Clandestine removal demands require cogent evidence, and extended limitation needs proof of fraud or suppression.

A duty demand for alleged shortage of clinker and clandestine removal was held unsustainable because the Department failed to produce independent evidence to rebut the respondents' expert reports, stock verification material, and explanation that recorded stock was overstated due to dust and gas loss. On limitation, the extended period could not be invoked because the record did not establish fraud, collusion, wilful misstatement, or suppression of facts, and the notice was not issued within six months of the Department's knowledge of the shortage. The appellate order setting aside the adjudication was upheld.

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Issues: Whether the demand of duty on alleged shortage of clinker and alleged clandestine removal was sustainable, and whether the extended period of limitation under the excise law could be invoked.

Analysis: The respondents relied on expert reports and stock verification to show that the recorded quantity of clinker was overstated because of loss arising from dust and gas emission and that the Department was informed of the discrepancy. The Department did not produce independent evidence to prove clandestine clearance of clinker or to dislodge the documentary and expert material produced by the respondents. On limitation, the record did not show fraud, collusion, wilful misstatement or suppression of facts, and the show cause notice was not issued within six months of knowledge of the shortage.

Conclusion: The demand of duty was unsustainable and the extended period of limitation could not be invoked; the order of the Commissioner (Appeals) setting aside the adjudication was upheld.

Ratio Decidendi: A duty demand for alleged clandestine removal cannot be sustained in the absence of cogent evidence, and the extended limitation period requires proof of fraud, collusion, wilful misstatement or suppression of facts.

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