2016 (1) TMI 1197 - AT - Central Excise

Remission of duty - whether the fire which occurred in the appellant s premises which originally started in the adjoining factory and later on spread to his factory was an unavoidable accident and can be said to have occured due to the reasons beyond control of the appellant and whether the appellant is entitled to the remission as claimed by him? - Held that - the learned Commissioner have erred in holding that the fire accident was avoidable and was due to negligence and carelessness on the part of the appellant. In view of the categorical finding of Chief Fire Fighting Officer it is an unambiguous conclusion that the fire started in the adjoining factory of M/s. Jandial Shoe Factory thereafter spread to the adjoining factory of Golden Eagle Shoe and from their pursuant to caving in of the roof the fire spread to the appellant s factory and immediately engulfed the whole factory. We have further found that the appellant had given timely notice to the Excise Authorities and hence no case of negligence is made out against him which could have prevented the Excise Authorities in verifying the accident and/or loss. Rejection of quantum of loss is also erroneous and no reasons have been given for the same. In case of fire where everything is lost the loss is to be estimated on the basis of some parameters and on past records. The appellant is held to be entitled to remission claim - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of remission claim for duty on goods destroyed in fire accident under Rule 21 of CER, 2002.
2. Determination of whether the fire incident was an unavoidable accident beyond the control of the appellant.
3. Entitlement of the appellant to the remission claim.

Analysis:

Issue 1: Rejection of Remission Claim
The appellant, M/s Tej Show Tech., Agra, appealed against the rejection of their remission claim for duty on goods destroyed in a fire accident. The Commissioner of Central Excise, Kanpur, rejected the claim under Rule 21 of CER, 2002, and Section 38A of the Central Excise Act, 1944. The rejection was based on the lack of documentary evidence supporting the claim, failure to report the fire incident within 24 hours, and the absence of statutory records to verify the loss. The Commissioner found the claim calculations to be based on assumption and presumption. Moreover, the appellant's contention of an unavoidable accident was deemed unsustainable due to negligence and carelessness in safeguarding goods and records. The appellant's failure to prevent the fire due to inadequate safety measures led to the rejection of the remission claim.

Issue 2: Unavoidable Accident Determination
The key issue in the appeal was whether the fire incident, originating in an adjoining factory and spreading to the appellant's premises, constituted an unavoidable accident beyond the appellant's control. The fire, triggered by an electric short circuit in the neighboring shoe factory, rapidly escalated and affected multiple factories. The Chief Fire Officer's report detailed the sequence of events, emphasizing the intense nature of the fire and the challenges faced in controlling it. The appellant argued that they promptly informed the Excise Authorities and took steps to salvage goods, disputing claims of negligence. The Tribunal noted the explicit findings of the Chief Fire Fighting Officer, concluding that the fire's spread was uncontrollable and not due to the appellant's actions. The Tribunal found no negligence in the appellant's response to the fire incident, overturning the Commissioner's decision.

Issue 3: Entitlement to Remission Claim
After considering the arguments and evidence presented, the Tribunal found in favor of the appellant. The Tribunal disagreed with the Commissioner's assessment of negligence and carelessness on the appellant's part. It highlighted the timely notice given to Excise Authorities and the lack of justification for rejecting the quantum of loss. The Tribunal emphasized the need to estimate the loss in a fire incident based on past records and parameters. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting the appellant entitlement to the remission claim along with any consequential benefits.

In conclusion, the Tribunal's judgment favored the appellant, overturning the Commissioner's decision and establishing the appellant's entitlement to the remission claim for duty on goods destroyed in the fire accident.