Remission of duty on molasses shortage allowed where loss stayed within tolerance and no clandestine removal was shown.

Remission of duty on shortage of molasses stored in steel tanks was held admissible where the loss remained within the recognised 2% tolerance limit and was attributable to natural causes such as evaporation, foaming, handling variation and temperature changes. The rejection of remission was found unsustainable because the record did not show clandestine clearance or any unauthorised removal without duty. The accepted tolerance reflected the susceptibility of molasses to natural weight variation, and the assessee was therefore entitled to condonation of loss and consequential relief.

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Issues: Whether remission of duty was admissible on shortage of molasses stored in steel tanks when the loss was within 2% and was claimed to have arisen from natural causes.

Analysis: The appellant claimed condonation of molasses loss on the basis of evaporation, handling and chemical reactions, supported by the relevant State notification, departmental instruction, Board circular and trade notice allowing loss up to 2%. The finding rejecting the claim was held unsustainable because the shortage was within the accepted limit, there was no material to show clandestine clearance without duty, and molasses are susceptible to weight variation due to natural factors such as foaming, evaporation and temperature changes.

Conclusion: Remission of duty on the molasses shortage was admissible and the rejection of the claim was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee was granted consequential relief on account of condonation of the molasses loss.

Ratio Decidendi: Where loss of molasses kept in storage is within the recognised tolerance limit and is attributable to natural causes, remission of duty cannot be denied in the absence of evidence of unauthorised removal without payment of duty.

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