ORDER
Shri Gowri Shankar, Member (T)
1. The appellant received in its factory located in the Kandla Free Trade Zone glass bottles without payment of duty in terms of Notification 272/79 to be utilised for packing oil manufactured by it for export. Verification of the stock of bottles in September, 1986 showed a shortage of 1.62 lakhs bottles in the stock received from April, 1983 to 1st September, 1986 approximately 0.3%. The Additional Collector in the order impugned in the appeal has confirmed the demand for Central Excise duty on these bottles on the ground that it had not been utilised in the production or for packaging of goods meant for export, had not been shown to have been lost or destroyed by natural causes or unavoidable accident. Hence this appeal.
2. It is the contention of the appellant that the bottles broke in the course of handling in the factory and duty cannot be demanded on these goods in terms of paragraph (j) of the appendix to the notification. The contention of the Collector that the bottles were not available for verification ignores the request made in the notice to verify the scrap which was available at the factory.
3. The departmental representative says that the appellant had not kept a proper record of the breakage of the bottles and had also not intimated the department of the breakage, either during the stocktaking or prior to it and that therefore duty has been rightly demanded and penalty imposed.
4. The percentage of bottles broken is 0.3. It is not unreasonable that such a small fraction of bottles broke during handling or packing the export product. The appellant had, in the reply to the notice specifically said that the broken bottles were available in the factory for verification. Therefore the main ground relied upon by the Additional Collector, that the breakage was not established because remnants of the bottles were not available, is not acceptable. The other ground relied on is that no account was maintained to show that goods were not destroyed during manufacture. Paragraph (i) of the Annexure to the notification provides that no duty shall be demanded on goods which are shown to have been lost or to have been destroyed by natural causes or by unavoidable accident during storage or handling in the approved premises. The notification does not prescribe any accounts to be maintained; the Additional Collector also does not indicate that there was any specific account to be maintained showing breakage. That there was an account of bottles kept would be evident from the fact that notice had been issued following the fact that number of bottles (containing the finished product) exported fell short of the bottles received. The bottles in question therefore would be covered by Clause (j) of the notification. Duty was therefore not demandable.
5. Appeal allowed. Impugned order set aside. Consequential relief.
(Dictated in court).