Remission of duty fails for fire-destroyed goods stored outside approved premises, but penalty needs separate justification.

Remission of duty was unavailable where finished goods destroyed by fire were stored outside the approved premises, even though they remained within the factory; the duty demand therefore followed once the remission claim failed. Penalty, however, required an independent factual basis and was not justified on the circumstances recorded, so it was set aside. The result was partial relief to the assessee, limited to deletion of penalty, while rejection of remission and confirmation of duty were sustained.

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Issues: (i) Whether remission of duty could be denied on finished goods destroyed by fire on the ground that they were stored outside the approved premises, and whether the duty demand was sustainable; (ii) whether penalty was leviable in the facts of the case.

Issue (i): Whether remission of duty could be denied on finished goods destroyed by fire on the ground that they were stored outside the approved premises, and whether the duty demand was sustainable.

Analysis: The goods were admittedly stored outside the approved premises, though within the factory. On that basis, the conditions of Rule 49 were held not to cover the case, so the claim for remission was not accepted. Once remission was rejected, the duty liability followed as a consequence.

Conclusion: Remission was rightly rejected and the duty demand was confirmed, against the assessee.

Issue (ii): Whether penalty was leviable in the facts of the case.

Analysis: No sufficient basis was found for imposing penalty on the assessee in the circumstances of the matter.

Conclusion: Penalty was set aside, in favour of the assessee.

Final Conclusion: The appeals succeeded only to the extent of deletion of penalty, while the rejection of remission and confirmation of duty were sustained.

Ratio Decidendi: Where finished goods are stored outside the approved premises, remission under Rule 49 is unavailable and duty remains payable, but penalty requires an independent justification on the facts.

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