Clandestine removal demands need reliable corroboration; mere suspicion and electricity norms alone cannot sustain excise duty or penalty.

Allegations of clandestine production and removal of steel ingots based mainly on electricity-consumption norms and private records were not sufficiently proved. The Tribunal held that, although clandestine removal cases are tested on preponderance of probability, the material must still be reliable, cogent, and adequately corroborated. The impugned order did not clearly establish the necessary links, nor did it properly correlate the private records, octroi receipts, and other materials so as to displace the statutory records and electricity-bill based figures. Mere suspicion, even if strong, cannot substitute for proof, and the demand and penalty were therefore held unsustainable.

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Issues: Whether the demand of central excise duty and penalty based on alleged clandestine production and removal of steel ingots, chiefly founded on electricity consumption norms and private records, was sustainable.

Analysis: The Tribunal found that although the Commissioner had undertaken a test run and referred to power-consumption studies, the impugned order did not clearly establish the essential links required to sustain the charge of clandestine clearance. The evidence did not sufficiently bring out cogent findings on clandestine removal or disposal, nor did it adequately correlate the private records, octroi receipts, and other materials in a manner that displaced the statutory records and electricity-bill based figures. In matters of clandestine production and removal, the standard is one of preponderance of probability, but the material must still be reliable and sufficiently corroborative; mere suspicion, even if strong, cannot substitute for proof.

Conclusion: The demand and penalty were not sustainable, and the appeal succeeded.

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