1995 (5) TMI 152 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit on burning loss due to processing of inputs.
2. Bar on limitation for issuing notice.
3. Correctness of the amount of duty demanded.

Analysis:
1. The Collector of Central Excise filed an appeal against the order disallowing Modvat credit on burning loss during processing of inputs. The respondents had sent materials for processing but did not receive the full quantity back, leading to a loss. The Assistant Collector disallowed part of the credit, which the Collector (Appeals) upheld based on a limitation issue. The Tribunal found that the notice was not barred by limitation as the credit was correctly taken, and the demand for duty was justified under Rule 57-I due to non-accounting of inputs. However, the Tribunal dismissed the appeal regarding restoration of the Assistant Collector's order as the method used to calculate the duty was arbitrary and lacked reliable data.

2. The Tribunal rejected the preliminary objection raised by the consultant regarding the appeal preparation process, citing Section 35(B)(2) of the Central Excises and Salt Act. The consultant argued that the notice was time-barred, relying on previous Tribunal decisions. However, the Tribunal found that the notice was not barred by limitation as the credit was correctly taken, and the demand for duty was justified under Rule 57-I due to non-accounting of inputs.

3. The Assistant Collector had disallowed Modvat credit on the burning loss of inputs, demanding duty on the excess losses. The Tribunal found the Assistant Collector's method of allowing only 5% loss and demanding duty on the excess arbitrary. The Tribunal noted that the normal range of losses was 5% to 8% and that the respondents should benefit from the doubt. Therefore, the appeal was dismissed concerning the plea to restore the Assistant Collector's order, as the duty calculation lacked a reliable basis and was deemed arbitrary.

In conclusion, the Tribunal ruled in favor of the appellant regarding the limitation issue but dismissed the appeal on the grounds of the correctness of the duty demanded due to the arbitrary method used in calculating the loss.