clandestinely, but there was no supporting evidence of transportation, identified buyers of diverted goods, or financial flowback. The buyers' statements were not available as evidence, and no complaint had been made by them regarding the supplied quantities. The adjudication also relied on one test report relating to a single lot, but that report could not be extended to the entire quantity in the absence of proof that the whole stock was identical in all relevant respects. In these circumstances, the case of clandestine removal was not established.

Conclusion: The demands, interest, confiscation and penalties were not sustainable.

Final Conclusion: The adjudication could not survive because the evidentiary basis failed and the alleged clandestine removal was not proved, while the issue of limitation was left open.

Ratio Decidendi: Where the adjudication of clandestine removal rests on statements that are not admissible for want of cross-examination and on uncorroborated inferences or a single isolated test report, the demand and consequential penalties cannot be sustained in the absence of independent tangible evidence.

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