Clandestine manufacture allegations fail when register-based demand rests on inconsistent figures and unreliable reconciliation.

Discrepancies between a private Progressive Moulding Register and the statutory RG-1 register were relied on to allege clandestine manufacture and removal of tyres. The Tribunal found that the duty demand was built entirely on production figures derived from those registers, but the Revenue's own reconciliation produced successive revised figures that materially differed from the show cause notice and from earlier reconciled figures. Those inconsistencies made the foundational data unreliable, and there was no stable or credible evidence to support excess production or clandestine removals. The duty demand and penalty were therefore set aside in favour of the assessee.

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Issues: Whether the duty demand and penalty could be sustained on the basis of discrepancies between the private Progressive Moulding Register and the statutory RG-1 register, and the alleged clandestine manufacture and removal of tyres.

Analysis: The demand was founded entirely on production figures worked out from the private register and compared with RG-1. During the Tribunal-directed reconciliation, the Revenue itself produced successive revised figures that materially differed from the show cause notice figures and even from its earlier reconciled figures. The resulting inconsistencies showed that the foundational data in the notice was unreliable. In the absence of stable and credible evidence supporting the alleged excess production and clandestine removals, the charge could not be upheld. The Tribunal therefore found that the basis of the duty demand was not supported by concrete evidence.

Conclusion: The demand and penalty were set aside in favour of the assessee.

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