Accidental loss of stored molasses supports duty remission where rupture was not deliberate and no mala fide intention was shown.

Remission of duty under Rule 21 of the Cenvat Credit Rules, 2004 was available where molasses stored in a tank were lost after the drain nipple ruptured. The governing test was whether the loss was accidental and without mala fide intention, rather than whether some additional precaution could theoretically have been taken. On the facts, the rupture was caused by high static pressure and the resulting leakage was not shown to be deliberate or intended by the assessee. The assessee was therefore entitled to remission of duty.

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Issues: Whether remission of duty was admissible under Rule 21 of the Cenvat Credit Rules, 2004 when molasses stored in a tank were lost due to rupture of the drain nipple.

Analysis: There was no dispute about the bursting of the drain nipple and the consequent loss of molasses. The question was whether the loss was deliberate or brought about mala fide, or whether it was an accident not intended by the assessee. The rupture was found to have occurred due to the high static pressure on the tank nipple and the resulting leakage was not shown to be a deliberate act. A restrictive reading of Rule 21 that denied remission merely because some precaution could have been taken would make the provision ineffective. The governing consideration was whether the loss arose from an accident without mala fide intention on the part of the assessee.

Conclusion: The assessee was entitled to remission of duty under Rule 21 of the Cenvat Credit Rules, 2004.

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