Duty on fire-damaged goods barred by accident-loss proviso where suppression and clandestine removal were not proved.

Duty on damaged goods was not sustainable where a fire accident was undisputed and the Department failed to prove suppression, clandestine removal, or facts inconsistent with loss by unavoidable accident. Applying Rule 49(1), the Tribunal noted that duty is ordinarily chargeable on removal, but the first proviso protects goods lost or destroyed by accident during handling or storage. As the record did not establish deliberate non-intimation as a basis to defeat that protection, the benefit of doubt went to the assessee and both duty demand and penalty were set aside.

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Issues: Whether duty demand and penalty were sustainable where the assessee claimed that goods were damaged in a fire accident and the Department proceeded mainly on the alleged non-intimation of the accident, and whether the first proviso to Rule 49(1) excluded duty liability on such loss or destruction.

Analysis: The fire accident was not disputed, and the dispute centered on whether an intimation had been duly received by the Department and whether the alleged omission justified a demand of duty and penalty. The Tribunal accepted that the record did not support the allegation that the assessee had suppressed facts with a view to evade duty. It also noted that the Department's case began and ended with the fire accident reflected in the assessee's annual report, without any finding that excisable finished goods had been clandestinely removed or that the damaged goods were not in fact lost in the accident. Applying the scheme of Rule 49(1), the Tribunal held that duty is chargeable on removal and that the first proviso operates where goods are lost or destroyed by unavoidable accident during handling or storage, and the Department had not established facts inconsistent with that protection. Benefit of doubt therefore went to the assessee.

Conclusion: The demand of duty and the penalty were not sustainable and were set aside in favour of the assessee.

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