Job work shortages and invisible loss do not attract excise duty absent proof of removal or another duty-triggering event.

Shortages or invisible loss at a job worker's end, by themselves, do not create central excise liability on goods sent for job work under Rule 57F(4) unless there is proof of removal or another duty-triggering event. Debit notes raised under the parties' contractual yield adjustment did not establish that the goods were received back and clandestinely removed. On that basis, duty demand and penalty were held unsustainable, and the impugned order was set aside with consequential relief.

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Issues: Whether duty could be demanded on the shortages/invisible loss arising at the job worker's end in respect of goods sent for job work under Rule 57F(4).

Analysis: The goods were sent to a job worker for extraction of sodium laurel sulphate powder on an agreed yield basis, and the shortfall was accumulated over a period. The debit notes raised against the job worker were part of the contractual adjustment between the parties and did not establish that the goods were received back and removed so as to attract duty. Mere shortage or lower yield, without any finding of clandestine removal or other basis for levy, does not justify duty demand on the appellant.

Conclusion: Duty was not leviable on the alleged shortages and the demand and penalty were unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Shortages or invisible loss at the job worker's end, by themselves and absent proof of removal or other duty-triggering event, do not create a liability to central excise duty.

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