Corroboration in excise proceedings: purchasers' statements alone were insufficient to sustain duty demand and penalty.

Central excise duty demand and penalty under Rule 173Q were held unsustainable where the allegation rested only on purchasers' statements recorded by departmental officers, with no independent witness or corroborative material. The statements were taken in English and signed in Punjabi, and the cross-examination record did not provide firm support for the charge. The Collector's findings were treated as based on presumption and conjecture rather than reliable proof, so the evidentiary foundation for both duty and penalty failed. The demand and penalty were set aside in favour of the assessee.

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Issues: Whether the demand of central excise duty and the penalty imposed under Rule 173Q of the Central Excise Rules, 1944 could be sustained when the allegation rested only on purchasers' statements recorded by departmental officers and there was no independent or corroborative evidence.

Analysis: The allegation was founded solely on statements of three purchasers recorded by Central Excise Officers in English, signed in Punjabi, and not witnessed by independent witnesses. The record of cross-examination did not furnish firm and conclusive support for the charge. The findings of the Collector were treated as based on presumptions and conjectures rather than reliable proof. In the absence of collateral material, the evidentiary basis for both the duty demand and the penalty was found insufficient.

Conclusion: The demand of duty and the penalty were not sustainable and were set aside in favour of the assessee.

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