1983 (10) TMI 174 - AT - Central Excise

Summary

Issues:
- Whether the demand made by the Assistant Collector of Central Excise and upheld by the Collector of Central Excise is correct.
- Whether the difference in weight of yarn is due to natural causes and warrants an abatement of duty.
- Whether the appellants should be allowed an allowance for the loss in weight claimed by them.
- Whether the orders passed by the lower authorities are justified.
- Whether the appellants are entitled to a refund of the amount paid under protest.

Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi concerns the correctness of a demand made by the Assistant Collector of Central Excise, Saharanpur, and upheld by the Collector of Central Excise, Kanpur. The issue revolves around the difference in weight of cotton yarn shown in the statutory accounts maintained by the appellants and the duty paid based on this weight. The authorities noticed discrepancies in the weight shown in the accounts, leading to the demand of Rs. 30,658.74. The appellants claimed that the weight difference was due to natural causes, specifically evaporation of moisture.

The Government of India had previously allowed an abatement of duty up to 1% for such weight differences on account of natural causes. However, the Allahabad High Court quashed this order and directed a fresh decision. The appellants argued that the weight loss was a natural occurrence due to the evaporation of moisture during the manufacturing process. The appellants' consultant provided supporting documents, including a communication from a textile research association and a trade notice, to bolster their claim of natural weight loss.

The Department, represented by Sh. Rakesh Bhatia, acknowledged the occurrence of such weight losses but defended the orders of the lower authorities. During the hearing, the Tribunal questioned both parties about the regularity of weight losses in cotton mills and the lack of material to support their arguments. Despite the absence of concrete evidence, the Tribunal acknowledged that weight losses do occur in manufacturing processes and that the appellants' claim of an average loss of 2.6% per year seemed plausible.

After careful consideration of the facts and circumstances, the Tribunal found merit in the appellants' claim for the loss of weight due to natural causes. Without establishing a general proposition, the Tribunal decided to allow the appeal, setting aside the demand made by the Excise authorities. Consequently, the Tribunal ordered the refund of the amount paid under protest by the appellants, granting them relief in this matter.