Remission of duty for reasonable open-storage loss cannot be denied without evidence of clandestine removal.

Remission of duty on zinc and lead concentrates stored in the open was examined where only a small percentage of loss was reported over the relevant period. The loss was treated as reasonable in light of open storage conditions, bulk handling and transportation, and the accounting policy allowing shortage within a specified limit. As no tangible evidence showed clandestine removal or other unauthorised clearance, the duty demand and disallowance of remission were found unsustainable. The orders below were set aside and relief followed.

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Issues: Whether remission of duty was rightly disallowed and duty demand sustained in respect of zinc and lead concentrates lost while stored in the open and claimed to have been lost due to natural causes.

Analysis: The goods were zinc and lead concentrates stored in the open by a public sector undertaking, and the record showed only a small percentage of loss over the relevant years. The loss was found to be reasonable having regard to the quantity handled, the open storage conditions, and the possibility of handling loss during bulk packing and transportation. No tangible evidence supported the allegation of clandestine removal without payment of duty. The accounting policy permitting shortage within a specified limit also supported the claim that the reported loss was within a normal range.

Conclusion: The disallowance of remission of duty and the confirmed duty demand were not sustainable.

Final Conclusion: The orders below were set aside and the appeals were accepted with consequential relief.

Ratio Decidendi: Where goods stored in open conditions suffer a small and reasonable loss attributable to natural causes or ordinary handling, and there is no evidence of clandestine removal, remission of duty cannot be denied merely on suspicion.

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