Clandestine manufacture allegations need corroborative evidence; sulphur consumption alone was insufficient to sustain duty and penalty demands.

Duty demand, penalty and confiscation based mainly on sulphur consumption could not be sustained where the record lacked corroborative evidence of clandestine manufacture or removal. The Tribunal noted that the lower authority had not examined total raw material consumption, feasible production, excess unaccounted purchases, worker statements, or evidence of undisclosed dispatches and buyers. It also accepted that the proprietor had corrected the sulphur ratio statement and found no inquiry into the appellant's explanation on sulphur usage. On that material, the finding of clandestine activity was held unsustainable, and fresh adjudication was required.

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Issues: Whether the demand of duty, penalty and confiscation based mainly on sulphur consumption, without proper examination of other raw materials or corroborative evidence, could be sustained.

Analysis: The Tribunal found that the lower authority had proceeded on the basis of sulphur consumption alone and had not made a detailed examination of the total raw materials consumed or the actual production that could emerge from them. Sulphur was not a specified raw material for which statutory accounts were required, and the record did not show any excess unaccounted purchases, worker statements, or evidence of clandestine dispatches or buyers receiving goods without central excise documents. The Tribunal also noted the correction in the proprietor's statement regarding the sulphur ratio and the absence of any inquiry into whether the appellant's explanation on feasible sulphur use was correct.

Conclusion: The finding of clandestine manufacture and removal was not sustainable on the material considered, and the matter required fresh adjudication.

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