2026-VIL-670-BOM-CE
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CENTRAL EXCISE High Court Cases

Central Excise - Cenvat Credit on Shortage of Raw Materials – Respondent-assessee was denied Cenvat credit on the ground of shortage of raw material as the Respondent failed to submit documentary evidence to justify the shortages – Vide the impugned order the CESTAT set aside the denial of CENVAT credit stating that the shortages are properly explained, aggrieved by the same the Revenue in appeal - Whether admission of shortage and availing of Cenvat credit on the same by the Respondent and failure to submit documentary evidence to justify the shortages are sufficient grounds to establish ineligibility for Cenvat credit and clandestine removal of goods – HELD - The explanation given by the Respondent, which is accepted by the Tribunal, is fair and reasonable and cannot by any stretch of imagination be termed as perverse. The shortages, when compared to the overall purchase of raw material and manufacture of final products, are negligible and such negligible differences can be reasonably attributed to human errors of posting and processing losses. There is no other material or evidence on record of diversion of these inputs. Accordingly, the denial of Cenvat credit on the ground of shortage of raw material does not give rise to any substantial question of law – Revenue appeal is dismissed - Cenvat Credit on Diverted Imported Raw Material - The Revenue-Appellant relied upon statements made by truck drivers and owners to contend that goods were never transported from the Respondent's godown to its factory, thereby establishing diversion of imported raw material - Whether the Tribunal erred in dropping the demand for Cenvat credit on diverted imported raw materials and excise duty on clandestine removal of goods on the ground of non-compliance with procedural requirements under Section 9D of the Central Excise Act, 1944 – HELD - The Tribunal was fully justified in concluding that the procedure followed by the Adjudicating Authority was not in consonance with the prescriptions of Section 9D of the Act. Further, the Tribunal, after carefully examining all facts and evidence, concluded that there exists no material to show any diversion as alleged by the Appellant. The Tribunal's finding of facts is neither perverse nor contrary to the record. The Tribunal properly examined the facts and correctly held that Cenvat credit could not be denied on this ground - The appeal is dismissed
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