Remission of excise duty on molasses destroyed by auto-combustion allowed; duty demand and penalty held unsustainable.

Remission of central excise duty was allowed on molasses destroyed by auto-combustion in a covered tank, as the loss was treated as destruction by natural causes beyond the assessee's control. The Tribunal noted that the goods were undisputedly unfit for consumption or marketing, and held that allegations of excess storage or inadequate cooling measures did not, on the facts, justify denial of remission under Rule 49 of the Central Excise Rules, 1944. The duty demand and penalty were therefore unsustainable, and the Commissioner's order was set aside.

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Issues: Whether remission of central excise duty was admissible on molasses destroyed by auto-combustion and whether the resulting duty demand and penalty were sustainable.

Analysis: The molasses was destroyed in a covered tank by auto-combustion, and the destruction was not in dispute. The Tribunal treated auto-combustion of stored molasses as a common occurrence in such cases and noted that the goods were unfit for consumption or marketing. It held that the loss was due to natural causes beyond the assessee's control. The Tribunal also found that the objection regarding excess storage and alleged lack of cooling measures did not justify denial of remission in the facts of the case, and relied on the remission framework under Rule 49 of the Central Excise Rules, 1944.

Conclusion: Remission of duty was allowable, and the confirmation of duty demand and imposition of penalty were unsustainable.

Final Conclusion: The appeal succeeded and the Commissioner's order was set aside, granting remission relief to the assessee.

Ratio Decidendi: Where excisable goods are destroyed by auto-combustion due to natural causes and are unfit for consumption or marketing, remission of duty cannot be denied merely on allegations of negligence unsupported by the facts.

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