Unretracted partner admission can sustain duty demand and penalty for input shortage without independent corroboration.

A clear, unretracted admission by a firm's partner regarding shortage of excisable inputs was treated as substantive evidence supporting duty demand and penalty. The later letter was not a valid retraction because it did not allege coercion, threat, or factual error, and the firm remained bound by the partner's statement. On that basis, the shortage and the consequent reversal of Modvat credit were upheld; the absence of an independent witness or a separate panchnama did not undermine the finding. The cited precedents were distinguished on their facts, and the duty liability and penalty were sustained.

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Issues: Whether the demand of duty and penalty could be sustained on the basis of the partner's admission regarding shortage of inputs and the consequent reversal of Modvat credit.

Analysis: The record showed that the partner of the appellant firm was present during verification, admitted the shortage of ingots and thereafter reversed the Modvat credit. The letter sent later did not amount to a retraction, as it did not assert coercion, threat or factual incorrectness of the statement. The maker neither denied the statement nor effectively retracted it, and the firm was bound by the admission of its partner. In such circumstances, the statement itself was treated as substantive and conclusive evidence of shortage, and the absence of an independent witness or a separate panchnama did not dislodge the finding. The cited precedents were found inapplicable on their facts.

Conclusion: The duty demand and penalty were rightly upheld against the appellant.

Final Conclusion: The appeal failed, and the impugned order sustaining the duty liability and penalty remained in force.

Ratio Decidendi: A clear, unretracted admission by a responsible partner regarding shortage of excisable inputs can, by itself, constitute sufficient evidence to sustain duty demand and penalty despite the absence of independent corroboration or a formal panchnama.

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