Natural loss in cotton yarn weight after conditioning and storage can defeat excise duty demand on the recorded facts.

Loss of cotton yarn weight attributable to natural causes and evaporation of moisture was accepted on the facts before the Tribunal. The yarn had undergone conditioning and storage before entry in the finishing accounts, and the Department did not dispute that natural loss in weight can occur. As the record showed a variation between the statutory account weight and the weight at the stage when duty was paid, and no material was produced to dislodge the assessee's explanation, the claimed loss was not disbelieved. The central excise duty demand was therefore held not sustainable and was set aside, with consequential refund of any amount paid.

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Issues: Whether the demand of central excise duty was sustainable where the assessee claimed loss in weight of cotton yarn due to natural causes and evaporation of moisture.

Analysis: The assessee's yarn was subjected to conditioning and storage before entry in the finishing accounts, and the Department did not dispute that loss in weight of cotton yarn can occur naturally. The record showed variation between the weight entered in the statutory accounts and the weight at the stage on which duty was paid. No material was produced to dislodge the assessee's claim, and the Tribunal declined to lay down any general rule beyond the facts before it. On the available record, the claimed loss in weight was not disbelieved.

Conclusion: The demand was not sustainable and was set aside, with consequential refund of any amount paid.

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