TMI Blog2004 (4) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... 901.10. Prior to August, 1999 they were also manufacturing lead ingots. The main input for manufacture of lead and zinc ingots is lead concentrate falling under sub-heading 2607.00 and Zinc concentrate falling under sub-heading 2608.00 respectively. The appellants procured lead and zinc concentrates from their own mines located at different places such as Jawar, Agucha etc., from where it is cleared on payment of duty. The appellants took Modvat credit on duty so paid. The concentrate received in the factory is weighed and securely stored in the factory premises and consumed by approximate measurements from time to time. The appellants have been taking physical stock verification of concentrates on approximate basis mainly to identify the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents on the basis of which credit was taken. The credit is being recovered on the shortages of zinc/lead concentrates found during physical stock taking by the appellants themselves and recorded in their own books of accounts. The shortages are less than 1.5 % and attributable purely to handling loss. The factors for shortages are : (a) Loss of moisture in the concentrate (b) Fly-over losses during the elaborate process of handling the concentrate (c) Arriving at the weight of the concentrate on an approximate basis. There is no allegation that the inputs found short were not received in the factory or after receipt they were removed from the factory. Rule 57A(4) specifically provides that credit of specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs received in the factory has been consumed within the factory of the appellants, the shortage is to be considered as forming part of the waste arising during the manufacture of the final product and therefore in terms of Rule 57D of the Central Excise Rules, 1944, credit can not be denied on the quantities of inputs alleged to have been found short. He relied on the following decisions. (i) Hindustan Petroleum Corporation Ltd. v. CCE, 2001 (136) E.L.T. 943 (ii) Modi Cement Ltd. v. CC C.Ex, Raipur, 1998 (99) E.L.T. 378 4. He pleaded that the entire demand is barred by limitation as there has been no reason of fraud, wilful mis-statement, collusion or suppression of facts or contravention of the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s indicated in the invoices. When the goods were stored in open, weight can also get increased due to absorption of moisture by the concentrate. There is no reason for the person estimating the stock to underestimate the quantity and the Company to accept it and include in their balance-sheet. He did not accept the ground put forward by the appellants. As regards the Appeal Nos. E/758-760/03 Shri Jayachandran pleaded that in O-I-O, the Commissioner has given a finding that the loss is above 25% of the concentrate which has not been put to the production. 6. Shri Shivadas appearing for the appellants pleaded that 25% loss as worked out by the Commissioner is not correct as the total shortage for the period from 1-4-1998 to 31-3-1999 is at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the final product, (or that the inputs have become waste in or in relation to the manufacture of the final product) whether or not such waste, refuse or by-products is exempt from the whole of the duty of excise leviable thereon or is chargeable at nil rate of duty or is not specified as a final product under rule 57A........." From the rules it is clear that credit of duty cannot be denied or varied where the input has become waste in or in relation to manufacture of final product. In the present case, lead and zinc concentrates were received by appellants in their factory. On that credit was taken. The loss which has taken place was detected in the annual stock taking. The appellants had accounted for the shortage found during stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Rule 57D which provides that the credit shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse or by product. The duty has been demanded in respect of difference in weight between two stages i.e. the factory gate and after feeding into silo. Revenue has not controverted the averment made by the Appellants that the entire quantity of inputs in the factory premises of the Appellants are taken in the process of manufacture. The learned Advocate for the Appellants has also explained in detail the process of manufacture undertaken by them. The loss of quantity of inputs occurs during the process of manufacture. Once the loss of inputs takes place in the process of manufacture it can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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