Remission for employee theft: shortage treated as unavoidable accident, so duty demand and penalty could not survive.

Shortage of tea caused by theft or unauthorised removal by employees, without the knowledge or control of management, was treated as an unavoidable accident. On that basis, remission of duty was held admissible under Rule 147 read with Rule 225 of the Central Excise Rules, 1944, and the duty demand was not sustained. Once remission was allowed, the basis for penalty also disappeared, so the penalty could not survive. The order confirming duty and penalty was therefore set aside in favour of the assessee.

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Issues: Whether remission of duty was admissible on the shortage of tea found in the appellant's stock, and whether the consequent penalty could survive.

Analysis: The shortage was treated as arising from removal and theft by employees without the knowledge or control of the management. On that basis, the shortage was held to be the result of an unavoidable accident, bringing the case within the scope of remission under Rule 147 read with Rule 225 of the Central Excise Rules, 1944. Once remission was held admissible, the foundation for the penalty also ceased to exist.

Conclusion: The issue was decided in favour of the assessee. Remission of duty was admissible, and the order confirming duty and penalty was set aside.

Ratio Decidendi: Shortage caused by theft or unauthorised removal by employees without the knowledge or control of management can constitute an unavoidable accident warranting remission of duty, and penalty cannot stand where remission is allowed.

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