Clandestine removal requires independent corroboration; private records and stock discrepancies alone were insufficient, while confiscation was upheld.

472 cartons of detergent cakes found taped and sealed and fit for entry in the finishing room were treated as goods required to be recorded in R.G. 1, so confiscation, appropriation of bond security and penalty were upheld. However, alleged clandestine removal could not be established merely from private registers and R.G. 1 discrepancies, because the private records served a different purpose and there was no independent corroboration from raw material consumption or proof of sale or disposal. On that basis, the duty demand and related penalty were set aside.

---

---

Issues: (i) Whether 472 cartons of detergent cakes found fit for entry in the finishing room were liable to confiscation and whether appropriation of security and penalty were justified. (ii) Whether the alleged clandestine removal of detergent cakes on the basis of private registers and R.G. 1 discrepancies stood proved so as to sustain duty demand and penalty.

Issue (i): Whether 472 cartons of detergent cakes found fit for entry in the finishing room were liable to confiscation and whether appropriation of security and penalty were justified.

Analysis: The cartons were found taped and sealed and were therefore regarded as goods which ought to have been entered in R.G. 1 at the stage of stock in the finishing room. The appellants had already been given the benefit in respect of the balance quantity found not fit for entry. On these facts, the finding of contravention in respect of the 472 cartons was maintained.

Conclusion: The confiscation, appropriation of Rs. 5,000 from the bond security, and penalty of Rs. 1,000 were upheld against the assessee.

Issue (ii): Whether the alleged clandestine removal of detergent cakes on the basis of private registers and R.G. 1 discrepancies stood proved so as to sustain duty demand and penalty.

Analysis: The private records were shown to serve a different purpose from the statutory stock register, and production could not be determined with accuracy from them alone. Since the entries in R.G. 1 were in any event higher than the private-record figures, the inference that all such production was omitted from R.G. 1 could not be drawn without additional evidence of consumption of raw material or sale of the alleged excess production. Such corroborative evidence was absent.

Conclusion: The demand of duty and the penalty based on alleged clandestine removal were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded only in part, with the finding of clandestine removal and the related duty and penalty being rejected, while the confiscation-related reliefs were left undisturbed.

Ratio Decidendi: Alleged clandestine removal cannot be sustained on private records and register comparisons alone unless supported by independent corroborative evidence of production, consumption, or disposal of the disputed goods.

---