2012 (6) TMI 758 - AT - Central Excise

Remission of duty - loss of molasses due to leakage - Held that - After the accident, was reported to the Department, the officials from the Commissionerate visited the factory of the appellant. There is nothing on the record that the excise team on inspection found some mischief or reported that the accident was not genuine. Thus, there is no dispute regarding the loss of molasses. As regards, the plea that the accident was avoidable it is sufficed to say that every accident is on account of lack of precaution on the part of the personnel responsible for avoiding such incident. Nobody deliberately would indulge in an exercise which may result in huge loss. Therefore, we are of the view that interpreting Rule 21 of the Central Excise Rules, the authorities are required to be liberal otherwise restrictive construction to Rule 21 would make it inoperable and redundant. In our aforesaid view, we are supported by the judgment of Hon ble Rajasthan High Court in the matter of Union of India v. Hindustan Zinc Ltd. (2008 (10) TMI 63 - HIGH COURT RAJASTHAN). Commissioner ought to have allowed the remission of excise duty particularly when there is no evidence to show any mala fide intention to evade the excise duty - Decided in favour of assessee.

Summary

Issues:
1. Remission of excise duty due to loss of molasses following an accident.

Analysis:
The case involved a State-controlled manufacturing unit engaged in the production of sugar and molasses as excisable items. The appellant reported an incident where a truck hit a pipeline, resulting in the loss of 1667 quintals of molasses. The appellant applied for remission of excise duty under Rule 21 of the Central Excise Rules, 2002, but the request was rejected by the Jurisdictional Commissioner on the grounds that the accident was avoidable.

The appellant challenged the rejection, arguing that accidents are often unforeseeable and that a restrictive interpretation of avoidability would render Rule 21 redundant. The appellant cited a judgment of the Hon'ble Rajasthan High Court to support this argument. The Department, represented by the DR, supported the Commissioner's decision, emphasizing the avoidable nature of the accident.

Upon review, the Tribunal found that there was no dispute regarding the loss of molasses, and no evidence of mala fide intent to evade excise duty. The Tribunal noted that accidents often occur due to lack of precaution and that a liberal interpretation of Rule 21 is necessary to prevent it from becoming inoperable. Citing the judgment of the Hon'ble Rajasthan High Court, the Tribunal concluded that the appellant's case warranted remission of excise duty. Consequently, the appeal was accepted, the impugned order was set aside, and the remission sought by the appellant was allowed.