Clandestine removal demands require independent corroboration; private diaries and statements alone are not enough without reasoned record verification.

Excise duty demands based on alleged clandestine removal must rest on corroborated evidence and a reasoned appraisal of statutory records. A private diary and statements of officials, by themselves, were treated as insufficient where the adjudicating order did not properly compare the diary entries with statutory registers, consumption data, electricity records, purchaser details, or other independent material. The defence seeking re-verification of stock and diary entries was not adequately addressed. The impugned order was set aside and the matter remanded for fresh adjudication with an opportunity of hearing and defence.

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Issues: Whether a demand of central excise duty and penalty based primarily on a private diary and statements, without adequate corroborative evidence and proper examination of statutory records, could be sustained.

Analysis: The demand arose from entries in a private diary and statements of company officials alleging removal of excisable goods without payment of duty. The order-in-original was found to be perfunctory, as it did not scrutinise the diary entries against the statutory records or independently verify the alleged clearances. In clandestine removal cases, the burden lies on the Revenue to substantiate the charge with corroborative material, such as statutory registers, consumption records, electricity records, purchaser details, and other supporting evidence. The defence raised by the assessee, including the plea for re-verification of stock and diary entries, was not adequately addressed.

Conclusion: The demand and penalty were not finally affirmed on merits; the impugned order was set aside and the matter remanded for fresh adjudication after granting the assessee an opportunity of hearing and defence.

Final Conclusion: Excise duty demands founded on alleged clandestine removal must be tested by proper corroboration and reasoned findings, and a deficient adjudication can be sent back for de novo consideration.

Ratio Decidendi: Allegations of clandestine removal cannot be sustained solely on the basis of a private record or statement unless the Revenue corroborates them with independent evidence and a reasoned appraisal of the relevant statutory records.

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