2012 (8) TMI 409 - AT - Central Excise

Claim for remission of duty for the breakage and losses - rejection - appellants engaged in the manufacture of aerated water under chapter 22 of C.E.T.A., 1985 contended that breakage is ranging from 0.06% to 0.01% which is much less than the limit of 0.5% prescribed by the Board vide Circular No.1D/3/70-CX.8 dated 08.09.1971 - Held that - It is found that department has not challenged the aspect that the appellants are regularly showing the quantum of loss due to breakage etc. in their periodical return filed by them. Nothing prevented the department to carry out the physical verification and it is not the case of the department that the loss due to breakage etc. was over and above the limit prescribed by the Board. We also find that this Tribunal for the earlier period has already allowed the appeal of the appellant, therefore, the decision of Commissioner is not sustainable and the same is set aside and appeal is allowed.

Summary

Issues:
- Rejection of remission application for breakage and losses below the prescribed limit by the Board
- Applicability of the Board's Circular dated 08.09.1971
- Requirement of physical verification for breakage claims
- Department's failure to challenge the quantum of loss shown in periodic returns

Analysis:
The appeal was filed against the Commissioner's decision to reject a remission application for breakage and losses during the period from March 2002 to December 2005. The appellants, engaged in manufacturing aerated water, claimed that their breakages and losses were well below the 0.5% limit prescribed by the Board's Circular dated 08.09.1971. They argued that they had consistently recorded these losses in their periodic returns. The Tribunal noted that the loss due to breakage ranged from 0.06% to 0.1%, which was within the prescribed limit. The Commissioner had rejected the remission application citing the need for physical verification, which was not carried out. However, the Tribunal found that the department did not challenge the quantum of loss reported by the appellants in their returns. Since there was no evidence that the breakage exceeded the prescribed limit, the Tribunal held that the Commissioner's decision was not sustainable.

The Tribunal emphasized that the Board's Circular applied to breakages occurring during handling, not just pressure-filling with CO2. The Commissioner's failure to conduct physical verification did not justify rejecting the remission application, especially when the department did not claim that the breakage exceeded the prescribed limit. Additionally, the Tribunal pointed out that they had previously allowed the appellant's appeal for a similar issue in an earlier period. Therefore, the Tribunal set aside the Commissioner's decision and allowed the appeal, ruling in favor of the appellants.

In conclusion, the Tribunal's decision highlighted the importance of adhering to the prescribed limits for remission of duty and the necessity of physical verification only when there are doubts about compliance. The judgment underscored the significance of consistent reporting in periodic returns and the need for departments to substantiate their claims with evidence before rejecting remission applications.