Unproven clandestine removal and speculative estimates cannot sustain excise duty demand, confiscation, or penalty.

Excise duty demand, confiscation and penalty were held unsustainable where the Department relied on a draft project report, disputed unit prices and conversion ratios, and other assumptions to estimate production and clearances. The findings of excess manufacture and clandestine removal were not supported by dependable corroborative evidence, and speculative calculations could not discharge the Department's evidentiary burden. The assessee was entitled to the benefit of doubt because the alleged clearances beyond the exemption limit were not proved by cogent material. The impugned order was therefore set aside in favour of the assessee.

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Issues: Whether the duty demand, confiscation and penalty could be sustained on the basis of estimated production and clearances worked out from a draft project report and other assumptions, in the absence of reliable evidence of excess manufacture or clandestine removal.

Analysis: The adjudicating authority had rested the computation of clearances largely on a project report that was not signed and appeared to be only a draft, and had also adopted unit prices and conversion ratios that were themselves disputed and inherently unstable. The findings on excess production were not supported by dependable corroborative evidence, and the inference of clearances beyond the exemption limit was built substantially on assumptions and presumptions rather than proved facts. In such circumstances, the evidentiary burden remained on the Department, and the benefit of doubt could not be denied to the assessee merely on speculative calculations.

Conclusion: The duty demand, confiscation and penalty were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the impugned order was annulled.

Ratio Decidendi: A demand for excise duty and consequential penal action cannot be upheld on conjectural estimates or unreliable project-based calculations when the Department has not established excess manufacture or clandestine removal with cogent evidence.

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