TMI Blog2004 (4) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of penalty for the period March, 1996 to March, 2000 by denying the Modvat credit to them on Caustic Soda Lye (in short CSL) used by them as one of the input in the manufacture of the final product namely, Calcined Alumina on the allegation that the unaccounted loss indicated in the Management Information System (MIS) was nothing but short receipt of CLS in the factory which had never been used/consumed in the process of manufacture of the final product. This impugned order has been passed by the Commissioner in pursuance to the show cause notice served on the appellants for denying them the Modvat credit of the amount in question wherein the imposition of penalty was also proposed and extended period was invoked for having suppresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccountant appointed under Section 14AA of the Act has no power to fix the norm, of consumption of CSL and of allowable loss, to take place in the manufacture of final product. Therefore, the observations of the Cost Auditor that normal loss of the CSL would be 4.14 kg/T could not be attached any legal value as he had no power to so observe. The earlier decisions of the Competent Authorities dropping the proceedings against the appellants initiated on these very grounds of having availed the Modvat credit on the quantity of CSL which was never received by them in the factory, had been wrongly over-looked by the adjudicating authority. The report of M/s. Niranjan Co., Cost Accountant who carried a special audit of the Modvat account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Rule 173D of the Rules. The expression Soda loss had been used by them keeping in mind its worldwide acknowledgement, and it only meant for Soda consumption in the manufacturing process. The norm of consumption of CSL, as indicated in the design documents supplied to them by M/s. Almonia Pechineye, the technology suppliers and the standard fixed by them were detailed and made known by them to the department. 6. The plea of the department is that the unaccounted soda loss is not a process loss but is attributable to short receipt of the CSL by the appellants occurring at various stages prior to the start of the manufacturing process and as such, the same being not covered by the provisions of Rule 57D of the Rules, they are lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emperature and references of the duty paying documents received from the suppliers. From the tank wagons when received in a sealed conditions along with MTA supported and accompanied by duty paying documents, the CSL is unloaded to the storage tanks installed by the appellants in their factory and from which the same is continuously fed to the manufacturing process. The entire quantity unloaded to the process tanks is shown by the appellants in their record issued for manufacture. The Modvat credit is taken by them on the quantity received by them in their plant as indicated in the MTA which is supported by valid duty paying documents issued by the supplier. All these facts were made known by the appellants vide letter dated 29-7-1991, to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CSL and its losses in the process of manufacture of the final product supported by the report by the Cost Accountant M/s. Niranjan Co. appointed by the Commissioner under Section 14AA of the Act for verifying the relevant record such as RG 23-A, RG-I, Gate passes, shipping bills, etc., were dropped as is evident from the copies of the orders dated 25-11-1994, 29-9-1994 and 7-9-1998, dropping the proceedings against the appellants passed by the adjudicating authority/Commissioner. 8. In the face of above referred orders and the report of the Cost Accountant M/s. Niranjan Co. much weightage could not be attached to the audit report dated 14-8-1998 of the Cost Accountant Shri Ashis Kumar Sengupta. His observations in that report th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the process of manufacture of final product. 10. The initial burden was on the department to substantiate their allegations as made out in the show cause notice that the unaccounted CSL loss detailed by the appellants in their statutory record during the period in question was nothing but transit loss taking place before the start of the process of manufacture of the final product but has failed to discharge this burden. From the facts and materials brought on record by the appellants and discussion made above, these allegations of the department stand unproved. It is not the case of the department that the appellants had cleared the CSL as such in a clandestine manner to some other manufacturer. It would be also beneficial to mention h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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