Contemporaneous admissions proved manufacture by assembling computer systems, and procedural objections failed absent demonstrated prejudice.

Contemporaneous admissions made during investigation established that the assessee was assembling computer systems at its premises, and the later retractions were delayed and unsupported; the activity was therefore treated as manufacture liable to central excise duty. A denial of cross-examination and the complaint of non-supply of documents did not vitiate the adjudication because prejudice was not shown and the relied upon documents had been furnished with the show cause notice. The duty demand, confiscation and penalties were sustained, and the appeals failed. The stated principle is that credible contemporaneous admissions can prove manufacture, while procedural objections do not invalidate proceedings absent demonstrated prejudice.

---

---

Issues: (i) Whether the appellants were engaged in manufacture by assembling computer systems and were therefore liable to central excise duty. (ii) Whether denial of cross-examination and the plea of non-supply of documents vitiated the adjudication on the ground of violation of natural justice.

Issue (i): Whether the appellants were engaged in manufacture by assembling computer systems and were therefore liable to central excise duty.

Analysis: The premises were visited by excise officers and the statements recorded at the time of visit showed that the appellants were assembling computer systems at their premises. The statements of the engineer and the partner admitted the assembling activity. The later retractions were made after a delay and were not supported by contemporaneous material showing that the appellants were only trading in computer systems. In the absence of any acceptable rebuttal, the contemporaneous admissions were treated as reliable evidence of manufacture.

Conclusion: This issue was decided against the assessee and the activity was held to amount to manufacture attracting duty.

Issue (ii): Whether denial of cross-examination and the plea of non-supply of documents vitiated the adjudication on the ground of violation of natural justice.

Analysis: The request for cross-examination did not establish prejudice because the partner himself had admitted the assembling activity and the other witness was an employee whose evidence did not alter the core facts. The record also showed that the relied upon documents were supplied along with the show cause notice. On these facts, no material violation of natural justice was found.

Conclusion: This issue was decided against the assessee and the adjudication was upheld as not vitiated by breach of natural justice.

Final Conclusion: The duty demand and the associated confiscation and penalties were sustained, and the appeals failed in their entirety.

Ratio Decidendi: Contemporaneous admissions made at the time of investigation, if not credibly displaced by timely and supported retraction, can establish manufacture, and denial of cross-examination does not vitiate proceedings absent demonstrated prejudice.

---