Excise demand fails where manufacture is unproved and valuation rests on a seized price list, not actual transaction value.

Excise duty demand was found unsustainable where the Revenue failed to prove manufacture of the disputed goods in the assessee's premises. The record accepted that the other brand owner had its own manufacturing setup, that certain machinery was shared, and that some goods were sent only for completion of process. Valuation was also rejected as arbitrary because it was based on a seized price list rather than actual transaction value. In the absence of documentary proof of manufacture and reliable valuation material, the duty demand, interest, and penalties could not be sustained.

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Issues: Whether the demand of excise duty and consequential penalties could be sustained when the Revenue did not establish manufacture of the disputed goods in the assessee's premises and the valuation of clearances was based on a seized price list rather than actual transaction value.

Analysis: The Revenue alleged that goods bearing the brand name of another concern were manufactured and cleared from the assessee's factory, thereby crossing the SSI exemption limit under Notification No. 8/98 dated 01.03.1998. The record showed, however, that the Revenue did not adduce documentary evidence to prove manufacture from the assessee's premises. The findings of the Commissioner (Appeals) that the other brand owner had its own manufacturing premises, that some machines were shared, and that goods were sometimes sent for completion of process were accepted. The valuation adopted in adjudication was also found to be arbitrary because it proceeded only on a price list and ignored actual transaction value. On the material before it, the demand could not be justified.

Conclusion: The demand of duty, interest, and penalties could not be sustained, and the assessee succeeded.

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