Uncorroborated loading challans cannot sustain excise demand; settlement may still grant immunity while leaving statutory interest payable.

Excise duty demands based only on transporter loading challans and statements were said to be unsustainable where the record contained cancelled challans, duplicate entries, entries for another commodity, and items not supported by GRs, because the Revenue must discharge the burden of proof with corroborative material. The settlement discussion further states that, where the applicants disclosed admitted duty and cooperated, immunity from prosecution and penal liability could be granted, while interest remained payable on duty retained until final payment under the statutory interest provision. The substantiated portion of the demand alone was treated as payable.

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Issues: Whether the disputed excise duty demand based on transporter loading challans and statements, without corroborative documentary support, could be sustained; and whether the applicants were entitled to settlement relief, including immunity from prosecution and the treatment of interest liability.

Issue (i): Whether the disputed excise duty demand based on transporter loading challans and statements, without corroborative documentary support, could be sustained.

Analysis: The disputed entries were examined against the record and were found to include cancelled challans, duplicate entries, entries relating to another commodity, and entries not supported by GRs. The Revenue relied mainly on the transporter's loading challans and a statement that tobacco entries belonged to the applicant, but the record did not contain sufficient corroboration for the remaining disputed entries. The Commission held that the burden of proof rested on the Revenue and that uncorroborated challans and statements could not, by themselves, sustain the entire disputed demand.

Conclusion: The disputed demand was not sustainable in full, and only the admitted duty and the specifically accepted residual amount were payable, in favour of the assessee to that extent.

Issue (ii): Whether the applicants were entitled to settlement relief, including immunity from prosecution and the treatment of interest liability.

Analysis: The applicants had made disclosure of the admitted duty liability and had cooperated with the proceedings. On that basis, immunity from prosecution and penal liability was considered within the settlement power under the Act. At the same time, the Commission found that the applicants had retained the duty amount and therefore directed payment of simple interest at 10% on the duty evaded until final payment, applying the statutory interest provision.

Conclusion: Immunity from prosecution and penal liability was granted, while interest was held payable, partly in favour of the assessee and partly in favour of the Revenue.

Final Conclusion: The settlement application was concluded by accepting only the substantiated portion of the duty demand, granting immunity from prosecution and penalty, and directing payment of statutory interest on the duty found payable.

Ratio Decidendi: A disputed excise demand cannot be sustained merely on uncorroborated third-party loading records and statements when the record contains material defects, such as cancellations, duplications, and entries relating to another commodity, and the Revenue fails to discharge the burden of proof.

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