Castrol India Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in- Appeal No. 80/RGD/2009 dtd. 18/9/2009 passed by the Commissioner of Central Excise & Customs(Appeals), Mumbai-II]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Castrol India Ltd. : Appellants

VS

Commissioner of Central Excise, Mumbai-II : Respondent

Appearance

Shri. H. M. Gandhi, Manager (Indirect Tax) for the Appellants Shri. V.K. Shastri, Asstt. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 6/5/2015 Date of decision: 6/5/2015

ORDER NO.

Per : Ramesh Nair

Today appeal as well as application for extension of stay are listed.

This appeal is directed against Order-in- Appeal No. 80/RGD/2009 dtd. 18/9/2009 passed by the Commissioner of Central Excise & Customs(Appeals), Mumbai-II, wherein he upheld the order-in-original dated 21/4/2008 and rejected the appeal of the appellant. The fact of the case is that the appellant availed Cenvat Credit in respect of various inputs which are volatile in nature and right from receipt of the inputs up to stage of consumption small quantity of inputs get evaporated and accordingly shortage of inputs occurs. Show cause notice was issued. The appellant as per their own assessment paid the Cenvat amount for shortage over and above 0.5% and the same is not under dispute. Show cause notice was proposing disallowance of Cenvat credit even on loss of 0.5% and below. In the adjudication order demand was confirmed. Aggrieved by the adjudication order appellant filed appeal before the Commissioner (Appeals) who vide impugned order upheld the demand, therefore appellant is before me.

2. Shri. H.N. Gandhi, Manager (Indirect Tax) appearing on behalf of the appellant submits that this Tribunal in their another unit has considered that the loss of input up to 0.5% is allowable vide this Tribunal order No. A/741 to 746/2007 C-II (EB) dated 12/10/2007. He submits that in view of this judgment the Cenvat Credit cannot vary on the loss of quantity of inputs up to 0.5%. He further submits that following aforesaid judgment of the Tribunal in their own case, it was held that loss of input up to 0.5 % is allowable by this Tribunal order No. A/734/2009/SMB/C-IV dated 25/11/2009 and order No. A/459/10/JBM/C-IV dated 16/8/2010. With these orders, issue in dispute has been settled and demand in the present case is also not maintainable. He also submits that subsequent to the above conclusion of the proceedings in their own case jurisdictional Addll. Commissioner also dropped the demand on the loss of quantity up to 0.5 % vide Addl. Commissioner order No. Raigad/ADC/339 to 341(DL)/13-14 dated 28/3/2014 the said adjudication order was accepted by the Revenue and no further appeal was made therefore it was accepted that 0.5% loss on the inputs received is allowable and Cenvat credit on such quantity cannot be denied.

3. On the other hand, Shri. V.K. Shastri, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue fairly conceded that with various orders of this Tribunal the issue attained finality.

4. I have carefully considered the submissions made by both sides and perused record.

5. I find that on the issued involved in their own case, this Tribunal has passed following order:

Tribunal order No. A/741 to 746/2007 C-II (EB) dated 12/10/2007

18. As regards punching errors as per the appellants own say, the duty involved is Rs. 25,87,042/- and form 9.74% of the total duty demand, we find that the Commissioner has rejected the plea of the appellants for lack of documentary evidence to establish such errors. We have perused the reconciliation statement furnished by the appellants and we find that in many cases the shortages are not supported by documentary evidences. Appellants have been able to give few documentary evidence which on their own admission do not cover the entire errors. Since these errors are not negligible and constitute about 10% of the demand, they cannot be ignored. Similarly in respect of the process losses which constitute 4.9% of the total demand roughly amounting to Rs. 13,00,271/- losses upto .5% alone are to be condoned as this has been established practice admitted by the appellant where they themselves were limiting the process losses upto .5% and were paying duty in respect of loss beyond that. These were unexplained losses and consequently attributed as process loss. The possibilities of these losses being on account of other than process loss also cannot be ruled out. Further merely because in some industries like IOCL etc. the loss beyond .5% has been condoned does not mean that similar percentage should be applied across the board to every industry. Loss may differ from industry to industry and the products manufactured some of which may be more volatile and others may be less and therefore once the appellants have themselves considered .5% as a bench mark which must be on some rational consideration less only upto .5% of the total production should be condoned. For these purposes matter is remanded back to the original authority with liberty to the appellants to produce all the documentary evidence before the Commissioner and Commissioner should consider such documentary evidence and thereafter give his finding on the same. At this stage we make it clear that duty demand amounting to Rs. 2,00,902/- due to addition of overheads in determining the cost of production is also held to be unsustainable as in respect of inputs found short, all that is required, is to reverse the credit equivalent to the amount taken at the time of receipt of the inputs. This demand is therefore not sustainable.

Tribunal order No. A/734/2009/SMB/C-IV dated 25/11/2009 The appeal is filed by M/s Castrol India Limited against the demand is on inputs, which are liquids, and some of which are base mineral oils. These liquids are procured in volume shown as litres or kilolitres in the relevant invoice. The volume is converted into weight theoretically and such quantity is entered in Part I of RG-23A account. At a later stage, it is said, the inputs are weighed, whereupon variation in quantity is found. It was alleged that there are differences in the quantity and the demand notices were issued for shortages.

2. The appellant has filed the written submissions that in the appellants own case, on the identical issue this Tribunal has decided in their favour vide Order No. A/741 to 746/2007/C-II/EB dated 12.10.2007. The issue is squarely covered and prayed the appeal be allowed.

3. The learned SDR also confirmed the same.

4. I find that the issue in this case has already been decided by this Tribunal vide Order dated 12.10.2007 nothing remains to be decided. Following the same, the impugned order is set aside and the appeal is allowed.

Tribunal order No. A/459/10/JBM/C-IV dated 16/8/2010.

The appellant is filed this appeal along with the stay application.

2. The authorized representative of the appellants submits that there is demand against the appellants on account of shortage of inputs which accrued during the course of their manufacturing process and the same is below 0.5%. He further submitted that some time, the shortage accrues 0.5% to 0.6% but they have reversed the input credit in excess of 0.5%. He further submitted that in the appellants own case, this Tribunal has considered this issue of reversal of input credit availed by the appellant for the earlier period vide order No. A-741 to A-746/2007/C-II/EB dated 12.10.2007 wherein this Tribunal has held that the input credit is available upto 0.5% on shortage of inputs accruing in the course of manufacturing.

3. Heard.

4. Considering the fact that the issue involved is squarely covered by the appellants own case for the earlier period. Accordingly, after waiver of the condition of pre-deposit, I took up the appeal also for disposal with the consent of both the parties.

5. As the issue is squarely covered by the decision of this Tribunal cited hereinabove holding that where the shortage below 0.5% of inputs in the course of manufacturing processes Cenvat credit cannot be denied. Following the same, I allow the appeal of the appellants. The stay application is also disposed of in the above terms.

In view of the above consistent view of this Tribunal in the appellants own case, the issue involved is no more under dispute therefore following ratio of above cited orders of this Tribunal, I set aside the impugned order and allow the appeal. Since appeal itself has been deposed of, the application for extension of stay become infructuous and therefore dismissed.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

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