Clandestine removal proved through private records and circumstantial evidence where statutory excise records were unreliable

Where statutory excise records did not reflect the true position, private records, loose slips, batch registers and related circumstantial evidence were relied on to establish clandestine manufacture and removal. The evidence showed unexplained mismatches in raw material consumption, stock discrepancies, entries in private documents and failure to correlate removals with duty-paid documents. The explanations for the variations were found unconvincing, and the private records were treated as reliable indicators of actual production and clearances on a preponderance of probability. On that basis, the finding of suppression was upheld and the duty demand and penalty were sustained.

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Issues: Whether the demand of duty and penalty were sustainable on the basis of alleged excess consumption of raw materials, private records, loose slips, batch registers and other corroborative material showing suppression of production and clandestine removal.

Analysis: The appellant was bound to maintain true and complete manufacturing and clearance records and to account for all raw materials and finished goods. The evidence showed a substantial mismatch between the rubber consumption reflected in Central Excise records and the figures reported to the Rubber Board, unexplained stock discrepancies, entries in private records and loose slips indicating production and clearances not matched by statutory records, and failure to correlate alleged removals with duty-paid documents. The explanations offered for the variations were found unconvincing and unsupported by material evidence. On the overall evidence, the private records were treated as reliable indicators of actual production and removals, and the case was assessed on the basis of preponderance of probability.

Conclusion: The finding of suppression of production and clandestine removal was upheld, and the duty demand and penalty were sustained in favour of the Revenue.

Ratio Decidendi: Where statutory records do not reflect the true position, private records and surrounding circumstantial evidence may be relied upon to establish clandestine manufacture and removal on the basis of preponderance of probability.

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