Unretracted employee statements and stock verification sustained duty demand and penalties, but the manager's penalty was deleted.

Unretracted statements of employees recorded under section 14, together with stock verification based on the assessee's own declaration, sustained the duty demand on 120 MT of MS square bars, along with confiscation and penalties against the manufacturer. The contemporaneous overtime and salary records were given no evidentiary weight, and the assessee could not recharacterise the verification as mere eye estimation. By contrast, the manager's penalty was set aside because he was only an employee acting under the manufacturer's instructions, so punitive liability was not justified on the facts.

---

---

Issues: (i) whether the duty demand on 120 MT of MS square bars and the related confiscation and penalties were sustainable on the basis of statements recorded under section 14 and the stock verification conducted by the department; (ii) whether penalty on the manager was justified.

Issue (i): whether the duty demand on 120 MT of MS square bars and the related confiscation and penalties were sustainable on the basis of statements recorded under section 14 and the stock verification conducted by the department.

Analysis: The employees examined under section 14 stated that the factory had not worked more than one shift on the relevant dates, and those statements were never retracted. The contemporaneous overtime and salary records were therefore held to have no evidentiary value. On stock verification, the declaration made by the authorised signatory for size-wise stock was treated as the basis for ascertainment, and the assessee could not later contend that the officers relied on mere eye estimation. The cited precedents were distinguished on facts.

Conclusion: The duty demand on 120 MT, along with confiscation and the penalties imposed on the manufacturer, was upheld and the assessee failed on this issue.

Issue (ii): whether penalty on the manager was justified.

Analysis: The manager was found to be only an employee acting under the instructions of the manufacturer, and not the person against whom punitive liability should be sustained on the facts of the case.

Conclusion: The penalty on the manager was set aside and relief was granted to that extent.

Final Conclusion: The order was sustained against the manufacturer with respect to duty, confiscation and penalties, but the penalty on the manager was deleted.

Ratio Decidendi: Unretracted statements of employees recorded under section 14, coupled with verification based on the assessee's own declaration, can sustain duty demand and confiscation, while penalty on a mere employee-manager may be set aside where his role is only subordinate and instructional.

---