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Issues: Whether the loss of molasses in storage was to be computed on the budget-day stock or on the total quantity stored in tanks from time to time, and whether the loss of 1.7% was condonable so as to justify remission of duty and setting aside of penalty and interest.
Analysis: The stock on the budget day had been ascertained only by the dip method, which was treated as an estimated and non-scientific means of finding the exact quantity of molasses in a tank. The proper basis for assessing storage loss was the total quantity actually stored and cleared during the relevant period, not the estimated budget-day figure. On that basis, the loss of 5465.07 quintals worked out to about 1.7% of 321920.68 quintals. Since the Board's instructions permitted condonation of loss up to 2%, the loss fell within the condonable limit. The rejection of remission, and the consequential demand of duty, penalty and interest, was therefore unsustainable.
Conclusion: The loss was to be computed with reference to the total quantity stored, the loss was condonable, and the assessee was entitled to remission of duty. The demand of duty, penalty and interest was not justified.
Ratio Decidendi: For purposes of remission of duty on molasses in storage, the loss must be assessed on the basis of the total quantity actually stored during the relevant period and not on an estimated budget-day stock figure obtained by a non-scientific method; where the loss remains within the condonable limit prescribed by the Board, remission cannot be refused.
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