Contemporaneous records prevail over untested statements in duty disputes; one demand set aside, another remanded for reconsideration.

Contemporaneous documentary evidence prevailed over untested oral statements in determining the timing of clearance of 80,000 polycarbonate bottles; the records supported clearance in March 1998 when the goods were exempt, so the contrary duty demand was set aside. On the separate allegation of fresh clearances shown as repairs under Rule 173H, the underlying documents and accounting material were not examined in sufficient detail, so the demand and connected penalties were remanded for fresh adjudication. Penalty liability was treated as dependent on the outcome of the substantive demand.

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Issues: (i) Whether 80,000 poly carbonate bottles shown in the statutory records as cleared in March 1998 were in fact cleared only in June 1998 and attracted duty. (ii) Whether the demand relating to alleged fresh clearances shown as repairs under Rule 173H, and the consequential penalties, could be sustained or required fresh adjudication.

Issue (i): Whether 80,000 poly carbonate bottles shown in the statutory records as cleared in March 1998 were in fact cleared only in June 1998 and attracted duty.

Analysis: The documentary record, including the new invoice series, RT 12 return, RG 1 entry sequence, and the contemporaneous financial statement supported the appellant's case that the disputed clearances took place in March 1998 when the goods were exempt. The adverse material relied upon by the Revenue consisted largely of oral statements and outward-register entries maintained by security staff, but those statements were not tested by cross-examination and the register itself did not consistently reflect the alleged June 1998 clearances. The rejection of the appellant's contemporaneous documents on the ground that they were not traceable years later was not considered a sound basis to disbelieve them.

Conclusion: The finding that 80,000 bottles were cleared in June 1998 was set aside and the issue was answered in favour of the assessee.

Issue (ii): Whether the demand relating to alleged fresh clearances shown as repairs under Rule 173H, and the consequential penalties, could be sustained or required fresh adjudication.

Analysis: The allegations concerning clearance of fresh manufactured bottles under the guise of repaired bottles required examination of the specific documentary material said to support the appellant's explanation, including the earlier invoice references, the accounting entries, and the asserted absence of raw material support for the Revenue's theory. The order did not deal with these submissions in sufficient detail. Since the penalty liability had been imposed on the footing of both demand findings, the determination of penalties also depended on the outcome of the remanded issue.

Conclusion: The demand on this count and the connected penalties were remanded for fresh adjudication.

Final Conclusion: The appeal succeeded on the disputed March 1998 clearance of 80,000 bottles, while the remaining demand and the consequential penalties were sent back for reconsideration.

Ratio Decidendi: Contemporaneous documentary evidence prevails over untested oral statements, and where material relied upon is not subjected to cross-examination or is inadequately examined, the resulting finding cannot be sustained; ancillary penalty liability must follow the fate of the substantive demand.

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