Clandestine removal requires corroborative evidence; an isolated statement and unrefuted technical explanation were insufficient to sustain penalties.

Clandestine removal of duty-free raw materials and finished goods could not be sustained where the Revenue relied mainly on an isolated statement of the authorised signatory and an alleged weight differential, but produced no independent corroborative evidence. The record also did not rebut the assessee's technical explanation that anti-static oil was removed during the dyeing and twisting process. On that basis, the Tribunal's setting aside of the duty demand and penalties under the excise and customs provisions was upheld, and no legal error warranting interference was found.

---

---

Issues: Whether the Tribunal erred in holding that clandestine removal of duty-free raw materials and finished goods was not proved in the absence of corroborative evidence, and whether the penalty orders under the excise and customs provisions were liable to be sustained.

Analysis: The Revenue's case rested primarily on the statement of the authorised signatory and on an alleged weight differential in the finished product. The Tribunal found that no independent corroborative evidence supported the allegation of clandestine removal and also noted that the adjudicating authority had not properly dealt with the assessees' defence and the technical opinion explaining that anti-static oil is removed during the dyeing and twisting process. The High Court held that the record did not contain material to disprove that technical explanation and that, apart from the statement of the authorised signatory, no other evidence established clandestine clearance.

Conclusion: The Tribunal was in setting aside the duty demand and penalties, and no legal error warranting interference was made out against the assessee.

Ratio Decidendi: A finding of clandestine removal cannot be sustained merely on an isolated statement unless supported by corroborative evidence and the material on record is sufficient to rebut the assessee's technical explanation.

---