Clandestine removal proved by statutory accounts and corroborative evidence, but penalties were limited to persons specifically linked to the record.

Clandestine removal of cement was upheld only to the extent supported by statutory raw material accounts and corroborative circumstances, including excess gunny bags, shortage of finished goods, and seized bilties indicating a double-set bilty arrangement. The Tribunal treated the case as proved on preponderance of probability, but limited the duty demand where the evidence was not equally corroborated. Penalties were confined to persons against whom the record sufficiently connected the conduct: the manufacturer's penalty was reduced, the transporter's penalty was reduced, the Rule 226 penalty was set aside, and penalties on the other appellants were deleted.

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Issues: (i) Whether clandestine removal of cement and consequent duty demand were established on the basis of private raw material accounts, seized bilties, excess gunny bags, and shortage of finished goods; (ii) Whether penalties on the appellants, especially the transporter and other connected persons, were sustainable.

Issue (i): Whether clandestine removal of cement and consequent duty demand were established on the basis of private raw material accounts, seized bilties, excess gunny bags, and shortage of finished goods?

Analysis: The private raw material accounts showed receipt of inputs in excess of the statutory records, and the explanation regarding defective material was not supported by prior intimation to the department. The record also contained corroborative circumstances such as excess gunny bags, shortage of finished cement, and seized documents showing a double-set bilty arrangement. The Tribunal held that the case was not based merely on third-party papers, but on statutory accounts read with corroborative evidence, which together established a pattern of clandestine production and removal on the basis of preponderance of probability. At the same time, the Tribunal disapproved selective reliance on bilties for one part of the period and rejection of the same type of evidence for another part when the case on that segment was not equally supported by corroboration.

Conclusion: Clandestine removal was established only to the extent of 3901.196 MT of cement, and duty was confirmable only to that extent.

Issue (ii): Whether penalties on the appellants, especially the transporter and other connected persons, were sustainable?

Analysis: The Tribunal found no direct evidence to sustain penalties against the appellants other than the manufacturer and the transporter. The plea of bias against the transporter was not supported by the record, but the Tribunal still restricted penal liability to the persons against whom the evidence was considered sufficient. For the remaining appellants, the material on record did not justify penal action under the relevant rule.

Conclusion: The penalty on the manufacturer was reduced, the penalty under Rule 226 was set aside, the transporter's penalty was reduced, and the penalties on the other appellants were set aside.

Final Conclusion: The duty demand was upheld only in part, with corresponding reduction or deletion of penalties where the evidence was insufficient, resulting in a substantial partial relief to the appellants.

Ratio Decidendi: Clandestine removal may be sustained on the basis of statutory accounts read with corroborative circumstantial evidence, but penal consequences require evidence sufficient to connect each person sought to be punished.

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