Audit objection alone cannot sustain excise duty demand without independent evidence proving the true identity of goods.

A central excise demand based on audit objection failed where the department did not produce independent investigation or reliable evidence to show that the goods cleared were unassembled metal containers rather than cut-to-size sheets or unfinished components. The earlier departmental classification was not displaced, and the record did not establish excisability of the articles as claimed. The assessee's plea that the goods were unfinished sheets for further manufacture was not adequately answered, and the failure to associate the assessee with inquiries breached natural justice. The demand was set aside and the matter resolved in favour of the assessee.

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Issues: Whether the goods cleared by the assessee were unassembled metal containers liable to central excise duty, or merely cut-to-size sheets/non-excisable components as earlier accepted by the Department.

Analysis: The demand was founded on audit objections, but no independent investigation or reliable evidence was produced to displace the earlier departmental classification of the goods as cut-to-size sheets. The record did not establish that the articles cleared were metal containers in unassembled form. The assessee's plea that the goods were unfinished sheets meant for further manufacture was not satisfactorily answered by the lower authorities, and the failure to associate the assessee with inquiries also infringed natural justice.

Conclusion: The demand could not be sustained, and the finding went in favour of the assessee.

Final Conclusion: The orders of the lower authorities were set aside and the appeals were allowed.

Ratio Decidendi: A duty demand cannot be sustained on audit objection alone unless supported by independent inquiry and evidence establishing the true identity and excisability of the goods; where the department fails to prove this, the demand is liable to be quashed.

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