Corroborated retracted statements can sustain excise penalty, but registration cancellation requires breach of registration conditions.

Private records, corroborated statements and comparison with statutory accounts were sufficient to sustain the penalty for contravention of the Central Excise Rules, because mere retraction did not displace their evidentiary value absent proof of duress or involuntariness. The penalty under Rule 173Q(bbb) was therefore upheld. By contrast, cancellation of the dealership registration could be ordered only for breach of the conditions of registration under Rule 174 and the registration certificate, not for every statutory violation. Since breach of Rule 57GG was not by itself a ground for cancellation, the registration order was set aside.

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Issues: (i) Whether the penalty imposed for contravention of the Central Excise Rules on the basis of private records and statements was sustainable; (ii) Whether cancellation of the dealership registration could be upheld for breach of Rule 57GG.

Issue (i): Whether the penalty imposed for contravention of the Central Excise Rules on the basis of private records and statements was sustainable.

Analysis: The allegations were supported by private exercise books recovered from the appellant's possession, comparison of those entries with the statutory records, and statements describing the mode of artificial invoicing and cash sales. The retraction of the statements was not supported by material showing duress or coercion, and the statements were corroborated by other evidence on record. Mere retraction, without proof of involuntariness, did not destroy their evidentiary value.

Conclusion: The penalty under Rule 173Q(bbb) of the Central Excise Rules, 1944 was upheld and this issue was decided against the assessee.

Issue (ii): Whether cancellation of the dealership registration could be upheld for breach of Rule 57GG.

Analysis: Revocation or suspension of registration was held to be permissible only for breach of the conditions attached to registration under Rule 174 and the registration certificate, not for every contravention of the Central Excise Rules. A breach of Rule 57GG could attract penal consequences, but it was not a ground by itself for cancellation of the registration certificate.

Conclusion: Cancellation of the dealership registration was set aside and this issue was decided in favour of the assessee.

Final Conclusion: The monetary penalty was sustained, but the order cancelling the dealership registration was quashed, resulting in partial relief to the assessee.

Ratio Decidendi: A retracted statement retains evidentiary value when corroborated and not shown to be involuntary, and cancellation of registration is permissible only for breach of the conditions of registration, not for any other statutory contravention.

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