Excess process loss in job work cannot justify duty demand without proof of diversion or clandestine removal.

Duty cannot be demanded on alleged excess burning loss in job work merely by comparing actual process loss with theoretical SION norms when the scrap was sent under permission, fully processed, and returned as brass rods. In the absence of evidence that any scrap, resultant goods, or waste was diverted or clandestinely removed, a differential loss figure by itself is insufficient to sustain duty demand. The text emphasises that SION norms are theoretical import-export standards and do not displace the actual facts of processing loss in job work. Accordingly, a duty demand founded only on such norms, without proof of diversion, is unsustainable.

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Issues: Whether duty could be demanded on the alleged excess burning loss arising in job work on the basis of SION norms when the scrap sent for processing was returned as finished goods and there was no evidence of diversion.

Analysis: The scrap was admittedly sent to the job worker under permission and the entire quantity was processed and returned as brass rods. There was no finding that any scrap, resultant goods, or physical waste was diverted or clandestinely removed. The demand rested only on a theoretical comparison with permissible burning loss under SION norms. In job work, actual process loss can vary depending on operational factors, and SION norms are only theoretical norms framed for import-export purposes. On the facts, the differential burning loss could not by itself justify duty demand.

Conclusion: The demand on the alleged excess burning loss was unsustainable and is held against the Revenue.

Final Conclusion: The impugned order was set aside and the appeal was allowed because the duty demand was based on theoretical norms rather than proof of diversion or clandestine removal.

Ratio Decidendi: Duty cannot be confirmed on alleged excess process loss in job work merely by applying theoretical SION norms absent evidence of diversion or clandestine removal of inputs or resultant goods.

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