Uncorroborated statements cannot deny excise exemption where invoices, records and scientific evidence do not support misdeclaration.

Uncorroborated and retracted statements recorded during investigation cannot, by themselves, sustain a charge of misdeclaration in excise matters where the assessee's invoices and records remain unshaken. The allegation that cotton fabrics were polyester-dominated fabrics failed because no samples were drawn, no test report was produced, and no independent documentary evidence supported the Revenue's case. On that footing, denial of exemption from Central Excise duty was unjustified, and the demand, interest and penalties could not be sustained.

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Issues: Whether the respondent was wrongly denied exemption from Central Excise duty on the allegation that cotton fabrics were misdeclared as polyester-dominated fabrics, and whether the demand, interest and penalties could be sustained on the basis of uncorroborated statements.

Analysis: The Revenue relied mainly on statements recorded during investigation, but those statements were disowned in cross-examination and were not supported by independent documentary evidence. The original invoices and records produced by the respondent were not effectively controverted, no samples were drawn, and no test report was brought on record to establish that the goods were polyester-dominated fabrics. In the absence of corroboration, the allegation of misdeclaration could not be sustained, and the statement evidence by itself was insufficient to confirm duty and penalty.

Conclusion: The respondent was rightly held entitled to the exemption under the notifications, and the demand, interest and penalties were unsustainable.

Ratio Decidendi: Uncorroborated and retracted statements, without supporting documentary or scientific evidence, cannot by themselves justify denial of exemption or confirmation of duty demand and penalty in excise proceedings.

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