HINDUSTAN ZINC LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Hindustan Zinc Limited have filed the present appeal against the demand of duty by the Commissioner under the impugned Order.

(2.) SHRI M.P. Devnath, learned Advocate, submitted that the Appellants manufacture non -ferrous metals and by -products; that they availed the Modvat Credit of duty paid on inputs under the provisions of Rule 57A of the Central Excise Rules, 1944; that the duty has been demanded and penalty has been imposed on the ground that the Modvat Credit is not available in respect of inputs lost in handling. The learned Advocate, further, submitted that the raw materials after being picked up from the storage tanks is taken to the hammer mill where the same is pulverized in order to reduce the size of the inputs; that simultaneously seiving process is undertaken to find out bigger outsized particles; that thereafter, the ground material is subjected to magnetic separation of iron particles because the iron would damage the smelting process; that after completion of this process, the concentrates are stored in the proportioning bins; that various grades of concentrates are stored separately and they are mixed in required proportions; that the material is discharged and taken to the central plant where just before feeding the same into the plant it is re -weighed; that this is where handling loss/process loss comes about; that it is thus apparent the loss occurs during the process of manufacture and accordingly the credit cannot be denied. He relied upon the decision in the case of CCE, Jaipur v. Rajasthan Spinning and Weaving Mills Ltd. -2001 (128) E.L.T. 239 (T) wherein it has been held that the Modvat Credit availed on the inputs used in the manufacture of final products and destroyed during the process of manufacture before finished goods, cannot be denied. He also submitted that the process loss is 0.896 which is less than 1% of this loss should be treated as normal and natural. Finally, he mentioned that the extended period of limitation is not invocable as it cannot be claimed that there was any suppression or misdeclaration; that the basis for the information in the show cause notice is from the balance sheet of the Appellants. He relied upon the decision in the case of U.T. Limited v. CCE, 2001 (130) E.L.T. 791.

(3.) COUNTERING the arguments, Shri O.P. Arora, learned Advocate, reiterated the findings as contained in the impugned Order and emphasised that there is loss of inputs on account of negligence and non -efficiency of the Appellants and as such the benefit of Modvat Credit on the lost quantity should not be extended to them.