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2014 (11) TMI 779 - HC - Central ExciseDenial of CENVAT Credit - Shortage in stock - Suppression of facts - Invocation of extended period of limitation - Whether the loss on the inputs which was found out by the respondent during their annual stock taking and which was written off by them in their books of account should be considered as loss which is allowable under Rule 57D of the Central Excise Rules, 1944 or whether duty should be charged on such loss - Held that:- Credit of duty cannot be denied or varied where input has become waste in or in relation to manufacture of final product; that the loss in stocks was detected in the annual stock taking which was accounted for by writing off the losses; the percentage of shortage found is less than 1.5% on an average for all the years in question; that after the inputs were received in the factory, there was a loss during the process of manufacture of finished products; the process of manufacture of finished products starts from the stage of taking raw material from the storage base to the factory and onward processes; under Rule 57D, on such losses, credit cannot be denied; a similar view was taken by it in the assessee’s own case in Final Order No. A/373/2003/NB-C, dated 12-6-2003 [2003 (6) TMI 144 - CESTAT, NEW DELHI] where similar issue was considered by the Tribunal; that it is not the case of the department that inputs were cleared from the factory without payment of duty; Modvat credit in respect of losses to the extent of 10% is considered reasonable and is allowable; and therefore the Orders-in-Original are liable to be set aside - Decided against Revenue.
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