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TMI Blog1995 (5) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing Modvat credit amounting to Rs. 10,618.91 on the burning loss due to processing of inputs sent outside during the period from May 1989 to 17-4-1990 under Rule 57F(2) besides imposing penalty of Rs. 1000/- on them under Rule 173Q. 2. The facts of the case brought out in the appeal are that a show cause notice was issued to the respondents that they had availed excess amount of loss of materials namely M.S. Ingots due to burning during the processing thereof in other factory where they had been sent in terms of Rule 57F(2) of Central Excise Rules . They had sent 402.930 M.Tonnes of M.S. Ingots for processing to their job workers but received only 362.658 M. Tonnes after processing, thus showing loss of 40.272 M. Tonnes of material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osses by submission of informations/returns. Hence the date of detection namely 20-7-1990 instead of the date of occurrence would be the more appropriate date, it has been urged. They were reluctant to produce the relevant documents to the Range Officer for verification which was absolutely necessary. 3. The appeal was argued on behalf of the appellant Collector by Shri D.K. Saha, learned Senior Departmental Representative. He reiterated the points urged in the appeal which have been referred to above and pleaded that the appeal be allowed by setting aside the impugned order and restoring the order-in-original passed by the Assistant Collector of Central Excise, Howrah South Division. 4. Shri B.N. Chattopadhyay, learned consultant repli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e longer period beyond six months. Shri Chattopadhyay pleaded that the department s appeal be dismissed. 6. I have considered the submissions. I have gone through the record. I reject the preliminary objection of the learned consultant. The Collector (Appeals) had allowed the appeal of the present respondents only on the ground that the notice was barred by limitation as it was issued more than six months after the credit was taken. The demand has been raised as the respondents had sent to their job workers 402.930 M. Tonnes of the material whereas they had received back from their job workers only a quantity of 362.658 M. Tonnes. Thus a quantity of 40.272 M. Tonnes had not been received back which they were directed to show cause why dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sub-rule (1) of the said Rule 57-I taking of credit on account of error, omission, misconstruction or due to wilful misstatement, collusion or suppression of facts can be regulated by issue of notice within six months or five years of taking of such credit as the case may be. In the present case this sub-rule does not get attracted as credit was not taken under the enumerated circumstances. The impugned credit was correctly taken. The cause of action for disallowing the credit and recovering the same arose because the input was sent out for job work and was not received back properly. It was a case of non-accounting of the inputs. Such a case is covered appropriately under sub-rule (2) of the same Rule 57-I. The notice alleged that the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of inputs on which credit of duty is taken for their utilisation as required under the relevant rules is an offence and payment of duty on such inuts would be attracted. But even in such a case the issue of notice would still be necessary and cannot be dispensed with, and a peremptory demand would not really fill the bill. As held by the Supreme Court in Government of India v. Citadel Fine Pharmaceuticals - 1989 (42) E.L.T. 575 in the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is no basis for such a finding. The loss due to burning in the manufacturing process will depend upon various factors like the material used, product made, the process, power supply including breakdown etc. Merely because the losses were reported around 10% it cannot be held that such figures did not represent the correct position and that the inputs were not accounted for. Moreover, the normal quantum of losses as per the enquiries conducted is reported to be in the range of 5% to 8%. There is no reason indicated, why the minimum level has been applied and excess thereabove disallowed. The method employed is arbitrary and cannot be upheld. The amount of duty involved is also about Rs. 10,000 /-. If there was some doubt felt by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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