Clandestine removal requires proof of manufacture, actual clearance and reliable evidence; mere suspicion and private records are not enough.

Clandestine removal of excisable goods cannot be sustained on police information, stock verification or private records alone unless the revenue proves that the goods were manufactured by the assessee, actually removed without duty payment, and supported by reliable evidence. Where the adjudication order records no finding that the seized goods were not stolen goods, does not establish actual removal, and fails to authenticate disputed private records or reconcile stock discrepancies, the charge rests only on assumptions and surmises. On these facts, the allegation of duty evasion failed and the impugned order was not sustainable.

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Issues: Whether the demand and penalty for alleged clandestine removal of excisable goods could be sustained on the basis of police information, stock verification and private records, in the absence of specific findings that the goods were in fact manufactured by the assessee, removed without duty payment, or supported by reliable evidence.

Analysis: The allegations originated from a police report that stolen aluminium conductors were stored in the assessee's godowns, but the adjudication order recorded no finding that the goods recovered were not stolen goods and were instead goods manufactured by the assessee. The order also did not establish actual removal of the goods from the godowns, though removal is the stage at which duty becomes payable under the excise scheme. Mere intention to remove, unsupported by the show cause notice or by findings in the adjudication order, was insufficient to prove contravention of the Central Excise Rules. The genuineness of the private records relied upon by the department was specifically challenged, and the burden remained on the revenue to prove that those records were authentic and that the alleged clearances were real. The evidence also did not properly reconcile excesses with shortages, nor did it show that the items treated as finished goods were not in-process or unfinished goods. In the absence of tangible evidence of clandestine clearance, the charge could not rest on assumptions or surmises.

Conclusion: The allegations of clandestine removal and duty evasion were not proved, and the impugned order could not be sustained. The appeal was allowed in favour of the assessee.

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