2017 (8) TMI 1370 - HC - Central Excise

Percentage of acceptable loss of oil - handling and storing lubricating oil and grease - percentage of loss which was adopted at 0.21% was for the period 1997-98 - C.B.E.C. dated 4-10-1976 - Held that - Admittedly, the most important factor which has to be considered while assessing the spillage loss or loss which may occur during the course of packing is, the manner in which the repacking or packing is done at the factory of the concerned assessee - Obviously, in the year 1976, there was no much automation in various factories except in auto mobile industries. The percentage of loss which was adopted at 0.21% was for the period 1997-98. Subsequently, the loss in case of other assessees has been fixed between 0.4% to 0.5%. Therefore, it will be inequitable for the second respondent to adopt a percentage of loss which was fixed in the 1976 regardless of the facilities available in the assessee s factory. The matter is remanded back to the first respondent to apply a percentage for spillage and loss during repacking by calculating an average, which was adopted in the case of the petitioner for the earlier three assessment years - petition allowed by way of remand.

Summary

Issues:
Interference with order by Revisional Authority regarding quantum of loss while handling and storing lubricating oil and grease.

Analysis:
The petitioner challenged an order passed by the Revisional Authority, who interfered with the order of the Commissioner of Central Excise (Appeals) regarding the quantum of loss occurring during the handling and storing of lubricating oil and grease. The Commissioner had allowed the petitioner to adopt a 0.21% figure for the loss due to spillage or repacking. However, the Revisional Authority set aside this order and directed the Commissioner to follow a circular issued by the C.B.E.C. in 1976. The court noted that the percentage of loss adopted in 1976 may not be equitable considering advancements in technology and facilities available in factories. The court found the order of remand by the Revisional Authority to be incorrect in this regard.

The High Court allowed the writ petition filed by the petitioner and set aside the impugned order dated 30-4-2004. The matter was remanded back to the Revisional Authority for reevaluation. The court instructed the Revisional Authority to calculate an average percentage for spillage and loss during repacking based on the figures adopted by the petitioner for the earlier three assessment years. This exercise was to be completed within four weeks from the date of receipt of the court's order, and a speaking order was to be passed accordingly. The court made no mention of costs in this judgment.