TaxTMI 
TaxTMI 
2013 (3) TMI 114
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....owed on the quantity of raw material which had not been received in the factory and not been utilized in the manufacture of the finished goods by wilful suppression of the facts.?" Briefly put, the relevant facts and background aspects of the matter are that the respondent-assessee is engaged in the manufacture of Zinc, Lead and Copper Sulphate Solution. Upon scrutiny of the records, it was found by the department that the assessee had shown transit losses of concentrate, which was one of the inputs in the manufacturing process. On being questioned, it was submitted on behalf of the assessee that the difference as shown in the balance-sheet was due to: (i) the difference in the readings of the weighing-scales installed at the mines and at the smelter; (ii) the human error in recording the measurement on the weighing scales; and (iii) the shortage due to dryage during the transit of the goods. It was submitted by the assessee that the concentrate, when cleared from mines, was in moist form and during movement, due to atmospheric conditions, there was natural drying of the moisture content resulting in minor difference in the quantity. Not satisfied with the explanation, the departm....
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....ge of inputs namely concentrates was due to pilferage or theft occurred during the transit. Hence, the Modvat/Cenvate credit is not allowable in respect of quantity of inputs received short and not used in the manufactured of the final product." However, in the appeal filed by the assessee, the Appellate Commissioner in his order dated 29.11.2005 referred to a decision of the Tribunal in the case of Hindustan Zinc Ltd. : 2004 (172) ELT 244 and held that the Adjudicating Authority was not justified in disallowing Modvat/Cenvat credit in relation to the loss on the goods that was about 0.05% during the period in question. The Appellate Commissioner observed and held as under: "8. I have carefully gone through the case records and the submissions made by the appellants. The appellants relied upon the decision of the Hon'ble Tribunal in the case of Hindustan Zinc Ltd., vs Commissioner of Central Excise, Visak - 2004 (172) ELT 244 (Tri-Bang.). I have gone through the above decision and find that facts of the above case are akin to that of the subject case of the appellants as in the case relied upon, M/s. Hindustan Zinc Ltd. had been procuring lead and zinc concentrates from their own....
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.... no case for interference particularly after finding that the transit loss was a negligible one, only to the tune 0.05%; and there was no evidence on record that the respondent had diverted the duty paid inputs with intent to evade payment of duty. The Tribunal, inter alia, observed and held as under: "4. The contention of the respondent is that from the mines, the concentrate is transported in the dumper and packed at the time of clearance of concentrate from the mines, it is wet condition and during transportation, therefore, minor difference comes of due to loss of moisture contents during transportation. The respondent relied upon the decision of the Tribunal in their own case i.e. Hindustan Zinc Ltd. Vs. CCE reported in 2004 (172) ELT 244. In the present case, as the transit losses are less than 0.05% which are negligible and there is no evidence on record to show that respondent had diverted the duty paid inputs with intent to evade payment of duty. In these circumstances, I find no infirmity in the impugned order, the appeal is dismissed." Seeking to question the orders aforesaid, it is contended on behalf of the appellant-revenue that as per the admission of the responden....
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.... the case of the revenue that any part of the duty paid inputs were diverted from the factory with intent to evade duty. In our view, it would be too impracticable and unrealistic to ignore in such a matter the ground realities and the natural causes where the excavated contents were being transported from mines to the factory; and where the contents were susceptible to dryage due to atmospheric conditions apart from the likelihood of some slight error in recording of measurements due to human or mechanical error. In the cited decision reported in 2009 (233) ELT 61 (Raj.), this Court has, of course, considered the provisions of Rule 21 as contained in the Central Excise Rules, 2001 but for their relevance on principles, the following observation could usefully be taken note of: "12. In our view, the expressions, being "natural uses" and "unavoidable accident" are required to be given, reasonable and liberal meaning, lest the provisions of Rule 21, so far they relate to admissibility of remission, on these two grounds, is rendered altogether otiose. If things were to be stretched in the manner, and to the extent, as the learned counsel for the appellant wanted us to, probably, no ....