Transit loss condonation for petroleum export warehousing remains available up to 1% under the continuing notification framework.

CESTAT Chandigarh held that, in export warehousing of petroleum products, the circular dated 30.10.1985 permitting condonation of transit loss up to 1% remained applicable under the existing notification framework, including Notification No. 46/2001-CE(NT), because it had not been expressly withdrawn or superseded. The Tribunal accepted that transit loss up to 1% in movement from refinery to warehouse for export purposes was permissible and that duty could not be demanded for loss within that limit. Revenue's challenge therefore failed, and the respondent was entitled to the benefit of condonation.

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Issues: Whether the respondent was entitled to condonation of transit loss up to 1% in respect of petroleum products cleared for export warehousing under the applicable circular and notification framework.

Analysis: The dispute turned on the effect of the circular dated 30.10.1985 in the context of export warehousing of petroleum products. The impugned order proceeded on the footing that the circular remained operative and that the warehousing/export arrangement continued under Notification No. 46/2001-CE(NT) dated 26.06.2001. The Tribunal found support for that view in the later judicial treatment of the same issue, including the recognition that transit loss up to 1% in movement from refinery to warehouse for export purposes is permissible and that the relevant circular was not rendered inoperative merely because the general petroleum warehousing facility had been withdrawn.

Conclusion: The respondent was entitled to benefit of condonation of transit loss up to 1%, and the Revenue's challenge failed.

Ratio Decidendi: Where export warehousing for petroleum products continues under the governing notification framework, a circular permitting condonation of transit loss up to 1% remains applicable unless expressly withdrawn or superseded, and duty cannot be demanded for transit loss within that limit.

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