Excise duty on invisible process loss in job work was unsustainable where normal processing loss was not covered by the permission condition.

Excise duty was found not payable on invisible process loss arising during job work on semi-processed inputs. The permission condition requiring duty on loss during transit or manufacture was read as applying to identifiable or insurable loss, not to normal invisible loss occurring in processing. The Tribunal also noted that the issue had already been settled in the assessee's own case for earlier and later periods, and those orders had been accepted by the department. On that basis, the demand, interest, and penalty raised in relation to such invisible process loss were treated as unsustainable.

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Issues: Whether excise duty was payable on invisible process loss occurring in the course of job work on semi-processed inputs.

Analysis: The goods were sent to a job worker for conversion and a condition in the permission letter required payment of duty on loss during transit or manufacture. The Tribunal noted that the issue had already been settled in the assessee's own case for earlier and later periods, with the department having accepted those orders. It further relied on the reasoning that excise duty is chargeable on manufactured goods and that invisible loss is not the same as an insurable or identifiable loss covered by the permission condition. The demand, interest, and penalty provisions invoked against such invisible process loss were therefore held to be unsustainable.

Conclusion: The duty demand on invisible process loss was not payable and the assessee succeeded.

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