TaxTMI 
TaxTMI 
2004 (4) TMI 197
X X X X Extracts X X X X
X X X X Extracts X X X X
....dvocate appearing for the appellants pleaded that the appellants are engaged in the manufacture of Zinc Ingots falling under sub-heading 7901.10. Prior to August, 1999 they were also manufacturing lead ingots. The main input for manufacture of lead and zinc ingots is lead concentrate falling under sub-heading 2607.00 and Zinc concentrate falling under sub-heading 2608.00 respectively. The appellants procured lead and zinc concentrates from their own mines located at different places such as Jawar, Agucha etc., from where it is cleared on payment of duty. The appellants took Modvat credit on duty so paid. The concentrate received in the factory is weighed and securely stored in the factory premises and consumed by approximate measurements fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egedly found short for the years 1998-99, 1999-2000, 2000-01. 3. He further pleaded that there is no dispute with regard to duty paying documents on the basis of which credit was taken. The credit is being recovered on the shortages of zinc/lead concentrates found during physical stock taking by the appellants themselves and recorded in their own books of accounts. The shortages are less than 1.5 % and attributable purely to handling loss. The factors for shortages are : (a) Loss of moisture in the concentrate (b) Fly-over losses during the elaborate process of handling the concentrate (c) Arriving at the weight of the concentrate on an approximate basis. There is no allegation that the inputs found short we....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Co., Ltd., 1998 (97) E.L.T. 101 (iii) Bhoruka Textiles Ltd., v. CCE, Bangalore, 2000 (116) E.L.T. 583. Since the entire quantity of inputs received in the factory has been consumed within the factory of the appellants, the shortage is to be considered as forming part of the waste arising during the manufacture of the final product and therefore in terms of Rule 57D of the Central Excise Rules, 1944, credit can not be denied on the quantities of inputs alleged to have been found short. He relied on the following decisions. (i) Hindustan Petroleum Corporation Ltd. v. CCE, 2001 (136) E.L.T. 943 (ii) Modi Cement Ltd. v. CC & C.Ex, Raipur, 1998 (99) E.L.T. 378 4. He pleaded that the entire demand is barred by lim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity in stock. The loss of moisture content is also not correct as weight recorded in their records was only the dry weight estimated by the mines as indicated in the invoices. When the goods were stored in open, weight can also get increased due to absorption of moisture by the concentrate. There is no reason for the person estimating the stock to underestimate the quantity and the Company to accept it and include in their balance-sheet. He did not accept the ground put forward by the appellants. As regards the Appeal Nos. E/758-760/03 Shri Jayachandran pleaded that in O-I-O, the Commissioner has given a finding that the loss is above 25% of the concentrate which has not been put to the production. 6. Shri Shivadas appearing for the appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... inputs shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse, or by-product arising during the manufacture of the final product, (or that the inputs have become waste in or in relation to the manufacture of the final product) whether or not such waste, refuse or by-products is exempt from the whole of the duty of excise leviable thereon or is chargeable at nil rate of duty or is not specified as a final product under rule 57A........." From the rules it is clear that credit of duty cannot be denied or varied where the input has become waste in or in relation to manufacture of final product. In the present case, lead and zinc concentrates were received by appellants in their factory. On tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e considered the submissions of both the sides. The Commissioner has confirmed the demand and imposed penalty on account of loss of inputs which is not covered by the provisions of Rule 57D which provides that the credit shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse or by product. The duty has been demanded in respect of difference in weight between two stages i.e. the factory gate and after feeding into silo. Revenue has not controverted the averment made by the Appellants that the entire quantity of inputs in the factory premises of the Appellants are taken in the process of manufacture. The learned Advocate for the Appellants has also explained in detail the process of manufacture u....