2004 (8) TMI 506 - AT - Central Excise

Summary

Issues:
1. Appeal against order-in-appeal passed by Commissioner (Appeals) regarding shortages of raw materials.
2. Denial of benefit of notification and Cenvat Credit by Revenue Department.
3. Contention of appellants regarding handling losses and duty payment.
4. Requirement for evidence of handling losses by appellants.
5. Duty demand on inputs found short and consideration of total quantity received.
6. Decision on appeal and entitlement for consequential relief.

Analysis:
1. The appellants filed an appeal against the order-in-appeal passed by the Commissioner (Appeals) concerning shortages of raw materials, specifically Cobalt Powder and Synthetic Industrial Diamond Powder.

2. The Revenue Department denied the benefit of notification for Cobalt powder and Cenvat Credit for industrial powder found short during a visit to the factory, alleging removal without duty payment.

3. The appellants argued that the shortages were due to handling losses during the manufacturing process, with small quantities of powders falling on the floor and becoming irrecoverable, resulting in approximately 0.2% shortages compared to the total purchased quantity.

4. The Revenue contended that the appellants were obligated to maintain accurate records of inputs for which credit or exemption was claimed, highlighting the lack of evidence provided by the appellants to support their claim of handling losses.

5. The Tribunal observed that the duty demand was based on the inputs found short, amounting to about 0.2% of the total quantity received by the appellants. Considering the nature of the inputs in powder form, the Tribunal accepted the appellants' argument that the shortages were indeed due to handling losses and set aside the impugned order.

6. Consequently, the appeal was allowed, and the appellants were deemed entitled to any consequential relief resulting from the decision in their favor.