Excise duty demands based on unreconciled accounts and incomplete invoices cannot stand without contrary evidence or verified records.

Central excise duty demands based on discrepancies between profit and loss account sales and excise-return clearances were unsustainable where the assessee produced audited accounts and a reconciliation showing that gross sales included excise duty and trading sales outside manufactured clearances; in the absence of contrary material rebutting that reconciliation, the demand was set aside. The alleged short-payment demand for 2000-01 and 2001-02 also failed because the assessee furnished invoice-wise computation and the Revenue relied on incomplete invoice sets without supplying the documents requested for verification; the assessee's calculation was not shown to be erroneous, so this demand was likewise annulled. The appeal succeeded and consequential relief followed.

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Issues: (i) Whether the demand of central excise duty based on the difference between the sales shown in the profit and loss account and the clearance value shown in the excise returns was sustainable. (ii) Whether the alleged short payment of duty for the years 2000-01 and 2001-02 was sustainable on the basis of the invoice-wise figures relied upon by the Revenue.

Issue (i): Whether the demand of central excise duty based on the difference between the sales shown in the profit and loss account and the clearance value shown in the excise returns was sustainable.

Analysis: The appellant produced audited profit and loss accounts, balance sheet material and a reconciliation statement showing that the gross sales figure in the accounts included excise duty and also included trading sales which were not part of manufactured clearance value. On reconciliation, the clearance value disclosed in the excise returns was found to be consistent with the books and did not justify an adverse inference. In the absence of a contrary finding disproving the reconciliation, the demand founded on the alleged excess turnover could not be sustained.

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

Issue (ii): Whether the alleged short payment of duty for the years 2000-01 and 2001-02 was sustainable on the basis of the invoice-wise figures relied upon by the Revenue.

Analysis: The appellant explained the duty computation with invoice-wise details and pointed out that the incomplete set of invoices relied upon by the Revenue could not be treated as conclusive against it, particularly when the relevant copies were not supplied despite request. The calculation furnished by the appellant was not shown to be erroneous, and the Revenue could not rely on its own failure to supply the relied-upon documents to sustain the demand.

Conclusion: The short-payment demand was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded, the duty demands and penalties were annulled, and the appellant was held entitled to consequential relief in law.

Ratio Decidendi: A duty demand based on account discrepancies cannot stand where the assessee furnishes a plausible reconciliation from audited records and the Revenue fails to rebut it with contrary material or to supply relied-upon documents necessary for verification.

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