2007 (8) TMI 623 - AT - Central Excise

Summary

Issues:
1. Denial of remission of duty on finished goods destroyed in fire accidents.
2. Reversal of input credit and interest on credit involved.
3. Lack of opportunity and grounds in Commissioner's decision.
4. Frequency of fire accidents indicating insufficient precautions.

Issue 1: Denial of Remission of Duty
The appellant, engaged in manufacturing chemicals prone to fire accidents, sought remission of duty for finished goods destroyed in fire accidents. The Commissioner denied remission based on the failure to reverse interest on the credit involved in the inputs used for the final products. The Tribunal noted that there was no evidence of deliberate action or negligence by the appellant causing the fire accidents. The denial of remission was not due to any deliberate or negligent action on the part of the appellant, as no such allegations were made in the show cause notice or Commissioner's findings.

Issue 2: Reversal of Input Credit
The appellant argued that the reversal of input credit is not required when remission is granted for final products destroyed in fire accidents. Citing the decision of the Larger Bench in the case of M/s. Grasim Industries, the appellant contended that remission does not necessitate the reversal of Cenvat credit. The Tribunal agreed with this argument and held that the denial of remission based on the non-reversal of credit was not justified.

Issue 3: Lack of Opportunity and Grounds
In the case of Appeal No. 553/07, the Commissioner's decision to deny remission was communicated by the Assistant Commissioner without providing any grounds or opportunity for the appellant to present their case. The Tribunal found this lack of due process concerning and set aside the order of the Commissioner, remanding the case for reconsideration with a reasonable opportunity for the appellant to be heard.

Issue 4: Insufficient Precautions
The Respondent argued that the frequency of fire accidents in the factory indicated a lack of sufficient precautions by the appellant, justifying the denial of remission. However, the Tribunal found no evidence to suggest that the fire accidents were caused by deliberate action or negligence on the part of the appellant. The Tribunal emphasized that the nature of the chemicals being inflammable does not automatically imply negligence on the part of the appellant.

In conclusion, the Tribunal allowed Appeals No. 551/07 & 552/07, as the denial of remission based on the non-reversal of credit was deemed unjustified. For Appeal No. 553/07, the lack of a speaking order and due process led the Tribunal to remand the case for reconsideration by the Commissioner with a fair opportunity for the appellant to present their case.