Remission of duty for goods destroyed in fire upheld where clandestine removal was not proved and demand failed.

Duty could not be demanded for sugar allegedly removed from records after a fire where the assessee promptly reported the loss and independent enquiry found no solid evidence of clandestine removal. The SDM's report supported the conclusion that fire could not be ruled out, while the department produced no reliable contrary proof and relied mainly on a disputed surveyor's report. On those facts, the claim for remission of duty on goods destroyed in fire was satisfied, so the duty demand was unsustainable and the penalty also failed.

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Issues: Whether duty could be demanded on sugar allegedly removed from statutory records after destruction in fire, and whether penalty could be sustained when the assessee sought remission of duty for goods destroyed in the fire.

Analysis: The material on record showed that the assessee promptly informed the department about the fire and the loss of goods. The Sub-Divisional Magistrate's independent enquiry found no solid evidence of removal of sugar bags from the godown and indicated that fire due to short circuit could not be ruled out. The department had no independent evidence to displace that finding, while the adjudicating authority relied mainly on a surveyor's report that was under challenge and did not properly consider the SDM's report. In these circumstances, the factual basis for alleging clandestine removal was not established, and the requirement for remission of duty on goods destroyed by fire stood satisfied.

Conclusion: The demand of duty was not sustainable and the penalty also could not survive.

Ratio Decidendi: Where destruction of excisable goods in fire is supported by independent evidence and there is no reliable contrary proof of clandestine removal, remission of duty cannot be denied and consequential duty demand and penalty fail.

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