Custom, Excise & Service Tax Tribunal
Cce Aurangabad vs M/S Somaiya Organo Chemicals Ltd on 15 June, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/706/04 Mum
Arising out of Order-in-Appeal No. BPS(391) 156/2003 dated 22.11.2003 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri Mathew John, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
CCE Aurangabad
:
Appellant
Versus
M/s Somaiya Organo Chemicals Ltd.
Respondent
Appearance Shri H.B. Negi, SDR for appellant Shri R.G. Sheth, Advocate For Respondent CORAM:
Shri Ashok Jindal, Member (Judicial) Shri Mathew John, Member (Technical) Date of Hearing : 15.06.11 Date of Decision : 15.06.11 ORDER NO.
Per Ashok Jindal Revenue is in appeal against the impugned order wherein the Commissioner (Appeals) has allowed the claim of the respondent of shortage of molasses in transportation to their factory.
2. The respondents are the manufacturer of various organic chemicals for which they required molasses as an input. The respondents are availing credit on molasses used in manufacturing of their final product. These molasses are procured from various sugar factories. It was found that the quantity of molasses received was less than the quantity mentioned in the invoices but the respondent has availed CENVAT credit on the full quantity shown in the invoices, therefore a show-cause notice was issued for reversal of CENVAT credit taken excess against the short receipt of molasses. The demand was confirmed against the respondent by the adjudicating authority, which was appealed against before the Commissioner (Appeals), who considering the contention of the respondent set aside the adjudication order and allowed the credit. Against the said order the Revenue is in appeal before us.
3. Heard both the sides.
4. Shri H.B. Negi, learned SDR appeared before us and submitted that the respondents are entitled to take credit only on the quantities which they have received in their factory. In this case, it is apparent on the record that the respondents had received less quantity as compared to the quantity shown on the invoices. Therefore, they have taken excess credit on the inputs which is required to be reversed. He further submitted that the lower appellate authority has relied on the Circular No. 261/136/97-CX dated 15.1.98 wherein loss of storage of molasses upto 2% is admissible but it is not a case of storage loss. The claim of the respondent is that the loss of quantity of molasses during transportation only, therefore the said Circular cannot be relied upon. He further submitted that the impugned order is to be set aside and the appeal be allowed.
5. On the other hand, Shri R.G. Sheth, Advocate, learned Counsel for the respondents appeared and submitted that the loss of molasses during the transportation due to natural causes, evaporation losses etc. which is permissible as per Bombay Molasses Rules, 1955. Losses in storage or in transit are admissible variation upto 1%. In this case the variation is 0.87%. Therefore, the shortages are within the permissible limit. He also relied on the decision of the Larger Bench of this Tribunal in the case of CCE vs. Bhuwalka Steel Industries Ltd. 2010 (249) ELT 218 (Tri. Larger Bench) wherein guidelines has been framed out for giving benefit to the assessee for losses during the course of transit of their goods wherein it has been stated that if the impugned goods lost in transit due to natural cause by way of evaporation etc., the assessee is entitled to avail credit on variation of the quantity with the permissible limit upto 2%. He further relied on in the case of Dhampur Sugar Mills Ltd. vs. Commissioner of Central Excise, Meerut II 2011 (264) ELT 430 (Tri. Del.). Therefore, he submitted that the appeal be dismissed.
6. After hearing the submissions made by both the sides, we find that it is not in dispute that the respondent has taken credit on molasses on the quantity shown in the invoices which is more than the actual receipt of the molasses. It is also not in dispute the variation is 0.87%. The only dispute is that the Board Circular cited herein above is not relevant to the facts of this case as the Board Circular allows losses of storage not transit loss therefore credit cannot be allowed. We have considered the contention of the learned Advocate, that the variation of 1% is permissible as per the Bombay molasses Rules, 1955. Moreover, Larger Bench of this Tribunal in the case of Bhuwalka Steel Industries Ltd. (supra) has laid down the guidelines that the assessee is entitled to avail credit of variation of the quantity with the permissible limit upto 2% during transit due to evaporation etc. In the case of Dhampur Sugar Mills Ltd. (supra) this Tribunal has held that loss in transit from sugar to chemical divisions is allowable. Therefore, we find that the loss of molasses is within the permissible of 1% as per Bombay Molasses Rules, 1955 and the respondents are entitled to take the credit as per the quantity shown in the invoices, as the loss of molasses is within the permissible limit.
7. In view of the above observations, we do not find any reason to interfere with the impugned order, the same is upheld. Appeal filed by the Revenue is dismissed.
(Pronounced in open Court) (Mathew John) Member (Technical) (Ashok Jindal) Member (Judicial) nsk 5