Incomplete stock records and ignored material evidence cannot support duty demand, confiscation or penalty in excise proceedings.

Duty demand, confiscation and penalty could not be sustained where the adjudicating authority relied only on an incomplete statutory register and ignored BIN cards and issue slips said to record receipt and issue of raw materials. The omission to write RG23A Part-I for the relevant period was treated as conclusive without examining the private records produced by the assessee, so the finding of shortages and excesses was based on an incomplete stock verification. Because the duty demand on alleged shortages, the demand on credit entries, confiscation and penalty all flowed from that flawed approach, the impugned order was set aside.

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Issues: Whether duty demand, confiscation and penalty could be sustained when the adjudicating authority relied only on incomplete statutory records and ignored BIN cards and issue slips showing the accounting of raw materials.

Analysis: The statutory register RG23A Part-I was admittedly not written for the relevant period, and the adjudicating authority treated that omission as conclusive without examining the private records produced by the assessee. BIN cards and issue slips, which were said to reflect the receipt and issue of raw materials, were not given any consideration. The finding of shortages and excesses was therefore based on an incomplete record rather than a proper verification of the stock position. The demand of duty on alleged shortages, the duty demand on credit entries, confiscation and penalty all rested on the same flawed approach.

Conclusion: The impugned order could not be sustained and was set aside.

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