Destruction of goods by flood defeated duty demand where loss was known and formal remission was the only missing step.

Duty demand and penalty were held unsustainable where excisable goods were destroyed in a flood, the loss was not disputed, and the assessee had kept the department informed through correspondence. The absence of a formal remission application under Rule 196 of the Central Excise Rules, 1944 did not by itself justify confirmation of duty and penalty; if a formal application was needed, the proper course was to require it. Relief was granted to the assessee, while it was left open to file a remission application for prompt disposal.

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Issues: Whether duty demand and penalty could be sustained when goods were destroyed in a flood and the assessee had substantially informed the department, but had not filed a formal remission application under Rule 196 of the Central Excise Rules, 1944.

Analysis: The fact of flood, destruction of goods, and the extent of loss were not disputed. The department had been kept informed through correspondence and assessments of loss had been undertaken. Rule 196 contemplates relief where loss or destruction of goods is shown, and the absence of a formal remission application did not justify issuing and sustaining a demand. If a formal application was considered necessary, the proper course was to require it rather than to confirm duty and penalty.

Conclusion: The duty demand and penalty were unsustainable and were set aside; the appeal was allowed.

Final Conclusion: Relief was granted to the assessee against the confirmed duty and penalty, while leaving it open to make a formal remission application for prompt disposal by the Commissioner.

Ratio Decidendi: Where destruction of goods is established and the department is informed of the loss, a demand for duty cannot be sustained merely because a formal remission application under Rule 196 has not yet been filed.

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