Decided on June 10,2015

Commissioner of Central Excise And S.T. Respondents


H.K.THAKUR,J - (1.)THIS appeal has been filed with respect to OIA No. SRP/308/VDR -II/2012 dated 15.09.2012. Ms. Harpinder Sandhu (Advocate) on behalf of the appellant argued that appellant is sending Caustic Potash Flakes for job work to two job workers namely M/s. Atlas Pallet Industries and M/s. Vinayak Chemicals for conversion into Potash Pallets.
(2.)That during conversion of Caustic Potash Flakes into Potash Pallets there is a processing loss of around 10% which is not received back by the appellant. It was her case that the processing loss of 10% is genuine and no CENVAT credit pertaining to processing loss is recoverable from the appellant. She relied upon the case law of Voltamp Transformer Limited vs. CCE, Vadodara [ : 2014 (302) ELT 586 (Tri. Ahmd.). It was also the case of the appellant that correspondence under letter dated 11.4.2007 was exchanged between the job worker M/s. Vinayak Chemicals and the appellant to the extent that there will be a processing loss of 10%. With respect to imposition of penalty, it was argued by the Advocate appearing on behalf of the appellant that the inputs were cleared for job work under challans and everything was within the knowledge of the department, therefore, penalty cannot be imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
(3.)SHRI Lalatendu Patra (AR) appearing on behalf of the Revenue argued that appellant is sending Caustic Potash Flakes to two job workers for conversion in Potash Pallets. It was argued that in the case of job worker M/s. Atlas Pallet Industries, 100% yield is sent back whereas only in the case of M/s. Vinayak Chemicals there is a processing loss of 10%. He made the Bench go through Para 9 of the Order -in -Appeal dated 15.09.2012 passed by the first appellate authority to argue that there can not be a processing loss in the case of one job worker and 100% yield of Potash Pallets in the case of other job worker. It was also strongly argued by the learned AR that no documentary proof such as Chartered Engineers certificate or any Scientific literature has been produced by the appellant to suggest that there is a processing loss of 10% when Caustic Potash Flakes are converted into Caustic Potash Pallets. On the imposition of penalties, it was argued that the case was detected during the course of audit and penalty has been correctly upheld by the first appellate authority.

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