Judgment:
Per Jyoti Balasundaram
Credit of Rs.11,25,980/- has been denied to the appellants herein on Benzene and Orthoxylene on the ground that total quantity of inputs were not received in the assessee s factory of production of final product.
2. We have heard both sides on the appeal against such denial. The items in question are organic chemicals. In a recent decision in the case of CCE Chennai Vs Bhuwalka Steel Industries Ltd. - MISC Order No.591/09 dt. 12.11.09, the Larger Bench has held that decision to allow or not to allow credit in a particular case will depend on various factors such as the following :-
(i) Whether the inputs/capital goods have been diverted enroute or the entire quantity with the packing intact has been received and put to the intended use at the recipient factory.
(ii) Whether the impugned goods are hygroscopic in nature or are amenable to transit loss by way of evaporation etc.
(iii) Whether the impugned goods comprise countable number of pieces or packages and whether all such packages and pieces have been received and accounted for at the receiving end.
(iv) Whether the difference in weight in any particular case is on account of weighment on different scales at the despatch and receiving ends and whether the same is within the tolerance limits with reference to the Standards of Weights and Measures Act, 1976.
(v) Whether the recipient assessee has claimed compensation for the shortage of goods either from the supplier or from the transporter or the insurer of the cargo.
3. The Bench has also noted that some goods are susceptible to transit loss on account of such goods being of hygroscopic nature or of volatile nature and that there can also be cases of difference in weight on account of difference in the weighing scales at both ends, i.e. at the point of despatch and at the point of receipt. It has been held that no hard and fast rule can be laid down for dealing with different kinds of shortages.
4. In the light of the Larger Bench decision cited supra, we set aside the impugned order and remand the case for fresh decision in the light of the Larger Bench decision to the adjudicating authority who shall extend a reasonable opportunity to the assessees of being heard in their defence before passing fresh orders.
5. The appeal is thus allowed by way of remand.