No excise duty on deteriorated molasses destroyed during storage where loss fell within the natural causes exemption.

Central excise duty was not chargeable on molasses that had deteriorated, become unfit for human consumption, and was destroyed during storage. The first proviso to Rule 49(1) of the Central Excise Rules, 1944 exempts manufactured goods lost or destroyed by natural causes or unavoidable accident, and that exemption applied here because the deterioration led to destruction. Execution of a B-2 bond did not by itself create duty liability. The prior request for permission, coupled with the absence of a timely response, supported the conclusion that destruction of the stock was justified and the duty demand was unsustainable.

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Issues: Whether central excise duty was payable on molasses that had deteriorated and become unfit for human consumption and was destroyed without prior permission, notwithstanding the execution of a B-2 bond.

Analysis: The molasses was found to have deteriorated and become unfit for human consumption. Under the first proviso to Rule 49(1) of the Central Excise Rules, 1944, no duty is chargeable where manufactured goods are lost or destroyed by natural causes or by unavoidable accident during handling and storage. Since the destruction arose from such deterioration, the existence of a B-2 bond did not create duty liability. The request for permission had already been made, and in the absence of timely response, destruction of the already deteriorated stock was treated as justified.

Conclusion: No central excise duty was payable on the destroyed molasses and the demand was unsustainable.

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