Molasses shortage within permissible limit defeated duty demand and penalty where loss was explained by storage conditions.

Duty demand and penalty arising from molasses shortage were unsustainable where the variation was 1.86%, within the permissible limit recognised by the Board, and the shortage was explained by storage-related natural factors such as foam, air bubbles, and temperature-driven changes in density and volume. In the absence of material indicating clandestine removal, the alleged shortage could not justify duty liability. The impugned order was set aside and the appeal was allowed.

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Issues: Whether the duty demand and consequential penalty arising from shortage in molasses storage were sustainable when the variation was within the permissible limit and the loss was explained as due to storage conditions.

Analysis: The variation claimed by the appellant was 1.86%, which was within the permissible limit recognised by the Board. The record also showed that the shortage was reported and explained as arising from natural factors affecting molasses, including foam, air bubbles, temperature-related change in density and volume. In the absence of material showing clandestine removal, the demand based on the alleged shortage could not be sustained.

Conclusion: The impugned order was set aside and the appeal was allowed.

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