Misdeclaration demand sustained only for proved clearances; broader extrapolation rejected and matter remitted for recomputation.

Duty demand for alleged misdeclaration of flush doors as panel or baton doors was sustained only for the specific clearances to identified customers, because written supply orders, statements, and seizure-related material corroborated those transactions. Denial of cross-examination did not vitiate the finding on those proved clearances, since the evidentiary basis was sufficient. However, the same inference could not be extended to all other customers and clearances during the dispute period, as the Revenue had not made wider enquiries and there was contrary material showing manufacture and declaration of panel doors and baton doors. The order was set aside and the matter remitted for fresh quantification of duty and recomputation of penalties limited to proved clearances.

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Issues: (i) Whether the duty demand in respect of clearances to the identified customers could be sustained on the basis of their written supply orders and statements, and whether denial of cross-examination caused violation of natural justice; (ii) Whether the finding that the goods were flush doors misdeclared as panel doors or baton doors could be extended to all other customers and clearances during the dispute period.

Issue (i): Whether the duty demand in respect of clearances to the identified customers could be sustained on the basis of their written supply orders and statements, and whether denial of cross-examination caused violation of natural justice.

Analysis: The demand relating to the identified customers was supported not only by their statements but also by written supply orders showing requirement of flush doors, and by contemporaneous seizure and stock-verification circumstances. In that setting, the request for cross-examination was held to be irrelevant. The evidence was sufficient to sustain the allegation that the invoices showing panel doors or baton doors represented flush doors, at least for those specific clearances.

Conclusion: The demand was sustained in principle for the clearances made to the identified customers, and denial of cross-examination did not vitiate the finding.

Issue (ii): Whether the finding that the goods were flush doors misdeclared as panel doors or baton doors could be extended to all other customers and clearances during the dispute period.

Analysis: The Revenue had not made enquiries with all customers, the housing authorities, the alleged intermediary agency, the workers, or the departmental officers who conducted stock verification. There was also material indicating manufacture and declaration of panel doors and baton doors, including enlistment letters and stock declarations. On that basis, the inference drawn from a limited set of customers could not be automatically extended to the entire turnover.

Conclusion: The finding could not be applied to all other clearances, and the demand had to be confined to the specific clearances established by evidence.

Final Conclusion: The impugned order was set aside and the matter was remitted for fresh quantification of duty and recomputation of penalties restricted to the proved clearances.

Ratio Decidendi: A duty demand based on misdeclaration can be sustained only to the extent supported by specific corroborative evidence for the relevant clearances, and a limited set of customer statements and supply orders cannot be mechanically extrapolated to all other transactions without independent proof.

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