1990 (12) TMI 86 - CGOVT - Central Excise

Summary

Issues:
1. Determination of process loss vs. storage loss in the manufacturing of Caustic Soda.
2. Adjudication of losses in a manufacturing unit under Section 11A.
3. Consideration of time bar under Section 11A.
4. Validity of the order-in-appeal issued by the Collector of Central Excise.
5. Apportionment of total losses between processing loss and storage loss.

Analysis:
1. The case involved a dispute regarding the nature of losses incurred during the manufacturing of Caustic Soda. The Assistant Collector initially determined that the loss was mainly a process loss, not a storage loss, based on the method of accounting used by the licensee. The Collector of Central Excise (Appeals) later set aside this decision and directed a reevaluation to ascertain storage loss under Rule 223(A), leading to a remand back to the Assistant Collector for the third time.

2. The Assistant Collector's order dated 16-12-1985 concluded that the loss was primarily a process loss and not a storage loss. He allowed a specific percentage of the total loss as a process loss, citing a previous government order for reference. The issue of time bar under Section 11A was raised by the party but was dismissed by the Assistant Collector, stating it did not apply to adjudication of losses in a manufacturing unit.

3. The Government reviewed the facts and found that the Assistant Collector had provided detailed reasons for considering the loss as a process loss. The Collector's order setting aside this decision lacked reasoning and did not address the party's shift to actual physical verification of production, which eliminated discrepancies between manufactured and stored quantities.

4. The Government noted that the party had not suppressed any facts, as the losses were accurately reflected in their records. With the party now recording production based on actual measurements, the Government accepted that any earlier losses were likely due to processing or external factors like power failures.

5. During the hearing, the party confirmed that there was no storage loss based on their calculations, a stance supported by the Assistant Collector's previous order. Consequently, the Government restored the Assistant Collector's well-reasoned decision from 16-12-1985, providing consequential benefit to the party.