Clandestine Removal Must Be Proved by Corroborative Evidence Before Excise Duty, Confiscation and Penalty Can Stand
A charge of clandestine removal in excise proceedings must be proved by credible, corroborative evidence. Prescribed vouchers and statutory records supported receipt of raw material, while the Department relied mainly on a retracted statement and uncorroborated diary entries, which were insufficient to establish manipulation or excess production. The explanation for the entries and stock discrepancy was supported by affidavits, and no clinching material showed clandestine manufacture and removal. The duty demand, confiscation and penalty therefore could not be sustained, and the impugned adjudication was set aside in favour of the assessee.
Issues: Whether the demand of duty, confiscation and penalty could be sustained on the basis of alleged clandestine removal of copper circles, and whether the Department had discharged the burden of proving such removal.
Analysis: The receipt of raw material was shown through prescribed vouchers and the statutory records did not support an inference of manipulation or afterthought. The Department relied mainly on the partner's statement and entries in a personal diary. The statement had been retracted and the diary entries were not corroborated by independent evidence. The explanation given for the entries and the excess stock was supported by affidavits, and the Department failed to produce clinching material to establish clandestine manufacture and removal.
Conclusion: The allegation of clandestine removal was not proved, and the demand of duty, confiscation and penalty could not be sustained.
Final Conclusion: The impugned adjudication was set aside and relief followed in favour of the appellant.
Ratio Decidendi: A charge of clandestine removal in excise proceedings must be established by credible and corroborative evidence, and a retracted statement or uncorroborated diary entries are insufficient to sustain duty demand and penal consequences.
TaxTMI 
AI Drafter ✕
TaxTMI 
