Clandine manufacture demands need corroborative evidence, not just theoretical production norms or assumption-based estimates.

The department cannot sustain a duty demand for alleged clandestine manufacture and clearance by relying only on SION-based theoretical production estimates. Where the assessee used varied zinc raw materials and the record lacked corroborative evidence of suppressed production or removal, such as transport records, sale proceeds, raw material procurement data, electricity consumption or other independent material, the burden of proof remains unmet. An assumption-driven calculation is insufficient to establish clandestine activity, and the demand founded on estimated excess production was set aside.

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Issues: Whether the department could apply SION norms to estimate the quantity of zinc oxide manufactured from zinc scrap and treat the difference between such estimated quantity and the recorded production as clandestine clearance without payment of duty.

Analysis: The demand was founded on a theoretical production estimate derived from SION norms, but the appellants used varied zinc raw materials and the record did not show corroborative evidence of suppressed manufacture or removal. The reasoning in comparable cases was followed to hold that an assumption-based estimate, without supporting material such as transport details, sale proceeds, raw material procurement, electricity data, or other independent evidence, does not discharge the department's burden in proving clandestine manufacture and clearance. The provision relied upon for normal production under the erstwhile regime did not justify such a method under the present regime.

Conclusion: The demand based on SION norms and theoretical production calculation was not sustainable, and the finding of clandestine clearance was set aside in favour of the assessee.

Ratio Decidendi: A demand of duty for clandestine manufacture and removal cannot rest merely on theoretical production norms or presumptions and must be supported by corroborative evidence.

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