2007 (9) TMI 531 - AT - Central Excise

Summary

Issues:
1. Remission of duty on destroyed inputs during job work procedure.

Analysis:
The appeal was filed against an Order-In-Original (OIO) rejecting a remission application for duty and Education Cess on inputs destroyed in a fire accident during job work. The appellants sought remission of duty, which was rejected, leading to an appeal before the Tribunal. The Tribunal remanded the matter back to the Commissioner for adjudication following principles of natural justice. Subsequently, a show cause notice was issued, and the impugned order rejected the remission application, ordering recovery of the duty and Education Cess along with interest. The appellants challenged this order before the Tribunal.

The appellant argued that the inputs were destroyed in the fire accident, and no finished goods were produced, citing precedents like Commr. v. Indchem Electronics and Bombay Dying and Manufacturing Company v. CCE, Mumbai. On the other hand, the JCDR contended that under the Cenvat principle, remission cannot be granted if finished products did not materialize, referring to the case of Tambraparani Coatings v. CCE, Pondicherry.

After considering the submissions, the judge found that no new products emerged as the manufacturing process was incomplete, but the inputs were issued for manufacturing. The judge agreed with the appellant's argument, relying on the decision in Commr. v. Indchem Electronics, which was upheld by the Supreme Court. The judge distinguished the JCDR's reliance on Tambraparani Coatings as a single-member decision, whereas Indchem Electronics was decided by a division bench. Consequently, the impugned order rejecting the remission application was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeal based on the precedent established in Commr. v. Indchem Electronics, emphasizing the importance of finished goods not being produced due to the destruction of inputs during the job work procedure.