Non-dutiable PET bottle breakage during manufacture accepted where breakage stayed within the circular limit and was disclosed in returns.

Breakage of PET bottles during manufacture was treated as non-dutiable where the quantity was below 0.5%, fell within the limit referred to in the Board's circular, and was disclosed in the ER-1 return. The Tribunal followed its earlier view that reasonable breakage, particularly where the duty impact was negligible, justified extending the benefit of doubt to the assessee. On that basis, duty was held not payable on the disputed breakage.

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Issues: Whether duty was payable on breakage of PET bottles of aerated water during manufacture where the breakage was below 0.5% and had been disclosed in the ER-1 return.

Analysis: The breakage during manufacture and before removal was found to be below the permissible limit referred to in the Board's circular. The quantity of breakage was also reflected in the ER-1 return, and the Tribunal followed its earlier view that, where the breakage percentage was reasonable and the duty involved was meagre, the benefit of doubt could be extended to the assessee.

Conclusion: Duty was not payable on the disputed breakage and the issue was decided in favour of the assessee.

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