Uncorroborated third-party statements cannot sustain excise demand, confiscation, or penalty without reliable proof of evasion.

An excise demand based solely on a third-party statement, without corroborative evidence that the goods were manufactured and cleared without duty, is not sustainable. Confiscation of alleged excess or unaccounted stock also requires reliable proof of non-accountal and the requisite intent to evade duty; eye-estimation of stock and uncorroborated statements are insufficient. On the facts noted, both the duty demand and the consequential confiscation and penalty were set aside, and the assessees succeeded with consequential relief.

---

---

Issues: (i) Whether the duty demand on Kamanies found in the trader's premises could be sustained solely on the basis of the trader's statement without corroborative evidence. (ii) Whether confiscation of the excess or unaccounted goods and the consequent penalty were sustainable when stock was alleged to be verified by eye estimation and no intent to evade duty was established.

Issue (i): Whether the duty demand on Kamanies found in the trader's premises could be sustained solely on the basis of the trader's statement without corroborative evidence.

Analysis: The demand rested on the statement of a third party, which attributed manufacture and clearance of the goods to the assessee without invoices. No corroborative material was shown to establish that the goods were in fact manufactured in the assessee's factory and cleared without payment of duty. A statement of a co-noticee or third party, by itself, cannot be the sole basis for an adverse demand in the absence of corroboration and appropriate evidentiary support.

Conclusion: The duty demand on this basis was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether confiscation of the excess or unaccounted goods and the consequent penalty were sustainable when stock was alleged to be verified by eye estimation and no intent to evade duty was established.

Analysis: The goods lying in the factory were treated as excess on the basis of stock verification, but the record did not establish that the non-accountal was with an intention to evade duty or to clear goods clandestinely. The confiscation was founded substantially on uncorroborated statements, and the absence of reliable proof of intent to evade duty weakened both confiscation and penalty. In such circumstances, unaccounted goods in the factory could not be confiscated merely because they were not reflected in the statutory records.

Conclusion: The confiscation and penalty were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The common order of adjudication did not survive judicial scrutiny, and the appeals succeeded with consequential relief.

Ratio Decidendi: An adverse excise demand, confiscation, or penalty cannot be sustained solely on an uncorroborated third-party statement or on alleged stock discrepancy unless the Revenue proves the charge with reliable evidence, including the requisite intent where confiscation is sought.

---