2017 (8) TMI 884 - AT - Central Excise

Material received short - job-work - processing loss - Held that - 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 - It is not a department s case that the 16% is not a process loss but either it is a physical scrap or removal of inputs as such - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of excise duty on processing loss claimed to be abnormal.

Analysis:
The case involved an appeal against the demand of excise duty on a processing loss claimed to be abnormal by the appellant. The appellant sent raw materials for job work and received processed material short to the tune of 16%, citing processing loss. The adjudicating authority confirmed the demand, leading to the appeal. The appellant argued that the job work process generated irrecoverable waste, supported by a Chartered Engineer's certificate stating process loss ranging between 16% to 27%. The appellant contended that the demand was based on assumption and presumption as the Revenue failed to provide evidence of diversion of input or generation of physical waste. The appellant also cited relevant judgments supporting their case.

The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order, emphasizing the abnormality of the 16% loss and justifying the demand confirmation.

Upon careful consideration, the Tribunal found that the demand based on the 16% process loss being abnormal lacked substantiating evidence from the Revenue. The Tribunal noted the absence of proof regarding diversion of input or clandestine clearance of physical waste. The Chartered Engineer's certificate provided by the appellant supported their claim of process loss ranging from 16% to 27%. The Tribunal highlighted that the Revenue failed to present contradictory evidence to refute the appellant's claim. It was clarified that the demand could not be upheld as there was no indication that the 16% loss was due to physical scrap or removal of inputs. Relying on the judgments cited by the appellant, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the lack of concrete evidence supporting the abnormality of the processing loss and the failure of the Revenue to counter the appellant's claims with substantial proof. The decision highlighted the importance of substantiated claims in excise duty matters and the necessity for evidence-based assessments to uphold demands.