Electricity consumption alone cannot sustain excise duty demands without corroboration or cross-examination of relied-upon witnesses.

Central excise duty demand based primarily on estimated excess production from electricity consumption and allied material was held unsustainable where no prescribed norms or corroborative evidence supported the inference. The Tribunal's view that electricity consumption alone cannot be the sole basis for determining production and duty liability was not shown to be perverse, and statements relied on by the Revenue could not be used without offering the makers and investigating officer for cross-examination after it was sought. The High Court also noted that invocation of the proviso to Section 11A(1) was not supported by proof of misstatement, suppression of facts, or fraud, so the demand and penalties failed and no substantial question of law arose.

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Issues: Whether the demand of central excise duty and penalties could be sustained on the basis of estimated excess production inferred mainly from electricity consumption and alleged allied material, and whether any substantial question of law arose from the Tribunal's order.

Analysis: The Tribunal's findings were founded on the evidentiary record and on the settled principle that electricity consumption, by itself, cannot be treated as the sole and conclusive basis for determining production and duty liability, especially in the absence of prescribed norms or corroborative material. The Tribunal also held that the alleged statements relied upon by the Revenue could not be used against the assessee without producing the makers and the investigating officer for cross-examination when such opportunity had been sought. The High Court found no material to hold that these conclusions were perverse. It further noted that, though the proviso to Section 11A(1) was invoked, the show cause notices and adjudication order did not establish misstatement, suppression of fact, or fraud.

Conclusion: The demand and penalties were not sustainable on the facts found, and no substantial question of law arose for consideration.

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