Retraction and sample testing cannot justify duty on all past clearances without independent corroboration.

CESTAT held that duty demand could not be extended to all past clearances merely on the basis of test reports from selected samples and a retracted supervisor statement. The Revenue had to establish, with reliable corroboration, that the appellant manufactured and cleared cross reel hank yarn throughout the disputed period. Customer correspondence, the absence of inquiries from multiple buyers, and the lack of panchnama or technical evidence on machinery weakened the Revenue's case. A test report for one lot could not be applied automatically to unrelated prior clearances. Duty and penalty were therefore confined to the goods actually proved to be cross reel hank yarn, with recomputation directed on that limited basis.

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Issues: Whether the evidence relied upon by the Revenue was sufficient to hold that the appellant manufactured and cleared only cross reel hank yarn throughout the disputed period, and whether test reports and a retracted statement could justify duty demand for past clearances.

Analysis: The Revenue relied on test reports of samples drawn from the factory and from a dealer's premises, along with a statement of a factory supervisor. The Tribunal held that such material was insufficient to conclude that all clearances during the entire period were of cross reel hank yarn. The correspondence with customers indicating complaints regarding plain reel hank yarn, the absence of inquiry from a larger number of buyers, and the lack of panchnama or technical evidence showing that the machinery was fitted with attachments for producing cross reel hank yarn undermined the Revenue's case. The retracted statement of the supervisor could not be treated as conclusive in the absence of independent corroboration. The Tribunal further held that a test report relating to a particular lot could not be automatically extended to prior clearances.

Conclusion: The Tribunal concluded that duty could be charged only on the goods actually tested and found to be cross reel hank yarn, and not on the entire past clearances.

Final Conclusion: The impugned order was set aside and the matter was sent back for recomputation of duty and penalty on the limited basis of the proved cross reel hank yarn clearances.

Ratio Decidendi: A retracted statement requires independent corroboration, and test results of a particular lot cannot be applied to unrelated past clearances without reliable supporting evidence.

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