2009 (3) TMI 836 - AT - Central Excise

Summary

Issues: Common issue involving remission of duty on Cotton Yarn destroyed in fire.

Analysis:
1. Facts of the Case: The appellants, engaged in manufacturing Cotton Yarn, faced a fire incident on 12-3-98 resulting in damaged finished goods. The Range Officer assessed a shortage of 17,467.920 kgs of Cotton Yarn. A show cause notice was issued proposing duty demand and penalty for not submitting a remission application promptly.

2. Remission Application: The Commissioner rejected the remission application citing late intimation within 48 hours of the incident. The appellants argued that they informed the Asst. Commissioner on the next working day, 16-3-98, and the Range Officer verified the stock on 20-3-98. The insurance company's letter also clarified the claim amount did not include Central Excise duty.

3. Legal Standoff: The Department insisted on the statutory requirement of intimation within 24 hours, which the appellants failed to meet. They also claimed the appellants did not quantify the damage promptly and that the stock taking report was unrelated to the fire incident report.

4. Judgment: The Tribunal noted that the appellants informed the Asst. Commissioner on 16-3-98, the next working day, and the stock verification on 20-3-98 confirmed the shortage. The Asst. Commissioner acknowledged the quantity was destroyed in the fire but no remission application was initially filed. Given the insurance company's statement and the circumstances, the rejection of the remission application by the Commissioner was deemed unjustified.

5. Decision: The Tribunal set aside the Commissioner's order rejecting the remission application and the consequential duty demand. Both appeals by the appellants were allowed, granting them relief in the matter of duty remission on the Cotton Yarn destroyed in the fire incident.