Marginal overfilling of excisable goods did not prove clandestine removal or justify excise duty on excess quantity.

Marginal overfilling of packed carbon black was treated as a recognised commercial practice, and the department's evidence, collected without effective rebuttal, did not prove clandestine removal. No extra consideration was shown for the slightly excess quantity dispatched, as duty was charged only on the invoiced quantity and the purchaser confirmed no additional payment. In the absence of clandestine removal or higher realisation, excise duty could not be demanded on the excess packed quantity, and the extended period of limitation was also unavailable to the Revenue. The impugned demand and penalties were therefore set aside.

---

---

Issues: (i) Whether clandestine removal of carbon black without invoices was established; (ii) whether any additional consideration was received for the slightly excess quantity packed and dispatched; (iii) whether excise duty and the extended period of limitation were invocable in respect of the excess quantity packed.

Issue (i): Whether clandestine removal of carbon black without invoices was established.

Analysis: The evidence relied upon by the department was not dependable because it was collected behind the back of the assessee and without affording an effective opportunity to rebut it. The assessee's method of accounting was based on the practical reality that carbon black could not be measured with precision and that marginal overfilling of bags was a normal commercial practice adopted to avoid shortage disputes. The material on record did not establish unauthorised removals without invoices.

Conclusion: Clandestine removal was not proved and the finding was in favour of the assessee.

Issue (ii): Whether any additional consideration was received for the slightly excess quantity packed and dispatched.

Analysis: The record showed that the sale price was charged only for the invoiced quantity and no excess amount was received for the marginal overfilled quantity. The purchaser's verification also indicated that no extra consideration had been paid. Where duty was ad valorem and no higher sale price was realised, the excess quantity packed did not justify a separate duty demand on the theory of additional consideration.

Conclusion: No additional consideration was received and the issue was decided in favour of the assessee.

Issue (iii): Whether excise duty and the extended period of limitation were invocable in respect of the excess quantity packed.

Analysis: The excess quantity was only marginal, arising from the accepted practice of slight overfilling for commercial reasons and within the range of variation supported by the standard practice and the material on record. In the absence of clandestine removal or extra realisation, no excise duty could be demanded on the marginal excess quantity. For the same reason, the extended period was not available to the Revenue.

Conclusion: No excise duty was payable on the marginal excess quantity and the extended period of limitation was not invocable, both in favour of the assessee.

Final Conclusion: The impugned demand and penalties were set aside, and the appeals succeeded with consequential relief.

Ratio Decidendi: Where marginal overfilling of packed excisable goods is a recognised commercial practice, no clandestine removal or additional consideration is proved, and duty is charged on an ad valorem basis, excise duty cannot be demanded on the excess packed quantity and the extended period of limitation is not invocable.

---