Bank statement discrepancies alone cannot prove unaccounted removal; duty demand and penalty need stronger corroboration.

Duty demand and penalty based solely on a discrepancy between bank statements and the RG 1 register for alleged shortage of railway sleepers were found unsustainable. Prior clerical and arithmetical errors in the bank statements provided a credible explanation for a substantial part of the variation, and the bank figures were only corroborative rather than conclusive proof of unaccounted removal. The record indicated that further enquiry was needed with the customer to determine whether goods had in fact been received without duty payment documents, so the stock variation alone could not sustain the demand.

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Issues: Whether duty demand and penalty could be sustained solely on the basis of a discrepancy between the bank statement and the RG 1 register in respect of alleged shortage of railway sleepers.

Analysis: The explanation offered for a substantial part of the discrepancy was supported by prior clerical and arithmetical errors in the bank statements, and that explanation could not be discarded. The bank figures were at best corroborative and could not by themselves constitute conclusive proof of unaccounted removal. Further enquiry was indicated with the customer as to whether any goods had in fact been received without duty payment documents, and the demand could not rest only on the stock variation shown in the bank statement vis-a -vis the statutory records.

Conclusion: The demand of duty and the penalty based only on the discrepancy was not sustainable, and the appeal was allowed.

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