Burden of proof in excise demand requires cogent evidence of dutiable goods; uncorroborated statement was insufficient here.

In a duty demand case, the department must prove by cogent evidence that the goods manufactured and cleared were the dutiable commodity alleged. Here, the demand failed because no cloth was seized, tested, or independently examined, and the record instead supported the appellants' consistent claim that they dealt only in dedhsuti. A statement attributed to Shri Ram Pratap was also rejected as unreliable, since it was unsupported by corroboration, contradicted by a later affidavit, and recorded by officers not authorised to take such statements for excise purposes. The impugned demand and lower orders were set aside.

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Issues: (i) Whether the department had proved that the appellants manufactured and cleared canvas cloth, and not dedhsuti, during the relevant period so as to sustain the duty demand under Rule 10-A of the Central Excise Rules; (ii) Whether the statement attributed to Shri Ram Pratap could be treated as reliable and sufficient evidence for fastening liability on the appellants.

Issue (i): Whether the department had proved that the appellants manufactured and cleared canvas cloth, and not dedhsuti, during the relevant period so as to sustain the duty demand under Rule 10-A of the Central Excise Rules.

Analysis: No cloth was seized, tested, or otherwise independently examined to establish its nature. The record showed that the appellants consistently denied manufacture of canvas and asserted manufacture of dedhsuti only. The department's case rested on inference rather than material evidence, while the available correspondence from the buyer indicated supply and receipt of dedhsuti yarn and dedhsuti cloth. In the absence of proof regarding the actual fabric manufactured, the alleged duty demand could not be upheld.

Conclusion: The department failed to prove that the appellants manufactured and cleared canvas cloth, and the demand was not sustainable.

Issue (ii): Whether the statement attributed to Shri Ram Pratap could be treated as reliable and sufficient evidence for fastening liability on the appellants.

Analysis: The statement was the sole basis of the department's case, but it was contradicted by a later affidavit stating that Shri Ram Pratap was neither the manager nor concerned with the firm's affairs. The surrounding circumstances and produced records supported the claim that he was not a responsible representative of the appellants. The statement was also taken by audit officers who were not authorised to record a statement under Section 108 of the Customs Act for excise purposes. In these circumstances, the statement could not be treated as dependable evidence to prove the charge.

Conclusion: The statement of Shri Ram Pratap was not sufficient or reliable evidence to sustain the demand against the appellants.

Final Conclusion: The impugned demand and the orders of the lower authorities were set aside because the department failed to establish manufacture and clearance of the dutiable commodity by acceptable evidence.

Ratio Decidendi: In a duty demand case, the burden lies on the department to prove the nature of the goods by cogent evidence, and a demand cannot be sustained on the basis of an uncorroborated statement from an unauthorized source unsupported by independent verification.

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