2006 (1) TMI 294 - AT - Central Excise

Summary

Issues:
1. Application for waiver of pre-deposit of duty
2. Rejection of remission application for duty on finished products destroyed in fire
3. Interpretation of Board's Circular No. 800/33/2004-Cx.
4. Authority to grant remission and recovery of Cenvat credit
5. Appeal decision through remand

The judgment by the Appellate Tribunal CESTAT, Mumbai, involved the consideration of an application for waiver of pre-deposit of duty amounting to Rs. 82,31,491, confirmed due to the rejection of a remission claim for finished products destroyed in a fire incident. The Tribunal, comprising Ms. Jyoti Balasundaram and Shri S.S. Sekhon, decided to proceed with the appeal itself after waiving the pre-deposit, with the consent of both parties involved.

The rejection of the remission application was based on the failure of the appellants to reverse the Cenvat credit on inputs used in manufacturing the destroyed finished goods, as required by Board's Circular No. 800/33/2004-Cx. The Tribunal found that the circular had been misinterpreted by the Commissioner, clarifying that the remission should be granted first upon satisfaction of the authority regarding the permissible extent of remission. Only after the remission is allowed should the recovery of Cenvat credit be directed to be reversed, as stated in the circular.

Consequently, the Tribunal set aside the impugned order and remanded the case to the jurisdictional Commissioner for a fresh decision. The Commissioner was directed to determine the quantum of duty to be remitted initially and then proceed with the recovery of Cenvat credit in accordance with the circular. The appeal was allowed through remand, emphasizing the correct interpretation and sequence of actions regarding remission and recovery processes as per the circular and legal provisions.

The judgment highlights the importance of following the correct procedure outlined in the circular for granting remission and recovering Cenvat credit in cases of destroyed finished goods. It underscores the necessity for authorities to adhere to the prescribed steps in determining remission amounts before directing the reversal of credits, ensuring a fair and lawful process in such matters.