Breakage loss exemption under excise notification upheld for minor glass bottle shortage during factory handling

Central excise duty was not payable on a small shortage of glass bottles received under Notification No. 272/79 where the loss was attributable to breakage during handling in the factory. A shortage of about 0.3% was treated as consistent with ordinary handling or packing loss, and the absence of broken remnants was not enough to reject the assessee's explanation. The notification did not require any particular account to prove breakage, and goods lost or destroyed by natural causes or unavoidable accident during storage or handling fell within the protection of the Appendix. The duty demand was therefore unsustainable.

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Issues: Whether central excise duty was demandable on glass bottles received without payment of duty under Notification No. 272/79 when a small shortage was found and the assessee claimed that the bottles were broken during handling in the factory.

Analysis: The shortage was only about 0.3%, which was considered consistent with ordinary breakage during handling or packing. The assessee had asserted that the broken bottles were available for verification, and the absence of remnants was therefore not a sufficient basis to deny the claim. The notification did not require maintenance of any specific account to establish breakage, and the surrounding record showed that bottles had in fact been received and were being tracked for use in export packing. Paragraph (i) of the Appendix protected goods lost or destroyed by natural causes or unavoidable accident during storage or handling, and the bottles were found to fall within the protective scope of the notification.

Conclusion: Duty was not payable on the shortage attributable to breakage, and the demand could not be sustained.

Final Conclusion: The assessee was entitled to relief and the duty demand based on the alleged shortage in bottles was set aside.

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