Best judgment quantification of duty demand upheld where statutory records and VAT returns supported clearances.

Duty demand quantified on the basis of VAT returns and other available records was held sustainable where the assessee had manufactured and cleared dutiable goods without payment of duty and failed to maintain separate records for exempted and dutiable clearances. The use of a best judgment method did not make the demand conjectural, because the authority relied on actual material on record and derived a near-correct sales figure for the period where complete production and clearance data were unavailable. The assessee's cited cases were distinguished on the ground that the department had used statutory records to quantify clearances, so the challenge to the quantification method failed.

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Issues: Whether the duty demand raised on the basis of available records and collateral evidence, described as a best judgment method, was sustainable against the assessee.

Analysis: The assessee was found to have manufactured and cleared dutiable goods without payment of duty and without maintaining separate records for exempted and dutiable clearances. The demand was worked out primarily from VAT returns and other available documents because reliable production and clearance data were not furnished by the assessee. The expression best judgment was used for the method of quantification, but the demand was not founded on pure conjecture. The authority relied on actual material on record and drew a near-correct sales figure for the period where complete data was unavailable. The cases cited by the assessee were distinguished because, on the facts, the department had relied on statutory records to quantify clearances.

Conclusion: The duty demand was held sustainable and the challenge to the quantification method failed.

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