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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2010 (12) TMI AT This

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2010 (12) TMI 291 - AT - Central Excise


Issues:
- Disallowance of credit on short received quantity of molasses
- Application of guidelines for condoning losses in transit
- Interpretation of findings in the case of Bhuwalka Steel Industries Ltd
- Examination of diversion and loss in storage within the same factory premises

Analysis:
1. The appeal addressed the disallowance of credit on a short received quantity of molasses by the sugar division to the chemical division. The original authority and the Commissioner (Appeals) upheld the denial of credit amounting to Rs.65,320 on the short received quantity of 1317.00 qtl. of molasses under Rule 57G, ordering recovery under Rule 57I read with Section 11A of the Central Excise Act, 1944.

2. The appellant argued that the credit should not be disallowed due to small variations caused by storage loss, drayage, and handling/transit loss. They relied on the decision of the Larger Bench of the Tribunal in CCE, Chennai vs. Bhuwalka Steel Industries Ltd., where it was held that minor losses during transit should be ignored, and credit allowed after considering relevant factors mentioned in the order.

3. The respondent contended that the decision in Bhuwalka Steel Industries Ltd. was not applicable since the disputed short found goods were never received by the chemical division and thus not used by the appellants. The Tribunal noted that the sender and receiver units were part of the same legal entity, situated in the same registered premises, emphasizing that the receiver did not receive a lesser quantity than invoiced, and no diversion of goods occurred.

4. The Tribunal referred to the guidelines set by the Larger Bench of the Tribunal in Bhuwalka Steel Industries Ltd. regarding transit loss between legal entities. The guidelines emphasized factors such as diversion en-route, nature of goods, countable packages, weighment differences, compensation claims, and industry norms for tolerances, highlighting that each case must be decided on its merits without rigid rules.

5. Upon examining the case in light of the guidelines, the Tribunal found no diversion and minimal storage loss due to drayage and handling/transit loss within the same factory premises. The losses ranged from 0.18% to 0.38%, falling within acceptable limits. The transfer being between two divisions of the same factory, the Tribunal concluded that the lower authorities' decision could not stand, setting it aside and allowing the appeal with consequential relief.

 

 

 

 

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