Custom, Excise & Service Tax Tribunal
M/S Kirlosakar Oil Engines Ltd vs Commissioner Of Central Excise, Nashik on 24 October, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. E/3708/03-Mum (Arising out of Order-in-Appeal No. CEX.XI/JMJ/286/916/NSK/ APPEAL/2003 dated 02.09.2003 passed by the Commissioner of Central Excise & Customs (Appeals), Nashik.) For approval and signature: Honble Mr. Ramesh Nair, Member (Judicial) Honble Mr. C.J. Mathew, 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 : No 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?
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M/s Kirlosakar Oil Engines Ltd.
Appellant
Vs.
Commissioner of Central Excise, Nashik
Respondent
Appearance:
Shri S.P. Sheth, Advocate
for Appellant
Shri S.V. Nair, Assistant Commissioner (A.R.)
for Respondent
CORAM:
HONBLE SHRI RAMESH NAIR, MEMBER (JUDICIAL)
HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL)
Date of Hearing: 24.10.2016
Date of Decision: 02.12.2016
ORDER NO.
Per: Ramesh Nair:
The fact of the case is that appellant used to send raw material i.e. valve steel & steel round bars to M/s Advance Mechanical Works, Rajkot for job work. It was noticed that after processing, appellant received material short to the tune of 16% stating that there is processing loss. A show-cause notice was issued contending that the 16% loss is abnormal, accordingly, proposed the demand of excise duty on such loss for the period September, 1996 to March, 1997. The adjudicating authority confirmed the demand. Being aggrieved by the Order-in-Original the appellant filed appeal before the Commissioner (Appeals) which was rejected, therefore the appellant is before us.
2. Shri S.P. Sheth, Learned Counsel for the appellant submits that the process of job work involved, machining of the rough steel volve, machining etc. which generates substantive quantity of waste and dust which is not recoverable, therefore return of such irrecoverable waste by the job worker is not possible. He submits that the appellant have submitted Chartered Engineer certificate that in the job work process loss arise ranging between 16% to 27%. He submits that the entire proceeding of demand is that process loss is not 16%, however the department did not adduce any evidence that there is a physical waste in scrap arising in the process. It is not the case of Revenue that 16% physical wastes and scrap was cleared clandestinely either by the appellant or by the job worker. Therefore duty demand confirmed is on assumption and presumption basis. He placed reliance on the following judgment:-
(i) Commissioner of Central Excise, Mumbai Vs. Bharat Radiators Ltd. 2002 (148) ELT 1101 (Tri.-Mumbai)
(ii) Real Ispat & Power Ltd. Vs. Commissioner of Central Excise & Customs, Raipur 2016 (335) ELT 325 (Tri.-Del.)
(iii) Voltamp Transformers Ltd. Vs. Commissioner of Central Excise, Vadodara-II - 2015 (329) ELT 380 (Tri.-Ahmd.)
(iv) Tata Motors Ltd. Vs. Commissioner of Central Excise, JSR - 2011 (264) ELT 385 (Tri.-Kolkata)
(v) Rollex Electro Products P. Ltd. Vs. Commissioner of Central Excise, Delhi-II - 2016 (338) ELT 736 (Tri.-Del.)
3. On the other hand Shri S.V. Nair, Learned Assistant Commissioner (Authorised Representative) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that demand was confirmed in respect of 16% loss which is abnormal therefore the demand was rightly confirmed by the lower authorities.
4. We have carefully considered the submissions made by both the sides and perused the records. We find that the demand was confirmed on the 16% process loss on the ground that this quantum is abnormal, however the Revenue could not produce any evidence to show that there is a diversion of input or generation of physical waste and scrap which was cleared clandestinely either by the appellant or by the job worker. Therefore, the demand on 16% process loss is on the basis of assumption and presumption, therefore the same cannot sustain. The appellant had produced Chartered Engineer certificate wherein it was certified that the process loss in the job work from 16% to 27%. The Revenue could not produce any contrary evidence to discard claim of the appellant. It is not a department case that the 16% is not a process loss but either it is a physical scrap or removal of inputs as such. In such situation the demand cannot be confirmed. All the judgments relied upon by the Learned Counsel support the case of the appellant. We therefore set aside the impugned order and allow the appeal.
(Pronounced in Court on 02.12.2016) (C.J. Mathew) (Ramesh Nair) Member (Technical) Member (Judicial) Sp 2 APPEAL NO. E/3708/03-Mum