Clandestine removal demand fails where dip-reading is unreliable and no evidence supports deliberate evasion.

Duty demand and penalty for alleged clandestine removal of molasses could not be sustained where the shortage was detected only by dip-reading and no finding of clandestine removal was recorded. The Tribunal noted that the assessee had itself reported the shortage and had offered explanations based on foaming, natural causes and seepage. It treated dip-reading of masonry tanks as an unreliable basis for exact quantification of molasses and held that a demand resting solely on that method could not stand. In the absence of evidence of deliberate evasion or wilful contravention, the penalty also lacked support.

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Issues: Whether the duty demand and penalty for alleged clandestine removal of molasses could be sustained when the shortage was detected by dip-reading and no finding of clandestine removal was recorded.

Analysis: The demand was founded on an allegation of clandestine removal, but there was no evidence proving such removal and no finding to that effect in either of the lower orders. The shortage itself had been reported by the assessee, which had offered an explanation based on foaming, natural causes, and seepage. The Tribunal treated the dip-reading method as not inherently reliable for determining the exact quantity of molasses in masonry tanks and held that a demand based solely on such an unreliable method could not stand. In the absence of facts showing deliberate evasion or wilful contravention, the penalty also lacked support.

Conclusion: The duty demand and penalty were unsustainable, and the appeal succeeded in favour of the assessee.

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