1995 (9) TMI 86 - CGOVT - Central Excise

Processing Losses in Factory: Jurisdictional Limits under Section 35EE

The reviewing authority under Section 35EE of the Central Excises & Salt Act, 1944 considered a duty demand case involving processing losses in a ... Revisionary jurisdiction - Stocktaking Issues:1. Jurisdiction of the reviewing authority under Section 35EE of the Central Excises & Salt Act, 1944.2. Interpretation of processing losses in the context of duty demand.3. Applicability of Government Order-in-Revision in similar cases.4. Determining the jurisdiction of the Government in cases of processing losses.Detailed Analysis:1. The Commissioner of Central Excise, Bombay-I sought a review of an order-in-appeal passed by the Commissioner of Central Excise (Appeals), Bombay regarding a demand of duty. The reviewing authority considered the jurisdiction under Section 35EE of the Central Excises & Salt Act, 1944. The respondents raised a preliminary objection on the reviewing authority's jurisdiction, which was further discussed during the hearing. The reviewing authority proceeded to decide the case based on available records as the respondents had already been heard.2. The case involved a demand of duty based on shortages noticed in Annual Stocktaking (AST) in the respondents' factory. The Asstt. Commissioner confirmed the duty demand, which was later set aside by the Commissioner (Appeals) citing that the total shortage was less than 3.35% and adjustments for excess noticed should be considered. The respondents argued that the shortages were processing losses, not subject to the jurisdiction under Section 35EE of the Act.3. The Government referred to a previous Order-in-Revision in a similar case to determine the jurisdiction in cases of processing losses. It was noted that losses on account of processing in a factory were not covered under Section 35EE and were not within the jurisdiction of the Government. This reference was crucial in establishing the precedent for handling cases involving processing losses.4. The reviewing authority examined the nature of the losses, emphasizing that the goods were lost in processing, which is considered a manufacturing activity in a factory. The Government clarified that cases falling under the revisionary jurisdiction relate to losses during processing in a warehouse or storage, not in a factory. Therefore, losses related to manufacturing activities like processing losses can only be considered in revision if they occur in a warehouse, not a factory. Based on this analysis, the reviewing authority concluded that the case was not maintainable under Section 35EE of the Act due to the nature of the losses and the jurisdictional limitations outlined.This detailed analysis of the judgment highlights the key issues of jurisdiction, interpretation of processing losses, reference to precedent, and the determination of the Government's jurisdiction in cases involving processing losses under the Central Excises & Salt Act, 1944.