Clandestine removal demands corroborative evidence, and theoretical capacity-based calculations cannot sustain excise duty demands.
A charge of clandestine removal of loose glass sheets requires positive corroborative evidence, including buyer, transporter, cash-flow, or unaccounted-input material, and cannot be sustained merely because items were not entered in RG-1 before clearance when authenticated records and departmental practice showed clearance-stage recording. Demand based on audited financial statements, assumed excess raw material consumption, and installed-capacity estimates is likewise unsustainable where it rests on theoretical derivation without reliable corroboration from machine records, technical evidence, suppliers, buyers, or transport material. The article states that clandestine removal must be proved by substantive evidence, not assumptions or unverified computations.
Issues: (i) Whether the demand of excise duty and penalties on the allegation of clandestine removal of loose glass sheets was sustainable in the absence of corroborative evidence and in light of the departmental practice of recording such goods at the stage of clearance. (ii) Whether the demand could be sustained on the basis of mathematical derivation from audited financial statements, alleged excess raw material consumption, and estimation of production on installed capacity.
Issue (i): Whether the demand of excise duty and penalties on the allegation of clandestine removal of loose glass sheets was sustainable in the absence of corroborative evidence and in light of the departmental practice of recording such goods at the stage of clearance.
Analysis: The record showed that loose glass sheets were entered in the authenticated log book and reflected in RG-1 at the stage of clearance, which had been accepted by departmental correspondence and prior stock verification. The only discrepancy noticed at the time of visit was non-entry of loose sheets in RG-1 before clearance, but the evidence did not establish any unaccounted removal, buyer-side enquiry, transport enquiry, unaccounted purchase, cash flow back, or other corroboration normally required to sustain a charge of clandestine removal.
Conclusion: The allegation of clandestine removal of loose glass sheets is not proved and the demand is unsustainable.
Issue (ii): Whether the demand could be sustained on the basis of mathematical derivation from audited financial statements, alleged excess raw material consumption, and estimation of production on installed capacity.
Analysis: The production and sales figures were derived on assumptions from financial data and installed capacity, without reliable corroboration from machine capacity records, technical literature, supplier evidence, buyer evidence, transporter evidence, or proof of unaccounted inputs. The alleged excess soda ash consumption was also founded on a single assumed batch ratio applied across the entire period, which was not shown to be a dependable basis for alleging suppression. A serious charge of clandestine removal cannot rest on theoretical computation or assumption alone.
Conclusion: The demand based on derived figures, excess raw material consumption, and installed capacity is not sustainable.
Final Conclusion: The impugned order confirming duty and penalties was set aside, and all appeals succeeded with consequential relief.
Ratio Decidendi: A charge of clandestine removal must be established by positive and corroborative evidence, and it cannot be upheld merely on assumptions, mathematical estimates, or unverified capacity-based computations.
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