Clandestine removal demands require verified evidence and reasons; untested assumptions and ignored defence records cannot sustain duty liability.

Clandestine removal allegations in excise matters must be supported by verified evidence and a reasoned order that addresses the assessee's records and objections. The commentary stresses that findings based on suspicion, conjecture, or untested assumptions cannot sustain duty demand or penalty, and that rejection of a defence without discussion breaches natural justice. It also notes that, although remand may otherwise be appropriate where adjudication is defective, prolonged pendency of more than twelve years justified declining remand and granting relief to the assessee.

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Issues: (i) Whether the demand and penalty could be sustained in respect of the alleged removal of 107 compressors without payment of duty. (ii) Whether the finding of manufacture and removal of 24 compressors without payment of duty could be sustained. (iii) Whether the matter required remand despite the lapse of time.

Issue (i): Whether the demand and penalty could be sustained in respect of the alleged removal of 107 compressors without payment of duty.

Analysis: The appellant had furnished machine-wise particulars showing repeated receipt and return of the same compressors for repair, including dates, challan particulars, and gate pass references. The adjudicating authority rejected this explanation without verifying the stated records or dealing with the appellant's specific objections. Clandestine removal is a positive allegation and must be proved by evidence; findings resting only on suspicion, conjecture, or unverified assumptions cannot stand. The absence of a reasoned examination also offended the requirement of a speaking order and the principles of natural justice.

Conclusion: The finding on the alleged removal of 107 compressors was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether the finding of manufacture and removal of 24 compressors without payment of duty could be sustained.

Analysis: The appellant gave a detailed factual explanation regarding the number of compressors, the source of compressor blocks, the entries in the registers, and the alleged clerical mistakes in postings and challans. These explanations were summarily rejected without discussion of the material placed on record. An adjudication order must disclose reasons for rejecting the defence, especially where the conclusion turns on disputed entries and stock records. A bare conclusion without examination of the defence is not a valid basis for confirming duty liability.

Conclusion: The finding regarding the alleged manufacture and removal of 24 compressors was unsustainable and was set aside in favour of the assessee.

Issue (iii): Whether the matter required remand despite the lapse of time.

Analysis: Although the defects in the adjudication order ordinarily could have justified remand, the proceedings had been pending for more than twelve years. In view of that prolonged delay, the matter was not sent back for fresh adjudication and the benefit of doubt was extended to the appellant.

Conclusion: Remand was declined and the appeal was allowed.

Final Conclusion: The impugned adjudication was set aside because the demand had been affirmed without verification of the appellant's records and without recording reasons, and the long pendency of the proceedings justified granting relief rather than remitting the case.

Ratio Decidendi: A quasi-judicial excise order confirming clandestine removal must be founded on verified evidence and recorded reasons; findings based on untested assumptions or conjectures, without dealing with the defence material, violate natural justice and cannot be sustained.

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