Duty on sugar lost during reprocessing was not payable where Rule 21 remission did not apply.

Loss of excisable sugar occurring during reprocessing did not fall within Rule 21, because the goods were not lost or destroyed by natural causes, unavoidable accident, or becoming unfit for consumption or marketing. On that basis, remission under Rule 21 was not required, and no duty was payable on the quantity lost in reprocessing. The resulting demand and penalty were therefore unsustainable.

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Issues: Whether duty was payable on the quantity of sugar lost during reprocessing and whether the assessee was required to seek remission under Rule 21.

Analysis: The sugar had become sub-standard and was reprocessed, during which a quantified loss occurred. Rule 21 applies where goods are lost or destroyed by natural causes, unavoidable accident, or become unfit for consumption or marketing. Those situations were not present here, so the rule did not govern the loss arising in the course of reprocessing. The Tribunal relied on its earlier decisions holding that no duty is payable on sugar lost during reprocessing.

Conclusion: The assessee was not required to apply for remission under Rule 21, and no duty was payable on the sugar lost during reprocessing.

Final Conclusion: The demand and penalty could not be sustained, and the Revenue's challenge failed.

Ratio Decidendi: Loss of excisable goods occurring in the course of reprocessing, where Rule 21 is inapplicable, does not attract duty liability.

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