Retraction and corroboration evidence defeated an excise duty demand, while procedural contraventions still justified confiscation and a reduced penalty.

A duty demand on pressure-cooker parts cleared under another concern's brand name was held unsustainable for the period before 10-6-1989 because the retracted partner statements were not backed by reliable independent evidence and contemporaneous correspondence showed branding was required only prospectively; the demand also had to account for duty already paid for June 1989 to October 1989. Confiscation of seized stock was sustained because the goods were unaccounted and the record showed procedural contraventions relating to licence, classification, price lists, statutory records and returns. The penalty was upheld in principle but reduced on the facts.

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Issues: (i) Whether Central Excise duty was payable on the pressure cooker parts cleared under the brand name of another concern for the period prior to 10-6-1989 and for the later period, and whether the duty already paid for June 1989 to October 1989 had to be given credit; (ii) whether confiscation of the seized goods and the penalty imposed on the appellants were sustainable.

Issue (i): Whether Central Excise duty was payable on the pressure cooker parts cleared under the brand name of another concern for the period prior to 10-6-1989 and for the later period, and whether the duty already paid for June 1989 to October 1989 had to be given credit.

Analysis: The demand was founded on the allegation that the appellants had cleared branded goods ineligible for exemption under Notification No. 175/86-CE. The earlier statements of the partners, on which the adjudicating authority relied, were later retracted as mistaken and were found to be corroborated by the contemporaneous letters from the brand owner and the purchasing concern, which indicated that branding was required only prospectively. The Department did not produce reliable independent evidence to establish branded clearances prior to 10-6-1989. The record also showed that duty of Rs. 24,901.07 had already been paid for the branded clearances during June 1989 to October 1989 before issuance of the notice, but that amount was not taken into account in the adjudication.

Conclusion: The duty demand was not sustainable either for the period prior to 10-6-1989 or to the extent duty already paid for the later period was ignored. The demand was set aside.

Issue (ii): Whether confiscation of the seized goods and the penalty imposed on the appellants were sustainable.

Analysis: The seized stock was found to be unaccounted and the record supported the finding that the appellants had contravened the excise procedural requirements relating to licence, classification, price lists, statutory records and returns. Those contraventions justified confiscation of the seized goods and invocation of penal provisions. However, considering the facts, the quantum of penalty required moderation.

Conclusion: Confiscation was upheld, while the penalty was reduced.

Final Conclusion: The appeal succeeded only in part: the duty demand was deleted, the confiscation was sustained, and the penalty was reduced.

Ratio Decidendi: A retracted admission, when unsupported by reliable independent evidence and contradicted by contemporaneous corroborative material, cannot by itself sustain a duty demand; where branded clearances are proved only for a later period and duty for that period has already been paid, the demand must reflect that payment, while separate procedural contraventions may still justify confiscation and a moderated penalty.

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