Remission for damaged excisable goods in storage or handling where loss is properly established under the central excise rules.

Damage to excisable tin containers occurring during packing, storage or handling was treated as remissible under Rule 196 of the Central Excise Rules, 1944, where the loss was satisfactorily established before the proper officer. The analysis distinguished this from Rule 195, which applies to refuse, and noted that damaged containers fall within the Rule 196B scheme. On that basis, the duty demand on the damaged tins was found unsustainable and remission was allowed.

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Issues: Whether damaged tin containers obtained under Chapter X procedure and lost during storage or handling were liable to duty, or were eligible for remission under the Central Excise Rules, 1944.

Analysis: The dispute turned on the character of the loss shown in the records and whether the damage occurred in the course of storage or handling. Rule 196 permits remission where goods are damaged in storage or handling to the satisfaction of the proper officer. The damaged tins were excisable goods and, being damaged during the packing process and in storage-cum-handling, were treated as losses covered by Rule 196. Rule 195 was held to be inapplicable because it deals with refuse, while damaged containers fall within the scheme of Rule 196B.

Conclusion: The tins damaged during storage and handling were eligible for remission of duty, and the duty demand was unsustainable.

Final Conclusion: The appeal succeeded and the order confirming the duty demand was set aside, leaving the assessee free from the disputed levy.

Ratio Decidendi: Damage to excisable goods occurring in storage or in the course of handling, including packing-related handling, is covered by Rule 196 and qualifies for remission when satisfactorily established.

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