2005 (6) TMI 439 - AT - Central Excise

Summary

Issues:
1. Duty demand on finished goods destroyed in fire.
2. Legality of duty demand on damaged inputs with penalty.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, New Delhi involved a challenge by the Revenue regarding the correctness of the impugned Order that had dropped the duty demand on finished goods destroyed in a fire. The Respondents, engaged in manufacturing Audio Cassettes, had availed Modvat Credit on inputs, specifically imported polyester film. The finished goods with a duty of Rs. 15,742/- and inputs with a credit of Rs. 2,36,202/- were damaged in a fire incident. It was noted that no remission of duty was legally available to the Respondents for the damaged finished goods. The learned Counsel also acknowledged this fact during arguments. Consequently, the impugned order dropping the duty demand on finished goods was reversed, and a duty demand of Rs. 15,742/- was confirmed against the Respondents without penalty, as the circumstances did not warrant the imposition of a penalty.

2. Regarding the duty demand on damaged inputs with penalty, it was determined that such demand was not legally sustainable. This conclusion was drawn because the Respondents had already paid the appropriate duty as per Rule 57-I (as amended), and this payment had been accepted by the Commissioner (Appeals) as correct under the law. Therefore, the impugned Order upholding the duty demand on damaged inputs with penalty was maintained. In light of the discussions and findings, the impugned Order was modified accordingly, and the appeal was disposed of based on the above terms. The judgment was dictated and pronounced in open court by Shri P.S. Bajaj, J.