Transit gain and loss adjustment supports full waiver of pre-deposit where the net position stays within the circular limit.

Excise duty on petroleum products transferred through pipeline turned on whether transit gains could be set off against transit losses under the governing circulars. The court accepted that, where such adjustment is permissible and the combined result remains within the prescribed limit, the loss is to be assessed on the net basis rather than product-wise alone. On that footing, insistence on pre-deposit was not justified, and the orders refusing complete waiver were set aside.

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Issues: Whether the petitioner was entitled to full waiver of pre-deposit in view of the treatment of transit loss and transit gain under the relevant circulars.

Analysis: The dispute concerned excise duty on petroleum products lost in transit while being transferred through pipeline. The demand was based on the view that loss had to be considered product-wise under Circular No. 663 dated 23-09-2002 and could not be offset by gains in other products. It was undisputed that if transit gain in one product was set off against transit loss in another, the combined loss fell within the limit prescribed by Circular No. 636 dated 22-04-2002. The earlier decision in the assessee's own case had recognised that adjustment of transit gains against transit losses was permissible, and nothing was shown to indicate that this position had been nullified.

Conclusion: Full waiver of pre-deposit was warranted and the direction insisting on pre-deposit was unsustainable.

Final Conclusion: The impugned orders refusing complete waiver were set aside, and the appeals were directed to be heard without insisting on pre-deposit.

Ratio Decidendi: Where transit gains and transit losses are permissible to be adjusted under the governing circular framework and the combined position remains within the prescribed limit, insistence on pre-deposit is not justified.

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