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2014 (12) TMI 1081 - CESTAT MUMBAIAvailment of ineligible Modvat credit - shortage of finished products which were not accounted for - clearance of goods without payment of duty - Held that:- As regards the demand of ₹ 9.12 lakhs (approx.) being the Modvat credit involved on the raw materials found short and not used, we find that difference between the quantity of raw materials consumed and finished products manufactured is very negligible and below 0.5 % in all the cases. We also note that as per the standard input of norms, the percentage of wastage for perfumery products is much higher up to 50%. Compared to this, the process loss in the appellant’s case is very low and, therefore, the explanation of processing loss of the material during the manufacturing process is reasonable and has to be accepted. Therefore, we do not find any merit in the contention of the Revenue that ₹ 9.12 lakhs is recoverable from the appellant. Accordingly, we set aside the same. In addition, an amount of ₹ 78,420/- has been confirmed in respect of the shortage of 1269 kgs which occurred at the job-worker’s end out of 14,400 kgs of raw materials and this loss is also reasonable and, therefore, there is no reason for confirmation of duty demand on this count also. As regards the demand of ₹ 1,70,990/-, in the statement recorded under Section 14 of the Central Excise Act, 1944, Mr. J.V. Shah, Manager of the appellant firm had admitted to the clearance of finished products without payment of duty. Only at the time of reply to the show cause notice, new grounds were adduced claiming that the difference in finished product stock was on account of invisible loss and material lying in process. These objections were not raised when stock taking was done. In these circumstances, the plea of invisible loss and material lying in process cannot be accepted and, therefore, the confirmation of demand of ₹ 1,70,990/- has to be upheld with interest - Decided partly in favour of assessee.
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