Clandestine removal must be proved by reliable evidence; mere diversion and timing discrepancies were insufficient here.

Clandestine removal was not proved where the investigation failed to trace the consignment or establish clandestine manufacture or removal, and mere diversion from the stated destination did not by itself show clearance without a valid gate pass. The alleged Rule 52A violation also failed because the gate pass, truck number and timing discrepancy in octroi payment were insufficient without corroboration from transport or state authorities. The adverse inference was found to rest on conjecture rather than reliable evidence, so confiscation, duty demand and penalty could not be sustained.

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Issues: Whether the goods were removed clandestinely without cover of a valid gate pass so as to attract duty, confiscation and penalty, and whether the alleged violation of Rule 52A of the Central Excise Rules, 1944 was established.

Analysis: The finding of clandestine removal was not supported by adequate investigation or evidence. The record did not explain what happened to the consignment said to have been cleared under the gate pass, nor did it establish clandestine manufacture or removal. Mere diversion of the consignment from the originally indicated destination did not by itself prove removal without gate pass. On the second allegation, the existence of one gate pass, the matching truck number, and the timing discrepancy in octroi payment were insufficient to conclusively establish clandestine clearance. The adverse inference drawn by the adjudicating authority rested largely on conjecture, without verification from the transport or state authorities and without reliable corroboration.

Conclusion: The alleged clandestine removal and Rule 52A violation were not proved, and the confiscation, duty demand, and penalty could not be sustained.

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