Monthly computation of evaporation and handling loss governs duty demand on excisable petroleum products.

Excisable petroleum product losses were required to be assessed on the Board-prescribed monthly basis for evaporation and handling losses, because the recognised method governed condonation and the authorities gave no reasoned basis for departing from it. Duty could not be sustained on the disputed losses where the record did not establish pilferage or wanton negligence, and abnormal daily fluctuations alone were insufficient to reject the monthly computation. The matter was therefore remitted for fresh determination of duty after recomputing loss on the prescribed monthly basis.

---

---

Issues: Whether the loss of excisable petroleum products was to be assessed on a monthly basis in accordance with the Board's instructions and whether the demand of duty on the disputed losses could be sustained.

Analysis: Section 5 of the Central Excises and Salt Act, 1944 empowers remission where excisable goods are deficient due to natural causes, and the first proviso to Rule 49 of the Central Excise Rules requires duty only where goods are not satisfactorily shown to have been lost by natural causes or unavoidable accident. The Board had prescribed a monthly method for determining and condoning evaporation and handling losses, and the authorities below had not shown any reasoned basis for rejecting that method. The record did not establish pilferage or wanton negligence, and the abnormal daily losses could not by themselves justify ignoring the recognised monthly computation method.

Conclusion: The monthly basis for working out loss was to be followed, and the impugned duty demand could not be finally sustained on the existing orders.

Final Conclusion: The appeals succeeded, the orders of the authorities below were set aside, and the matters were sent back for fresh determination of the duty payable after recomputing loss on the prescribed monthly basis.

Ratio Decidendi: Where administrative instructions prescribe a recognised method for condoning evaporation or handling losses and the authorities give no reasoned basis for departing from it, the loss must be assessed by that method before duty is demanded on any excess.

---