Clandestine removal demand based on electricity use and retracted statements failed without independent corroboration.

Demand of central excise duty, interest and penalty based mainly on electricity consumption, peak production ratio, retracted statements and alleged stock discrepancies was found unsustainable because the method did not by itself prove constant production throughout the disputed period or clandestine removal of goods. The retracted statements were not supported by independent corroborative evidence sufficient to establish clandestine clearance. Applying the reasoning of the earlier relied-on decision, the material placed by the department did not justify confirmation of the excise demand, and the appeals were allowed.

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Issues: Whether demand of central excise duty, interest and penalty could be sustained solely on the basis of electricity consumption and peak production ratio, along with retracted statements and alleged stock discrepancies.

Analysis: The demand was founded mainly on electricity consumption by applying the highest production ratio noticed for a limited period. Such a method, by itself, does not establish that production remained at the same level throughout the disputed period or that goods were clandestinely removed without payment of duty. The relied-upon statements had been retracted, and the record did not furnish independent corroboration sufficient to sustain the allegation of clandestine clearance. On the facts, the reasoning applied in the earlier decision relied upon by the Tribunal governed the dispute, and the excise demand could not be upheld on the material placed by the department.

Conclusion: The demand of duty, interest and penalty was unsustainable and the appeals were allowed.

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