Remission of duty for goods damaged by rain water cannot be denied for non-compliance with departmental manual instructions.

Remission of duty was available where excisable goods were damaged by rain water before removal and became unfit for marketing, because Section 5 of the Central Excise Act, 1944 read with Rule 21 of the Central Excise Rules, 2002 permits remission when goods are lost, destroyed, or rendered unfit by natural causes or unavoidable accident. The authority had to make an objective factual satisfaction, and the assessee had to prove the statutory conditions, which were met on the record. Compliance with departmental manual instructions was not a mandatory precondition, as such instructions could not override the statutory scheme, so the Revenue's challenge failed.

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Issues: Whether remission of duty was available where excisable goods were damaged by rain water and became unfit for sale, and whether compliance with the departmental manual was a mandatory precondition for granting such remission.

Analysis: Remission under Section 5 of the Central Excise Act, 1944 read with Rule 21 of the Central Excise Rules, 2002 depends on loss or destruction of goods by natural causes, unavoidable accident, or their becoming unfit for consumption or marketing before removal. The authority must be satisfied objectively on the basis of the facts, and the assessee bears the burden of proving that the loss arose from the specified causes. The record showed that the goods were damaged by rain water, remained unremoved, and were found unfit for marketing. The reliance on instructions in the Excise Manual was rejected as those instructions did not override the statutory scheme. The earlier precedent dealing with the corresponding former rule was treated as applicable in principle.

Conclusion: Remission of duty was rightly allowed, and the Revenue's challenge failed.

Ratio Decidendi: Where excisable goods are lost or rendered unfit for marketing by natural causes before removal, and the statutory conditions for remission are satisfied on objective assessment, duty remission cannot be denied merely for want of compliance with departmental manual instructions.

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