Retracted statements without corroboration cannot sustain duty demand, interest or penalties where no independent evidence exists.

Demand of duty, interest and penalties cannot be sustained where it rests mainly on departmental statements that are later retracted in cross-examination and are unsupported by independent evidence. The record showed no excess stock, suppressed raw material, fake invoices, delivery challans, or physical movement of goods without duty payment. Once the witnesses were examined and their earlier inculpatory statements were substantially withdrawn, the adjudication could not rely on those statements alone without corroborative documentary or other independent proof. On that basis, the demand and penalties were set aside.

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Issues: Whether the demand of duty, interest and penalties could be sustained when the case rested predominantly on uncorroborated statements that were later retracted in cross-examination and were not supported by independent evidence.

Analysis: The demand was founded mainly on statements recorded by departmental officers. The earlier remand required cross-examination, and the witnesses were subsequently examined. Their cross-examination substantially retracted the earlier inculpatory statements. No excess stock, suppressed raw material, fake invoices, delivery challans, or physical movement of goods without duty payment was found. In these circumstances, the adjudication could not continue to rely on the earlier statements alone, particularly after they had been tested and retracted, without corroborative documentary or other independent evidence.

Conclusion: The demand of duty, interest and the penalties were unsustainable and were set aside.

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