Short-landing must be assessed on quantity actually discharged, excluding goods never landed from the shortage calculation.

Shortage of imported goods must be computed only on the quantity actually discharged, because goods never landed cannot be included in the deficit calculation. The note states that the landed quantity in the out-turn report is the relevant base for assessing any breach of the import condition, and that a demand worked out on the full bill of lading quantity is incorrect. If the short-landing figure is excluded and the deficit falls below the permitted loss threshold, the customs demand cannot be sustained.

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Issues: Whether the shortage of imported goods was to be computed with reference to the quantity actually landed and, on that basis, whether the customs duty demand based on the end-use shortage could be sustained.

Analysis: The landed quantity shown in the out-turn report had to be treated as the relevant base for determining shortage. Goods that were never landed could not be counted while working out the alleged deficit. Once the short-landing figure was excluded, the shortage fell below the 1% loss permitted by the Central Government. The demand had been worked out on the basis of the full quantity shown in the bill of lading rather than the quantity actually discharged.

Conclusion: The demand was unsustainable and the appeal was allowed.

Final Conclusion: The impugned order was set aside and the customs demand failed because the shortage had to be assessed only on the quantity actually landed.

Ratio Decidendi: For assessing a shortage where goods are partly not landed, the relevant base is the quantity actually discharged, and quantities never landed cannot be included in the computation of shortage or breach of the import condition.

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