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TMI Blog2021 (8) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the Tamil Nadu Value Added Tax Act, 2006 (in short 'Act') occasioned during the process of manufacture of Ghee, is covered by earlier decisions of this Court in the case of Rupa and Co. Ltd. Vs. CESTAT, Chennai (324 ELT 295) applied in the context of Commercial Taxes in A.R.S. Steels and Alloy International Pvt. Ltd. Vs. The State Tax Officer, Chennai (W.P.Nos.2885 of 2020 and batch) dated 24.06.2021 and Saradhambika Paper and Board Mills Pvt. Ltd. Vs. The State Tax Officer, Gobichettypalayam and Another (W.P.Nos.590 of 2021 and batch) dated 30.06.2021. The relevant portion of the order in W.P.Nos.2885 of 2020 and batch is extracted below: 'This batch of Writ Petitions relates to two sets of assessment orders passed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised in these Writ Petitions, statutory appeals have been filed with regard to the other issues. 5. This order is thus confined to a decision on the legal issue as to whether a reversal of Input Tax Credit (ITC) is contemplated in relation to loss arising from manufacturing process. 6. The petitioners are engaged in the manufacture of MS Billets and Ingots. MS scrap is an input in the manufacture of MS Billets and the latter, in turn, constitutes an input for manufacture of TMT/CTD Bars. There is a loss of a small portion of the inputs, inherent to the manufacturing process. The impugned orders seek to reverse a portion of the ITC claimed by the petitioners, proportionate to the loss of the input, referring to the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stered dealer for tax paid Omitted[or Payable] at the time of purchase of goods, if such- (i) goods are not sold because of any theft, loss or destruction, for any reason, including natural calamity. If a dealer has already availed input tax credit against purchase of such goods, there shall be reversal of tax credit; or (ii) inputs destroyed in fire accident or lost while in storage even before use in the manufacture of final products; or (iii) inputs damaged in transit or destroyed at some intermediary stage of manufacture. 9. The prescription in Section 19 is echoed in the provisions of Section 17 of the GST Act. Section 17 (1) to (4) set out the entitlement of the assessee to ITC. Sub-section (5) and its sub-clauses provide for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoking the provisions of clause (h) extracted above. This relates to goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. In my considered view, the loss that is occasioned by the process of manufacture cannot be equated to any of the instances set out in clause (h) above. 11. The situations as set out above in clause (h) indicate loss of inputs that are quantifiable, and involve external factors or compulsions. A loss that is occasioned by consumption in the process of manufacture is one which is inherent to the process of manufacture itself. 12. In the case of Rupa & Co. Ltd. V. Cestat, Chennai (2015 (324) ELT 295), a Division Bench of this Court decided a question of law in regard to the entitleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent into the making of the finished product represents the inputs of such products in entirety.' 15. In the light of the discussion as above, I am of the view that the reversal of ITC involving Section 17(5)(h) by the revenue, in cases of loss by consumption of input which is inherent to manufacturing loss is misconceived, as such loss is not contemplated or covered by the situations adumbrated under Section 17(5)(h). 16. The impugned orders to the above extent are set aside. Writ Petitions in W.P.Nos.2888, 2890 and 3936 of 2020 are partly allowed and W.P.Nos.2885, 3930 and 3933 of 2020 are allowed in full. No costs. Connected Miscellaneous Petitions are closed.' 2. The above order has been passed in the context of TNVAT and wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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