Clandestine removal requires tangible evidence, and delayed excise proceedings can fail when limitation is properly invoked.

Limitation under the Central Excise adjudication framework was treated as enforceable where investigation and notice proceedings extended beyond the prescribed time, and the objection was accepted in favour of the assessee. Allegations of clandestine removal were also rejected because the demand rested on stock calculations and arithmetic assumptions without tangible, independent evidence such as transporter, buyer, or other corroborative material. The commentary reiterates that clandestine removal cannot be established by conjecture, presumptions, or mere stock discrepancy; it requires concrete proof of actual removal and sale. As a result, the demand and penalties were found unsustainable on both limitation and merits.

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Issues: (i) Whether the demand was barred by limitation under Section 11A(11) of the Central Excise Act, 1944. (ii) Whether the allegation of clandestine removal of raw materials and the resulting demand could be sustained without tangible evidence.

Issue (i): Whether the demand was barred by limitation under Section 11A(11) of the Central Excise Act, 1944.

Analysis: The proceedings arose from a visit by central excise officers, after which the investigation and issuance of notice were prolonged. The challenge specifically questioned the time taken to complete the proceedings and the adjudication beyond the statutory time frame. The limitation objection was found to have substantial force.

Conclusion: The limitation objection was accepted as being in favour of the assessee.

Issue (ii): Whether the allegation of clandestine removal of raw materials and the resulting demand could be sustained without tangible evidence.

Analysis: The demand was based on stock calculation and arithmetic working, without due allowance for manufacturing losses or work-in-progress. No transporter, buyer, or other independent evidence was brought to establish actual clandestine removal. The reasoning applied the settled principle that clandestine removal must rest on tangible evidence and cannot be proved by assumptions, presumptions, or conjecture alone.

Conclusion: The demand based on alleged clandestine removal was held unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned demand and penalties could not be sustained, and the assessee succeeded on the merits as well as on the limitation objection.

Ratio Decidendi: A demand for clandestine removal must be supported by tangible, independent evidence of removal and sale, and cannot rest solely on stock discrepancies or mathematical calculations; limitation objections under the governing excise adjudication framework are also enforceable where proceedings exceed the prescribed time.

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