Invisible burning loss in job work cannot be taxed where a binding Board circular allows such non-physical process loss.

Invisible burning loss in job work was treated as a non-physical process loss, not as identifiable waste capable of return, duty-paid clearance, or supervised destruction. A Board circular specifically allowing such loss was held binding on departmental authorities, so the levy could not be sustained on inputs lost in processing merely because no physical waste remained. The record did not conclusively establish the objection that the inputs were too pure for burning loss, and that point had not been examined earlier. The operative effect was that duty was not payable on the input element lost as invisible process loss, and the demand was unsustainable to that extent.

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Issues: Whether duty could be demanded on inputs consumed in invisible burning loss during job work, and whether the departmental circular permitting such loss was binding on the departmental authorities.

Analysis: The claim for relief was founded on the footing that the shortage arose not from physical waste capable of return, clearance on duty, or destruction in the presence of the proper officer, but from burning loss and similar invisible loss inherent in processing. The provisions relied upon by the lower authority concerning return, duty-paid clearance, or supervised destruction of waste apply where identifiable waste exists physically. A Board circular specifically covered invisible loss on burning, and departmental instructions of that kind were binding on the officers administering the levy. The objection that the inputs were of high purity and therefore burning loss was improbable was not examined in the earlier orders and could not be conclusively decided on the record.

Conclusion: Duty was not payable on the input element lost as invisible burning loss, and the departmental circular had to be given effect.

Final Conclusion: The demand was unsustainable to the extent it proceeded on invisible process loss, and the assessee obtained relief with the impugned order set aside.

Ratio Decidendi: A binding Board circular permitting allowance for invisible burning loss must be followed by departmental authorities, and duty cannot be demanded on inputs lost as non-physical process loss merely because no waste is returned or destroyed.

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