Breakage norm for aerated bottles defeats duty demand where loss stays within the accepted circular limit.

Duty on burst aerated water bottles could not be sustained where the loss was shown to be within the 0.5% breakage norm under the applicable Board circular and the adverse finding lacked supporting evidence. The assessee's explanation that bursting resulted from CO2 expansion and atmospheric conditions beyond human control was accepted as consistent with the record, and the alleged handling-related bursting in the bonded storeroom was not proved. The rejection of the remission application did not independently support the demand. Accordingly, the duty demand and penalty were set aside, with consequential relief.

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Issues: Whether duty could be sustained on burst aerated water bottles when the loss was within the 0.5% breakage norm indicated in the Board circular and the adverse finding was unsupported by evidence.

Analysis: The record showed that the assessee had explained bursting of bottles as a natural consequence of CO2 expansion and atmospheric conditions beyond human control. The loss during the material period was stated to be within 0.5%, which was within the permissible limit contemplated by the Board circular on breakage adjustments. The finding that the bottles burst while being handled in the bonded storeroom was not supported by material evidence. The rejection of the remission application did not affect the demand where the demand itself was not founded on that rejection.

Conclusion: The demand of duty and the penalty could not be sustained and were set aside; the appeal succeeded with consequential relief.

Ratio Decidendi: Where breakage is within the accepted norm under the applicable circular and the adverse factual finding is unsupported by evidence, duty cannot be upheld merely on an unsubstantiated inference.

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