Clandestine removal demands tangible corroboration; mere goods found in a godown cannot sustain excise duty, interest or penalty.

Clandestine removal is a serious excise allegation and cannot be sustained on the mere presence of goods in a godown. The Tribunal held that the demand failed because the record lacked tangible and corroborative evidence of raw material procurement, clandestine manufacture, actual removal of unaccounted finished goods, transport details, or sales to identifiable buyers. It also noted that the de novo order did not apply the principles governing clandestine removal as required by the earlier remand and Delhi High Court guidance. Accordingly, the central excise duty demand was unsustainable, and the consequential interest and penalty also could not survive.

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Issues: Whether the demand of central excise duty, interest and penalty based on alleged clandestine removal of goods found in the godown was sustainable in the absence of tangible evidence and in view of the earlier remand directions requiring application of the principles governing clandestine removal.

Analysis: The Tribunal held that clandestine removal is a serious allegation that must be supported by tangible and corroborative evidence. Mere discovery of goods in a godown could not by itself establish clandestine manufacture and clearance. The record did not contain proof of procurement or use of raw materials, actual removal of unaccounted finished goods, sale to identifiable buyers, transport details, or other evidence required to sustain the allegation. The de novo order also failed to apply the principles governing clandestine removal as laid down by the Delhi High Court and required by the earlier remand direction.

Conclusion: The allegation of clandestine removal was not proved and the demand of central excise duty was unsustainable. The consequential demand of interest and penalty also could not survive.

Ratio Decidendi: A demand for clandestine manufacture and clearance cannot be sustained on mere assumptions or the presence of goods alone and must rest on tangible, corroborative evidence establishing the full chain of illicit manufacture, removal and clearance.

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