TaxTMI 
TaxTMI 
2017 (7) TMI 642
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.... 375.00 MT 7525.421 MT (-)7159.421 MT 2 HDPE Bags 23650 Bags 29299.00 Bags (-) 5649 Bags 3 Gypsum 55.00 MT 67.022 MT (-) 12.022 MT 4 Fly Ash 185.00 MT 80.383 MT (+) 104.617 MT 5 Cement 351.00 Bags 351.00 Bags NIL Moreover there was some shortage in the stock of Gypsum & some excess in the stock of Fly Ash which are Non-cenvatble inputs. Credit balance was found to be Rs. 14,57,653/- in RG 23A Part II. Shri Prabhu Narain Tiwari in his statement dated 26/09/2005 stated that one person comes from the factory everyday and he brings the stock position of the firm at the end of the day to their office located at Varanasi and the same is entered into the records and sometimes the stock position is communicated on telephone from the factory to the office. Shri Girish Narain Mishra Plant Supervisor in his statement dated 29/10/2005 confirmed the stock position of inputs found on 28/09/2005. On summons issued to Mr. Kamal Potddar - Manager of the Company, his statement was recorded on 29^th September, 2005 wherein he stated that production in the factory was started from April, 2005 when they took over the charge of the ....
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....n by revenue, the discrepancy in the stock of clinker comes to approximately 49% of the clinker purchased by them, as it is evident from Range Officers report dated 20^th January, 2006. As per the said report, appellant have received 7,946.300 MT clinker during the period from February, 2005 to 27/09/2005 and used 3682.187 MT during the said period. At the time of inspection only 375 MT of clinker was found on floor. As such shortage of clinker noticed during the said period is 7946.300 - 3682.187 - 375.00 or 3889.113 MT which is approximately 49% of the total clinker received by the appellant during the said period. It further appeared to Revenue that under the provisions of Cenvat Credit Rules, statutory duty is cast on the appellant-assessee to maintain proper records in respect of inputs and reflect the same in the records. Any manufacturer buys further inputs when he finds that the available quantity of inputs is adequate to sustain the production, which is simply not possible unless the stock of inputs is checked. The party has been buying further quantity of clinker for manufacture of cement obviously noticing inadequate stock of clinker. After all a manufacturer needs no Ce....
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....ought from J. P. Cement and Maiher Cement. Both are situated at a distance of about 300 km. Further, the road condition is bad and good part of the road is through mountainous region, which further increases the transit loss. That no weighbridge is available inside the plant and the clinker was stored in the open. Further, the conveyor belt is also not properly covered, which results in handling loss during the process of production. So far the loss of HDPE Bags is concerned the same have occurred during the packing process, wherein in normal course, some bags get damaged in the process of filling and packing, which have to be discarded. It is further stated that there is no deliberate default and/or contumacious conduct and/or suppression of facts on their part. The loss occurred is in the ordinary course of the business, due to nature of the raw materials. There is no dispute about the dispatch of Clinker & HDPE Bags to the appellant and the receipt of the same. The entries are made on the basis of invoice. Further, from the statement of Plant Supervisor - Shri G. N. Mishra, it is evident that only stock register of cement was available in the factory and the rest of the records ....
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....the assessee. 6. The aforementioned ruling in U. P. State Cement Corporation Ltd. Versus Union of India reported at 2002 (145) E.L.T. 513 (Allahabad) was followed by the Hon'ble Allahabad High Court in its subsequent ruling in the case of same assessee taking note that the Revisional Authority of the Central Government under the Central Excise Act, have accepted 2% loss of clinker in handling and transport. The Hon'ble High Court observed that the loss of Cement - Clinkers in handling and transport from Dala and Churk to Chunar factory was a natural loss and full exemption was justified, and consequently quashed the impugned orders and granted full exemption of the loss of Cement - Clinkers. The Hon'ble High Court further directed the Revenue Authority to grant full exemption for the loss of Cement - Clinkers from Central Excise duty. 7. The ld. Counsel further urges that as per the records of the appellant during the period 1998-99 to 2004-05, 81,067 MT of clinkers were received in the factory and it is undisputed fact that clinker is subject to transportation, handling and manufacturing loss. He further states that if the data for this period is taken into account the loss ....
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....dings in the previous litigation between the parties and drawn adverse view, that the appellant have been engaged in clandestine removal of cement and suppression of production. Accordingly, the ld. A. R. prays for dismissing the appeal. 11. Having considered the rival contentions and on perusal of facts on record, I find that there is no allegation in the Show Cause Notice of any clandestine activity on the part of the appellants. The whole Show Cause Notice is based on the apparent shortage found at the time of inspection. Moreover, I find that the valuation of stock have been done basically by way of eye estimation, which is definitely prone to error. Further, I find that this issue have been repeatedly considered by Hon'ble Allahabad High Court, wherein the Hon'ble High Court have accepted that clinker is an item prone to handling, transportation and manufacturing loss. Hon'ble High Court have further held that such loss is under the category of normal loss requiring no special order of remission from the appropriate authority under Rule 21 of the Central Excise Rules, 2002. I, further find that the new management of the appellant which took over from the earlier management ....