Accepted statutory records defeat excise demand, penalty and extended limitation where revenue fails to prove suppression.

Statutory excise records accepted by the department shifted the burden to revenue to rebut the assessee's claim with affirmative evidence, and mere assumption or presumption was insufficient to sustain a demand or penalty. Because the assessee had licences and cleared Solvent C-IX under the prescribed Chapter X procedure, with RT-11 returns, RG-16 records and AR-3/warehousing documents scrutinised and accepted, the department could not prove misuse, diversion, wilful misstatement or suppression of material facts. The demand and penalty were set aside, and the extended period was held inapplicable.

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Issues: (i) whether the demand and penalty could be sustained when the assessee produced statutory records and the department did not rebut them; (ii) whether the extended period could be invoked on the ground of suppression of facts.

Issue (i): Whether the demand and penalty could be sustained when the assessee produced statutory records and the department did not rebut them.

Analysis: The assessee held the requisite licences and received Solvent C-IX under Chapter X procedure for the notified manufacture. The relevant RT-11 returns, RG-16 records and AR-3/warehousing documents had been scrutinised and accepted by the departmental officers. In the absence of contrary evidence such as extracts from RG-1, GP-1 or any material showing that the declared product was not manufactured or that the solvent was diverted, the allegation of misuse rested only on assumption and presumption. The record was sufficient to shift the burden back to the department, which failed to substantiate the charge.

Conclusion: The demand and penalty were not sustainable and the findings against the assessee were set aside.

Issue (ii): Whether the extended period could be invoked on the ground of suppression of facts.

Analysis: The supplies were made under licence through the prescribed Chapter X procedure, and the returns and registers were filed, checked and accepted by the department. On these facts, there was no concealment or non-disclosure capable of supporting invocation of the extended period. The department failed to establish wilful misstatement or suppression of material facts.

Conclusion: The extended period could not be invoked.

Final Conclusion: The appeal succeeded, the impugned order was set aside, and the assessee obtained relief from the demand and penalty.

Ratio Decidendi: When statutory records maintained under the prescribed excise procedure are accepted by the department, the burden lies on the revenue to rebut them with affirmative evidence before alleging misuse, suppression, or invoking the extended period.

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