2010 (6) TMI 233 - AT - Central Excise

Maintainability of loss of goods/inputs found short between physical stock taking and book stocks. Held that - stock differences arising at the plant due to some reasons including process loss which is not covered in clause (a) of first proviso to section 35B(1) of the Central Excise Act, 1944. Appeal maintainable.

Summary

Issues: Jurisdiction of the Appellate Tribunal under Section 35B(1) regarding loss of goods and admissibility of Cenvat credit on stock differences.

Analysis:
1. The appeal was filed by M/s Castrol India Ltd. along with a stay application. The preliminary objection raised by the learned DR was that the appeal was not maintainable before the Tribunal as per Section 35B(1) proviso (a) of the Central Excise Act, 1944.

2. The show-cause notice issued to the appellant was for contravention of Central Excise Rules and Cenvat Credit Rules due to failure to maintain proper accounts, resulting in short payment and inadmissible Cenvat credit on finished products and inputs found short during stock-taking.

3. The learned JDR argued that since it was a case of loss of goods, the appeal was not maintainable under Section 35B(1) of the Act. However, the appellant's representative contended that the appeal was maintainable based on the Tribunal's previous decision in the appellant's favor on identical issues.

4. The Tribunal examined Section 35B(1) of the Act, which restricts the Tribunal's jurisdiction in cases of loss of goods occurring during specific circumstances such as transit or processing. The Tribunal noted that the loss of goods in this case was due to stock differences, not falling under the proviso related to loss of goods.

5. Referring to previous judgments like Dawn Mills Ltd., CCE vs. Godrej Soaps Ltd., and CCE vs. TISCO, the Tribunal established that issues concerning stock differences due to process loss were maintainable before the Tribunal, as losses during processing in a factory did not fall under the jurisdiction of the Government.

6. The Tribunal concluded that the issue of stock differences at the plant, including process loss, was not covered under the proviso related to loss of goods in Section 35B(1). Citing previous decisions and the Tribunal's own rulings on identical issues for the appellant, the Tribunal held that the appeal was maintainable before them, dismissing the preliminary objection raised by the learned DR.

7. The Tribunal directed the Registry to list the matter for disposal of the stay application, confirming the appeal's maintainability before the Appellate Tribunal. The judgment was pronounced on 18th June 2010.