Natural storage loss within administrative tolerance cannot be denied without proper reasons or factual basis.

Natural or storage loss within the recognised administrative tolerance for working loss could not be disallowed without adequate reasons or factual basis. The Tribunal noted that losses up to 1% were treated in the Board's bulletin as a standard working rule, and that claims below that level were ordinarily not to be doubted, although the authority was only guided by the circular for uniform treatment. Because the rejection order did not dispute the occurrence of loss and relied only on storage period and seasonal climate without satisfactory reasoning, the disallowance was held unsustainable. The appeal was allowed and consequential relief followed.

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Issues: Whether the claim for condonation and refund of duty on storage loss was liable to be rejected despite the loss being within the Board's working rule and the absence of adequate reasons for disallowance.

Analysis: The Tribunal noted that losses up to 1% were treated in the Board's bulletin as a standard working rule, beyond which closer scrutiny may be needed, but claims below that level were not ordinarily to be doubted. Although the adjudicating authority was not strictly bound by the circular, it could legitimately be guided by it to ensure uniformity in condoning losses due to natural causes. The appellate order did not reject the occurrence of loss and relied only on storage period and seasonal climate, without giving satisfactory reasons for disallowing the claim. Those factors alone were insufficient to deny the benefit sought.

Conclusion: The claim was not validly disallowed and the appeal was allowed in favour of the assessee.

Final Conclusion: The orders of the authorities below were set aside and consequential relief was directed to follow.

Ratio Decidendi: Where a claim for natural/storage loss falls within the recognized administrative tolerance and the rejection order lacks adequate reasons or factual basis, the disallowance cannot be sustained.

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