Clandestine manufacture demands require scientific computation and access to relied-upon records before final adjudication.

Denial of cross-examination and allegations of coercion did not vitiate the proceedings because the statements relied upon were treated as voluntary, no immediate retraction was made, and no effective request for independent witnesses was pressed. However, a demand and confiscatory findings based on estimated production, sulphur consumption and electricity use could not stand where the computation was not scientifically reworked and the appellants were not given proper access to seized records. The matter was therefore remanded for de novo adjudication with disclosure of relied-upon material, fresh computation on a scientific basis, and a further opportunity of hearing.

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Issues: (i) Whether the proceedings were vitiated by denial of cross-examination or coercion in recording statements. (ii) Whether the demand and confiscatory findings based on estimated production, sulphur consumption and electricity use could be sustained without scientific reworking of the figures and access to seized records.

Issue (i): Whether the proceedings were vitiated by denial of cross-examination or coercion in recording statements.

Analysis: The statements relied upon by the department were treated as voluntary. The plea of coercion was not accepted, and the absence of an immediate retraction was treated as significant. The request for cross-examination was rejected in relation to the appellants' own statements, and no specific and effective demand for production of independent witnesses was shown to have been pressed before the adjudicating authority.

Conclusion: The proceedings were not vitiated on this ground, and the plea of violation of natural justice by denial of cross-examination failed.

Issue (ii): Whether the demand and confiscatory findings based on estimated production, sulphur consumption and electricity use could be sustained without scientific reworking of the figures and access to seized records.

Analysis: The demand was founded largely on annexures, statements and broad estimates of production derived from sulphur consumption and electricity data. The recorded findings did not satisfactorily explain how the quantified alleged manufacture had been computed, nor did they adequately discuss whether the appellants had the necessary machinery, manpower and inputs for such production. The appellants were held justified in seeking inspection of seized records and copies thereof, and the figures required reworking on a scientific basis before final adjudication.

Conclusion: The impugned order could not be sustained and the matter had to be remanded for de novo adjudication after disclosure of seized records and fresh computation.

Final Conclusion: The adjudication was set aside and the dispute was sent back for fresh decision on the basis of a properly worked out record and after granting the appellants a further opportunity of hearing.

Ratio Decidendi: A demand for clandestine manufacture cannot be upheld on broad estimates alone and must rest on a scientifically supported computation based on relevant records, inputs, and capacity, with fair access to relied-upon material before final adjudication.

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