TMI Blog2010 (12) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery of the same under Rule 57I read with Section 11A of Central Excise Act, 1944 - it is not a case that some part of the quantity which was invoiced by the sugar division has been diverted and not sent to the chemical division because sender and receiver unit are the same legal entity - he larger bench of the Tribunal in the case of Bhuwalka Steel Industries Ltd considered the transit loss involved in transfer from one legal entity to another legal entity and prescribed guidelines for condoning the losses - It was held that the order of the lower authorities cannot be allowed to survive and the same are set aside and the appeal is allowed with consequential relief, as per law - E/1141/2009-SM(BR) - 1411/2010-SM(BR)(PB) - Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )/SCN/DPR/99/300 dated 14.10.99 334488.30 9.80 490.00 0.00 4. The original authority decided the show cause notices and denied the credit taken amounting to Rs.65,320/- on short received quantity of 1317.00 qtl. of molasses under Rule 57G and ordered recovery of the same under Rule 57I read with Section 11A of Central Excise Act, 1944. The Commissioner (Appeals) has upheld the order of the original authority. 5. Learned Advocate for the appellant submits that the credit cannot be disallowed on the ground that there was a small variation due to storage loss, drayage and handling/transit loss. He relies on the decision of the Larger Bench of the Tribunal in the case of CCE, Chennai vs. Bhuwalka Steel Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er legal entity and prescribed guidelines for condoning the losses in para 12 and 13 of the order which are reproduced :- 12. Considering arguments from both sides and the case laws cited by both sides which have been extracted above, we are of the considered view that different types of shortages cannot be dealt with according to any one inflexible and fixed standard for the purpose of allowing credit under Rule 3(1) of the Cenvat Credit Rules. Decision to allow or not to allow credit under rule 3(1), in any particular case, will depend on various factors such as the following:- (i) Whether the inputs/capital goods have been diverted en-route or the entire quantity with the packing intact has been received and put to the intended use a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case are examined in the light of the guidelines prescribed in the decision of the Larger Bench of the Tribunal, it is clear that there is no finding of any diversion and the loss in storage due to drayage and handling/transit loss within the same factory premises (from sugar division to chemical division) is minimal and it ranges only in the range of 0.18% to 0.38%. In the cited decision, losses noticed in respect of transfer of goods from one legal entity to another has been held admissible subject to the conditions mentioned therein. In the present case, the transfer is between two divisions of the same factory and therefore, appellants case stands on a strange footing. 10. In view of the above, the order of the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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