Clandestine clearance can be proved by corroborated statements and seized records, but duty must be quantified on actual removal date.

Corroborated evidence such as employee and customer statements, along with a seized register, sustained the finding of clandestine manufacture and unaccounted clearance of crown corks despite belated retractions, alleged coercion, and denial of cross-examination. However, the production figures and duty computation were not adequately supported on the record, and the applicable excise rate had to be linked to the date of actual removal rather than mechanically to the show cause notice date. The duty liability and consequential penalty were therefore remanded for fresh quantification on a properly supported basis, while the finding of clandestine removal was maintained.

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Issues: (i) Whether the finding of clandestine manufacture and clearance of crown corks without payment of duty was sustainable on the evidence; (ii) Whether the quantity of production and the rate of duty had been correctly worked out for the purpose of quantification.

Issue (i): Whether the finding of clandestine manufacture and clearance of crown corks without payment of duty was sustainable on the evidence.

Analysis: The demand was supported by statements of employees, the Managing Partner, customers, and a register recovered from the Manager's residence. The defence based on power consumption, raw material consumption, and alleged coercion in recording statements was not accepted. The retractions were treated as belated, and denial of cross-examination did not vitiate the findings because the original statements were corroborated by other evidence, including purchasers' statements and the seized register. The plea regarding Thanneermukkom Bund also did not dislodge the conclusion of unaccounted removals.

Conclusion: The finding of excess unaccounted production and clandestine clearance was upheld against the assessee.

Issue (ii): Whether the quantity of production and the rate of duty had been correctly worked out for the purpose of quantification.

Analysis: The computation of production was not found to be satisfactorily supported on the record, particularly as the working days and deductions for non-working days and holidays were not clearly established from the order. The Tribunal also held that the rate of duty could not be mechanically applied with reference to the date of show cause notice. In clandestine removal cases, the relevant rate is the rate in force on the date of actual removal under the applicable excise rule, and where the exact date is uncertain, the matter requires examination on the available evidence. The quantification and related penalty therefore required reconsideration by the adjudicating authority.

Conclusion: The duty computation and consequential penalty were set aside for fresh determination on a proper basis.

Final Conclusion: The appeals succeeded only to the extent that the duty liability and penalty were sent back for fresh adjudication, while the finding of clandestine removal was maintained.

Ratio Decidendi: In cases of clandestine removal, the fact of unaccounted clearance may be sustained on corroborated evidence notwithstanding belated retraction and denial of cross-examination, but duty must be quantified by reference to the correct statutory rate applicable to the actual removal period and on a properly supported computation of production.

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