ORIENTAL AROMATICS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE appeal is directed against Order -in -Appeal No. GWL/63/2004, dated 9 -2 -2004 passed by the Commissioner of Central Excise (Appeals), Gwalior. Vide the impugned order, the learned lower appellate authority has upheld the demand of Rs. 9,12,964.85 being ineligible Modvat credit availed on the input used in the manufacture of final products. He has also confirmed the duty demand of Rs. 1,70,990/ - on the shortage of 3419.80 kg of finished products which were not accounted for and which were alleged to have been cleared without payment of duty as admitted by the appellant M/s. Oriental Aromatics Ltd. He has set aside the penalties imposed on the appellant. Aggrieved of the same, the appellant is before us. The learned Counsel for the appellant submits that the appellants are manufacturer of perfumery product and they used chemicals, essential oils and resinoids in the manufacture of perfumery compounds. In the process of manufacture of the said products, wastage occurs both by way of handling loss as also by way of process loss. It is on this loss the impugned demands have been confirmed. For the year 1992 -93 the total consumption of raw material was 204,834 kg and the quantity of goods manufactured was 204,380 kg. The difference between the consumption and production was 454 kg. As compared with the production of 204,380 kg, the difference of 454 kg works out of 0.221 % which is quite minimal and it is on account of process loss. For the year 1993 -94, the total consumption was 311,256 kg against which the quantity manufactured was 298,152 kg. The difference works out to 13,104 kg and the Modvat credit is sought to be denied on 13,104 kg.

(2.) THE learned Addl. Commissioner appearing for the Revenue, on the other hand, submits that the process undertaken is only mixing/blending of chemicals and, therefore, there cannot be said to be any process loss. Therefore, there is no satisfactory explanation of the shortage of raw materials consumed and finished products manufactured. Accordingly, the impugned order is sustainable in law.