Volumetric stock taking of molasses held unreliable; confiscation, duty demand and penalty were set aside on insufficient proof.

Molasses stock discrepancies determined only by volumetric tank measurement were held unreliable because volume varies with temperature, foam and decomposition, making actual weighment the more dependable method. The Tribunal also relied on departmental guidance permitting condonation of storage loss up to 2% of molasses. On that basis, the alleged excess and shortage were not established with sufficient certainty, and confiscation, duty demand and penalty could not be sustained. The lower order was therefore vacated and no liability survived on the disputed stock discrepancy.

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Issues: Whether excess and shortage of molasses was established on the basis of volumetric stock taking, and whether confiscation, duty demand and penalty could be sustained.

Analysis: The Tribunal noted that earlier decisions had held that molasses cannot be accurately controlled on a volume basis, since volume varies with temperature, foam and decomposition, and that actual weighment is the more reliable method of ascertainment. It also noted the departmental circular permitting condonation of storage loss up to 2% of molasses. On that reasoning, the discrepancies found in the tanks were not treated as establishing a reliable case of excess or shortage against the assessee.

Conclusion: The finding of excess and shortage of molasses was not sustained, and the confiscation, duty demand and penalty were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the order of the lower authority was vacated, with no liability surviving on the disputed molasses stock discrepancy.

Ratio Decidendi: Discrepancies in molasses stock determined merely on volumetric basis, without reliable actual weighment, are not sufficient to sustain confiscation, duty demand or penalty where the accepted method and departmental guidance show that such measurements are inherently uncertain.

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