Temperature-based contraction in HSD quantity did not amount to actual loss, so excise duty refund was admissible.

Refund of excise duty on the apparent quantity difference in HSD was held admissible because the variation arose from temperature-based contraction, not from actual loss of goods. The difference between loading and unloading was only in kilolitres, while the weight remained substantially unchanged, and departmental circulars supported the scientific position that petroleum products contract with temperature variation. The remission bar was treated as applicable only to an actual shortage or loss, so it did not defeat the claim. Unjust enrichment was also found not to arise, and the refund was allowed.

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Issues: Whether refund of excise duty paid on the apparent quantity difference in HSD was admissible when the variation arose from temperature-based contraction and there was no actual loss of goods, so as to attract the condition barring remission.

Analysis: The quantity difference between loading and unloading was found to be only in kilolitres, while the weight remained substantially unchanged. The accepted scientific position that petroleum products contract with temperature variation was supported by the departmental circulars. On that basis, the variation was treated as a density-related change rather than a physical shortage or loss. The condition prohibiting remission of duty was held to apply only where there is an actual loss of goods, and not where the same quantity of goods is shown in different temperature conditions. Unjust enrichment was also found not to arise on the facts.

Conclusion: The duty paid on the apparent difference was refundable and the refund claim was allowed.

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