Hon’ble Tarun Agarwala, J.—The appellant is a Company incorporated under the Indian Companies Act and is engaged in the manufacture of sugar. During the course of manufacture of sugar, molasses emerges as a by-product. This molasses is stored in steel tanks/pucca pits and are cleared on payment of duty from time to time. The storage and clearance of molasses is physically controlled by the State Excise Department as molasses is a raw material for the manufacture of potable alcohol. An Excise Inspector stays in the factory premises and undertakes frequent physical verification of the stock of molasses. This physical verification is done at random by a dip rod method. Whenever a physical verification is undertaken, the physical stock of molasses is ascertained and the same is intimated to the State Excise Department as well as to the Central Excise Department.

2. Molasses is a highly sensitive and volatile goods. The volume of molasses, which are stored in steel tanks and pucca pits, expands with the rise of temperature and there is a heavy risk of auto combustion. Consequently, the physical stock of molasses is affected due to a number of factors, namely, dip reading method