2013 (9) TMI 997 - CGOVT - Central Excise

Remission of duty - Goods damaged due to flood - Commissioner allowed remission - Held that - Damaged finished goods and inputs are still lying in the factory. This fact is not disputed at all. However original authority confirmed the duty demand in finished goods as well as inputs along with interest and penalty. Commissioner (Appeals) has set aside the demand of 1, 27, 655/- on finished goods since the same are removed from factory and directed the party to file remission application under Rule 21 of Central Excise Rules 2002. - duty is chargeable under Section 3 of Central Excise Act 1944 but the payment of duty is deferred till removal of goods from the factory under Rule 8 of Central Excise Rules 2002. This fact is not disputed by department also. Finished goods are still lying in the factory. The loss of goods due to floods is established with available documentary evidences of insurance report and intimation given by party. - The loss of goods due to floods is by natural causes or by unavoidable accident and the damage of goods are claimed to be unfit for marketing and their remission of duty involved on such goods is to be considered under Rule 21 of Central Excise Rules 2002 - reversal of input credit when remission granted on final product destroyed in fire/accident is not required. The ratio of said judgments is squarely application to this case. As such the view taken by Commissioner (Appeals) cannot be faulted with. - No infirmity in impugned order - Decided against revenue.

Summary

Issues:
1. Duty demand on finished goods and inputs due to floods damage.
2. Validity of setting aside the demand on finished goods by Commissioner (Appeals).
3. Requirement of remission application under Rule 21 of Central Excise Rules, 2002.
4. Contestation of the direction to file remission application by the department.
5. Consideration of loss of goods due to natural causes for remission of duty.
6. Applicability of previous judgments on the case.

Analysis:

Issue 1:
The case involved a duty demand on finished goods and inputs of a company due to damages caused by floods. The original authority confirmed the duty demand, which was challenged by the respondent in appeal.

Issue 2:
The Commissioner (Appeals) set aside the demand on finished goods, stating that duty is leviable only upon removal of goods from the factory. The department contested this decision, arguing that the duty should be confirmed in the absence of a remission application.

Issue 3:
The requirement of a remission application under Rule 21 of Central Excise Rules, 2002 was a crucial point of contention. The respondent argued that there was no stipulation for immediate filing of the application after goods damage, and the appeal should be rejected based on this ground.

Issue 4:
The department contested the direction to file a remission application, stating that it was an unhealthy practice to require it after exhausting all procedural formalities. They argued that the duty should be confirmed in the absence of such an application.

Issue 5:
The consideration of loss of goods due to natural causes for remission of duty was a key aspect. The Government observed that the damaged goods were still in the factory and could be inspected, indicating a genuine loss due to floods.

Issue 6:
The applicability of previous judgments, such as Mira Chemicals v. CCE, Grasim Industries v. CCE, and Voltamp Transformers Ltd. v. CCE, supported the view that in the absence of goods clearance from the factory, confirmation of duty demand was not justified.

In conclusion, the Government upheld the decision of the Commissioner (Appeals) to set aside the demand on finished goods and rejected the revision application, as the duty remission under Rule 21 of Central Excise Rules, 2002 was deemed appropriate in the case of goods damaged by natural causes like floods.