Remission application must be decided by speaking order before duty demand on short molasses can be sustained.

Duty demand on short or lost molasses cannot be sustained until the jurisdictional Commissioner decides the remission application by a speaking quasi-judicial order after giving the assessee an opportunity of hearing. An administrative rejection, or the absence of a served order on remission, leaves the demand notice premature because liability depends on prior adjudication of remission. Where the underlying demand is premature, consequential penalty and interest founded on that demand also cannot survive.

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Issues: Whether duty demand and consequential penalty could be sustained on shortage of molasses before the jurisdictional Commissioner had finally and by a speaking order disposed of the assessee's remission application.

Analysis: The remission application was required to be adjudicated by the jurisdictional Commissioner in a quasi-judicial manner and could not be rejected administratively or without affording the applicant an opportunity of being heard. In the absence of a served speaking order on the remission application, the department could not validly proceed to demand duty on the same quantity of molasses. The demand notice issued before such adjudication was therefore premature, and the consequential penalties and interest founded on that demand could not survive.

Conclusion: The duty demand and consequential penalties were unsustainable and the appeal succeeded in favour of the assessee.

Ratio Decidendi: A duty demand on allegedly lost or short quantity cannot be sustained unless the corresponding remission application has first been decided by the competent authority through a speaking quasi-judicial order after due opportunity of hearing.

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