Clandestine removal demands need clear corroborative evidence; private registers and statements alone were insufficient, and the soap demand also failed.

Clandestine removal of excisable goods cannot be established merely from private register entries and statements where they do not show clear, reliable and corroborative proof of finished goods leaving the factory; on the facts, transport documents and gate passes tallied, so the demand and penalty were not sustainable. A further demand for soap manufactured without the aid of power also failed because the manufacture was already within departmental knowledge, and the extended demand could not be maintained on that basis. The impugned order was therefore set aside and relief was granted to the assessee.

---

---

Issues: (i) Whether the demand and penalty could be sustained on the basis of a private register and statements, without independent corroborative evidence, to prove clandestine removal of excisable goods. (ii) Whether the demand relating to soap manufactured without the aid of power was sustainable when the department was already aware of such manufacture.

Issue (i): Whether the demand and penalty could be sustained on the basis of a private register and statements, without independent corroborative evidence, to prove clandestine removal of excisable goods.

Analysis: The private register was found to reflect production-stage entries and labour-control notings, with goods moving in liquid or unfinished form for further processing, and not clear proof of removal of finished goods outside the factory. The statements of supervisors and the director did not establish clandestine clearance, and the transport documents and gate passes were found to tally. In a charge of clandestine removal, the revenue had to produce clear and reliable evidence, which was absent here. The adjudicating authority had also proceeded without proper examination of the material and without adequate application of mind.

Conclusion: The allegation of clandestine removal was not proved, and the demand and penalty on this basis were set aside in favour of the assessee.

Issue (ii): Whether the demand relating to soap manufactured without the aid of power was sustainable when the department was already aware of such manufacture.

Analysis: The record showed that the manufacture of soap without the aid of power was within the department's knowledge, and the Tribunal treated the earlier order in the assessee's own case as applicable. On that footing, the extended demand for soap could not be sustained.

Conclusion: The demand relating to soap manufactured without the aid of power was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed, as the revenue failed to establish clandestine removal and the soap-related demand was also not maintainable.

Ratio Decidendi: A charge of clandestine removal cannot be sustained merely on private register entries and statements unless supported by clear, reliable, and corroborative evidence showing removal of finished excisable goods beyond the factory.

---