Private record discrepancies alone cannot sustain excise duty demand without reliable proof of undervaluation or extra consideration.

Excise duty demand cannot be sustained solely on discrepancies in private records when statutory records and invoices reflect correct description and duty payment, and the employee statements do not reliably prove clandestine clearance or receipt of extra consideration. Where the departmental material lacks corroboration and the authorship of the private notes is unreliable, undervaluation or short payment cannot be inferred merely from mismatches between private and statutory records. The stated consequence was that the duty, interest, and penalties were not sustainable and the impugned order was set aside.

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Issues: Whether the demand of duty, interest, and penalties could be sustained solely on the basis of discrepancies in private records, in the absence of reliable evidence of undervaluation or receipt of extra consideration.

Analysis: The discrepancies noticed by the department were confined to certain private records maintained by employees, while the statutory records and invoices reflected the correct description and duty payment. The evidence recorded from the employees did not support the allegation of clandestine clearance or receipt of higher value, and the materials relied upon by the department were found to be of unreliable authorship. In the absence of corroborative evidence showing that superior goods were cleared in the guise of inferior goods for extra consideration, a duty demand could not be founded merely on mismatches between private notes and statutory records.

Conclusion: The demand of duty, interest, and the penalties were not sustainable and the finding was in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: A demand of excise duty cannot rest only on uncorroborated discrepancies in private records; there must be reliable evidence of undervaluation, short payment, or clandestine receipt of extra consideration.

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