Clandestine removal demands need independent corroboration; third-party records alone are unsafe without proof of direct nexus.

Allegations of clandestine manufacture and removal cannot be sustained on third-party ledger entries and invoices alone where no direct nexus with the assessee is proved. The Tribunal noted that the alleged linkman was not traced, there was no evidence of cash dealings or instructions from the assessee, and the assessee's statement did not amount to an admission. It also found that the adjudicating authority should have examined other production indicators, including electricity consumption and manufacturing capacity, before confirming demand and penalty. On the evidence relied upon, the impugned order was unsustainable and required reconsideration on a fuller factual basis.

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Issues: Whether a demand and penalty for alleged clandestine manufacture and removal of tread rubber could be sustained solely on the basis of third-party ledger entries and invoices relating to carbon black purchases, without corroboration from other evidence.

Analysis: The demand was founded on entries in the records of a supplier showing purchases in the appellant's name, supported by invoices carrying the appellant's sales-tax number. However, the alleged linkman was never traced, there was no direct evidence of cash transactions or instructions from the appellant, and the appellant's statement did not amount to an admission of purchase. The record also showed that similar purchases in the names of other parties had not been owned up, which weakened the evidentiary value of the supplier's records. The Tribunal held that in a case of alleged clandestine manufacture and removal, it was unsafe to rely only on third-party documents without independent corroboration, and that the adjudicating authority ought to have examined other production indicators such as electricity consumption and related manufacturing capacity.

Conclusion: The impugned order could not be sustained on the evidence then relied upon, and the matter required reconsideration on a broader factual and evidentiary basis.

Ratio Decidendi: Allegations of clandestine manufacture and removal cannot be upheld on uncorroborated third-party records alone when no direct nexus with the assessee is established and relevant production parameters are not examined.

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