Unretracted admissions and surrounding circumstances can prove non-duty paid goods and support duty demand, confiscation and penalty.

Unretracted admissions by a proprietor, supported by excess stock, delivery challans and subsequent duty payment, were treated as sufficient to establish that the fabrics were non-duty paid. The Commissioner (Appeals) was found to have erred in doubting the voluntariness of those statements and in discarding them despite the surrounding circumstances. On that basis, duty demand, confiscation and penalty were restored because the proprietor's conduct showed active participation in evasion, even though the actual processor was not independently traced.

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Issues: Whether the duty demand, confiscation and penalties were sustainable on the basis of the proprietor's admissions and surrounding circumstances, and whether the Commissioner (Appeals) was justified in rejecting those statements and setting aside the original order.

Analysis: The goods were found in excess of recorded stock and the proprietor admitted that the fabrics were received without Central Excise invoices and were non-duty paid. The department also relied on recovered delivery challans and subsequent payment of duty by the proprietor. The statements were never retracted, and the surrounding circumstances, including the proprietor's own conduct, were treated as sufficient to establish the non-duty paid nature of the goods. The Court further held that the Commissioner (Appeals) erred in doubting the voluntariness of the statements and in discarding them lightly. Where the proprietor himself admitted duty liability and the goods were found in another person's premises, the department was justified in treating him as liable for duty and penalty for his active participation in evasion.

Conclusion: The order of the Commissioner (Appeals) was not sustainable and the Revenue's challenge succeeded.

Final Conclusion: The confiscation, duty demand and penalty action based on the admitted non-duty paid character of the fabrics was restored by setting aside the appellate relief.

Ratio Decidendi: An un-retracted admission, supported by surrounding circumstances, can establish the non-duty paid character of excisable goods and justify duty recovery and penalty, even where the actual processor is not independently traced.

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