2010 (5) TMI 417 - AT - Central Excise

Remission of duty Goods unfit for sale or marketing shall not be dutiable and duty thereon can be remitted under law - deficiency in quantity of the excisable goods resulting out of natural cause Held that - remission claim on the goods was loss due to rain water rendering the goods unfit for marketing - if it is seen that if the goods have been lost by natural causes, duty is not payable - Revenue s appeal is bound to be dismissed.

Summary

Issues: Revenue aggrieved by Commissioner's order remitting duty on sponge iron damaged by rainwater.

Analysis:
1. Revenue's Argument: The Revenue contended that the remission of duty on sponge iron damaged by rainwater, as allowed by the Commissioner, would result in a loss of revenue. They argued that the prescribed procedure under Chapter 18 of the Excise Manual for the destruction of goods by natural causes must be followed to claim remission of duty. Failure to adhere to this procedure renders the Commissioner's order unsustainable.

2. Respondent's Defense: The Respondent, through their counsel, highlighted that the damage to the sponge iron was undisputedly caused by rainwater, a natural occurrence beyond their control. The Commissioner found that the claim for remission of duty was supported by a surveyor's report and an Insurance Agent's assessment. The Respondent, unaware of Central Excise laws, had the damaged goods in their stock account without attempting to market them. Relying on precedents and Tribunal decisions, the Commissioner rightly allowed the remission under the law.

3. Legal Analysis: The Tribunal examined the provisions of Section 5 of the Central Excise Act, 1944, and Rule 21 of the Central Excise Rules, 2002. The Authority can entertain claims for remission arising from natural causes or unavoidable accidents without mandatory conditions. The essential elements to be satisfied for remission include the deficiency in quantity due to natural causes, objective satisfaction of the Authority, and the burden of proof on the claimant. In this case, the Commissioner's finding that rainwater damage rendered the goods unfit for marketing aligned with the legal provisions, demonstrating a clear understanding of the law.

4. Precedent and Decision: Relying on judgments such as Mira Chemicals v. CCL and Balrampur Chini Mills Ltd. v. CCE, the Respondent's claim for remission due to natural losses was supported. The Tribunal referenced the decision of the Hon'ble High Court of Allahabad, emphasizing that if goods are lost due to natural causes, duty is not payable. The judgment in the present case aligned with the legal requirements and the precedent, leading to the dismissal of the Revenue's appeal.

5. Conclusion: The Tribunal's decision upheld the Commissioner's order allowing remission of duty on the damaged sponge iron, emphasizing the legal provisions, precedents, and factual findings supporting the claim. The judgment highlighted the importance of objective satisfaction by the Authority and the burden of proof on the claimant in cases of remission due to natural causes.