Unavoidable accident and remission of duty applied to molasses loss after storage tank burst in the sugar industry.

Loss of molasses caused by the bursting of a storage tank was treated as an unavoidable accident for remission purposes under Rule 49 of the Central Excise Rules, 1944. The record showed that carbon dioxide gas formation in the molasses increased hydrostatic pressure and caused the tank to burst at the welded portion. As there was no material indicating mala fides or habitual negligence, the expressions "natural causes" and "unavoidable accidents" were read liberally to cover loss occurring beyond the assessee's control despite due and reasonable care. Duty remission was therefore available.

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Issues: Whether the loss of molasses caused by the bursting of the storage tank was an unavoidable accident or loss by natural causes so as to justify remission of duty under Rule 49 of the Central Excise Rules, 1944.

Analysis: The bursting of the tank and the resulting loss of molasses were not in dispute. The material on record showed that the explosion was caused by formation of carbon dioxide gas in the molasses, leading to increased hydrostatic pressure and bursting of the tank at the welded portion. The record also indicated that such tank explosions are known to occur in the sugar industry and that there was no material to show mala fides or habitual negligence on the part of the assessee. The expression "natural causes" and "unavoidable accidents" in Rule 49 were held to require a reasonable and liberal construction, and an unavoidable accident was treated as one occurring beyond the control of the assessee despite due and reasonable care.

Conclusion: The loss of molasses was held to be caused by an unavoidable accident, and the assessee was entitled to remission of duty.

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