Warehoused goods and storage loss: excess loss was not condonable, and deferred duty carried interest on breach of conditions.

Excess storage loss in petroleum products was not condonable beyond the prescribed limit, and refinery storage loss could not be set off against terminal storage gain because no provision permitted such adjustment; the claim was rejected. Where warehoused excisable goods were not accounted for in accordance with the warehousing conditions, duty deferred by the warehousing arrangement became recoverable together with interest; interest on the duty demand was held payable. The lower authorities' orders confirming duty and interest were upheld, and the revision failed in entirety.

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Issues: (i) whether excess storage loss in petroleum products could be condoned beyond the prescribed limit and adjusted against gain shown at the terminal; (ii) whether interest was payable on the duty demand arising from non-compliance with warehousing conditions.

Issue (i): whether excess storage loss in petroleum products could be condoned beyond the prescribed limit and adjusted against gain shown at the terminal.

Analysis: The adjudicating authority had already condoned the loss only up to the prescribed limit on the basis of the assessee's own loss statement. The claimed adjustment of refinery storage loss against terminal storage gain was not accepted, as there was no provision permitting such set-off. The cited circular was held not to prescribe any condonation limit for petroleum products or to assist the assessee in claiming a higher condonation on the facts presented.

Conclusion: The claim for condonation beyond the prescribed limit and for adjustment of loss against gain was rejected.

Issue (ii): whether interest was payable on the duty demand arising from non-compliance with warehousing conditions.

Analysis: The duty arising on manufacture was regarded as postponed only by the warehousing arrangement, and once the relevant warehousing conditions were not complied with, recovery of duty with interest followed. The earlier decisions relied upon by the assessee were distinguished as cases involving special circumstances not present here.

Conclusion: Interest on the duty demand was held payable.

Final Conclusion: The revision failed in entirety, and the orders of the lower authorities confirming duty and interest were upheld.

Ratio Decidendi: Where warehoused excisable goods are not accounted for in accordance with the governing conditions, excess loss beyond the permissible limit is not automatically condonable or adjustable against unrelated gain, and the deferred duty becomes recoverable with interest.

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