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Issues: (i) Whether duty could be confirmed on a pro rata basis for 89 invoices in the absence of corresponding packing slips or direct evidence; (ii) Whether confiscation of finished goods not entered in the statutory register was sustainable when the show cause notice alleged contravention of the accounting and stock-maintenance rules; (iii) Whether the confirmed penalty and interest called for interference.
Issue (i): Whether duty could be confirmed on a pro rata basis for 89 invoices in the absence of corresponding packing slips or direct evidence.
Analysis: The evidence was found adequate only for 28 invoices, where the corresponding packing slips and invoices were recovered from the consignee and supported by the statement of the commercial assistant. For the remaining 89 invoices, there was no corresponding documentary recovery and no specific admission covering those consignments. A general statement that invoices reflected a lesser quantity and that excess goods were removed was held insufficient to sustain a pro rata inference for the untouched invoices without independent evidence.
Conclusion: The duty demand for the 89 invoices was not sustainable.
Issue (ii): Whether confiscation of finished goods not entered in the statutory register was sustainable when the show cause notice alleged contravention of the accounting and stock-maintenance rules.
Analysis: The show cause notice alleged breach of the stock-accounting and daily accounting requirements under the excise rules. On that footing, the confiscation provision invoked was treated as requiring proof of the requisite guilty mind. In the absence of a finding of mens rea, and given that the notice did not proceed on the specific basis that would dispense with that requirement, confiscation of the goods could not be upheld.
Conclusion: The confiscation order was rightly set aside.
Issue (iii): Whether the confirmed penalty and interest called for interference.
Analysis: Once clandestine removal was established on the 28 invoices for which direct corroboration existed, the confirmed duty, the corresponding penalty, and the interest were supported by the record. No separate ground was accepted to reduce the penalty further or to displace the interest liability on the sustained demand.
Conclusion: The penalty and interest were upheld.
Final Conclusion: The appeal of the assessee failed on the confirmed demand, penalty, and interest, while the Revenue's challenge did not warrant restoration of the confiscation or the additional demand on the 89 invoices. The common order was therefore left undisturbed to the extent it sustained only the demand supported by direct evidence.
Ratio Decidendi: A duty demand for alleged clandestine removal cannot be extended by mere pro rata inference to other consignments without specific supporting evidence, and confiscation under the accounting-breach limb of the excise confiscation rule requires proof of mens rea where that limb is the one invoked.
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