Old computers and excise duty: plausible purchase records defeated unproved allegations of manufacture or assembly.

Old computers were not shown to have been manufactured or assembled by the assessee, because purchase documents supported acquisition of used machines and the revenue produced no independent evidence to discredit them. A mere discrepancy between the assessee's statement and the documents was insufficient to reject the defence. In the absence of verification from the alleged sellers or other reliable contrary material, the allegation of manufacture remained unproved. The claim that the computers were only upgraded old computers was therefore accepted, and no excise duty liability could rest on an unsubstantiated inference of manufacture.

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Issues: Whether the seven computers found in the assessee's premises were manufactured or assembled by the assessee, or were merely old computers upgraded by it so as to attract central excise duty.

Analysis: The assessee produced purchase documents showing acquisition of old computers, and the department did not conduct verification with the alleged sellers or produce independent evidence to prove that the documents were bogus. The mere discrepancy noted between the assessee's statement and the documents was held insufficient to reject the defence. In the absence of evidence supporting the allegation of manufacture or assembly, the claim that the computers were only upgraded old computers was accepted.

Conclusion: The computers were not proved to have been manufactured or assembled by the assessee, and no excise duty demand could survive on that basis.

Ratio Decidendi: Where the assessee produces plausible documentary evidence of purchase of old goods and the revenue fails to adduce reliable contrary evidence, manufacture cannot be inferred merely from allegation or suspicion.

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