K.D. Mankar, J.

1. The appellants are manufacturers of sugar and molasses. The department has demanded and confirmed the duty on 7000 qtls. of molasses for the year 1995-96 stored in approved steel tank No. 2, but which accidentally leaked therefrom and seeped into an adjoining kachcha pit. The high grade molasses quantity that leaked in the kachcha pit got inter-mixed with the low grade molasses in the kachcha pit affecting the quantity of the said 7,000 qtls. The loss of molasses due to storage in the steel tank was accidental. Though at the insistence of Range Officers the appellant had deposited duty of Rs. 7,000 @ 20% ad valorem taking the assessable value of Rs. 5 per qtl., the show-cause notice subsequently issued by the Range Superintendent alleged that, the appellant failed to provide safe and secure storage place and took no pains to prevent leakage of molasses and accordingly demanded duty at 20% ad valorem by adopting the assessable value at Rs. 40 per qtl. (price specified by State Government for levy molasses) and also proposed penalty under Rule 173Q for contravention of Rules 47 and 226. The show-cause notice led to passing an order-in-original confirming duty of Rs. 56,000. The appellants appeal was rejected by the Commissioner (Appeals), Central Excise, Allahabad. Hence the appeal before the Tribunal.

2. Heard both sides.

3. The aforementioned facts are not in dispute. It is true that, 7000 qtls. molasses stored in steel tanks (approved premises) did leak out and were diverted to kachcha pits. Due to mixing with sub-standard molasses, this quantity was also transformed into sub-standard grade. Though, the duty has been paid by the appellants, at the instance of Department, this payment is contested. Whereas the, department holds that the sub-standard value is not applicable the appellants contest it by saying that the value as applicable to sub-standard quantity should be applied.

4. It is a fact that, in terms of the first proviso to Rule 49(1) of the Central Excise Rules, 1944, duty is required to be paid by the manufacturer in respect of the goods which are not shown to the satisfaction of proper officer to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in such store room or other approved premises. It is an admitted fact that the leakage had occurred in the steel tank. It is also an admitted fact that, the steel tank has been approved by the department for storage of molasses after ensuring that these were safe for storage of molasses. Merely alleging that, the party failed to provide safe and secure storage for molasses and took no pains to prevent leakage, without mentioning as to where the failure was, does not support the case for denying the claim for non-payment of duty (viz. remission) on this quantity. It is also obvious that, duty can be demanded only when the goods are removed from the factory or consumed as such or removed for manufacture of any other commodity. There is no allegation that, the said molasses have been removed from the factory. The show-cause notice admits that, the molasses have leaked into the adjoining kachcha pit. Therefore, molasses are very much there in the factory. It is also not an allegation that, these have been consumed either, "as such" or "for manufacture of any other commodity". Hence the point of demanding duty having not reached, the demand for duty is not sustainable.

5. Accordingly, I set aside the impugned order and allow the appeal with consequential relief in accordance with law.