Clandestine removal allegations fail where export documents and tangible evidence rebut claims of fictitious job workers.

Clandestine excise duty demands cannot rest on assumptions that job workers were fictitious; the Revenue must prove undeclared procurement, removal, or clearance of excisable goods by tangible evidence. Where the assessee produces shipping bills, invoices, bank realisation certificates, DEEC books and export-obligation discharge certificates showing manufacture for export and fulfilment of export conditions, those documents may rebut allegations of clandestine clearance. On that footing, duty demand and penalties are not sustainable when suspicion is unsupported by corroborative evidence.

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Issues: Whether the excise duty demand and penalties could be sustained on the allegation that the assessee had clandestinely manufactured and cleared yarn through fictitious job workers, and whether the exported goods and supporting export documents negatived the demand.

Analysis: The Revenue's case rested mainly on the alleged non-existence of the job workers. No tangible material was brought on record to show procurement of undeclared raw material, sale of the alleged yarn, mode of removal from the factory, or clearance for home consumption. The assessee, on the other hand, produced shipping bills, invoices, bank realisation certificates, DEEC books and export-obligation discharge certificates, all of which supported the finding that the imported fibre was used in manufacture of export goods and that the export obligations stood fulfilled. In such circumstances, a duty demand could not be confirmed on assumptions or suspicion alone, and the findings of clandestine clearance were not sustainable.

Conclusion: The duty demand and penalties were not sustainable and the appeal failed; the assessee succeeded.

Ratio Decidendi: Clandestine manufacture and removal cannot be presumed merely from the non-existence of job workers; the Revenue must establish clearance of excisable goods by tangible evidence, and uncontroverted export documents may rebut the charge and defeat the demand.

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