Clandestine manufacture requires corroborative evidence; electricity-consumption estimates alone cannot sustain an excise duty demand.

A demand for central excise duty based on alleged clandestine manufacture and clearance cannot rest solely on an expert estimate of production derived from electricity consumption. The governing principle is that the department must prove clandestine production and removal through reliable corroborative evidence, such as unaccounted raw material purchases, transport records, sale proceeds, or similar material. Where the case is founded only on presumptions, theoretical production figures, or a chartered engineer's power-consumption analysis, the demand is unsustainable. On that basis, the appeal was allowed in favour of the assessee.

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Issues: Whether demand of central excise duty alleging clandestine manufacture and clearance could be sustained solely on the basis of an expert opinion estimating production from electricity consumption, without corroborative evidence.

Analysis: The appeal concerned a demand built on theoretical production derived from unit power consumption attributed to a chartered engineer's report. The same issue had already been decided in the assessee's own earlier period, where it was held that clandestine manufacture and removal cannot be inferred merely from electricity-consumption estimates. The governing principle applied was that the department bears the burden to prove clandestine production and clearance by reliable evidence. In the absence of evidence of unaccounted raw material purchases, transport of goods, sale proceeds, or other corroborative material, a demand founded only on presumptions and estimates could not stand.

Conclusion: The demand was not sustainable and the appeal succeeded in favour of the assessee.

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