Remission of excise duty allowed for flood-damaged waste lost by natural cause under Rule 49

Remission of central excise duty was held admissible where neutralised waste was lost in floods, because the evidence showed damage by heavy rain and flooding and supported the assessee's contemporaneous disclosure of loss. The adverse inference drawn from the absence of the damaged bags was unsupported by the record, and the loss was treated as having occurred by a natural cause. The claim fell within Rule 49, which permits remission where goods are lost or destroyed by natural causes or unavoidable accident to the satisfaction of the proper officer. Refusal of remission was therefore unsustainable, and refund of duty paid under protest followed consequentially.

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Issues: Whether remission of central excise duty was admissible on neutralised waste lost in floods and whether the Collector was justified in refusing refund of the duty paid under protest.

Analysis: The evidence showed that the excisable goods were stored and were damaged by heavy rains and flooding, and the correspondence with the excise authorities supported the assessee's contemporaneous disclosure of loss. The finding that the loss was discovered only by the department, and the adverse inference drawn from the absence of the damaged bags, were held to be unsupported by the record. The loss was treated as having occurred by a natural cause and the claim was held to fall within Rule 49, which permits remission where goods are lost or destroyed by natural causes or unavoidable accident to the satisfaction of the proper officer.

Conclusion: The refusal of remission was unsustainable and the assessee was held entitled to remission of duty and consequential refund of the duty paid under protest.

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