2011 (4) TMI 1084 - AT - Central Excise

Remission of duty - remission of duty is being claimed on the ground that the goods in respect of which the remission of duty has been claimed were a lost/destroyed due to an unavoidable accident - remission has been claimed on the ground that the goods, in question, were lost/destroyed due to unavoidable accident, the appellant have to prove beyond doubt the accident which resulted in loss was actually unavoidable Held that - appellant have not been able to explain as to how the bottom of the tank got burst. In view of this, this is not the case for total waiver from the requirement of pre-deposit. The appellant are directed to deposit an amount of Rs. 12,00,000, On deposit of this amount within the stipulated period, the requirement of balance amount of duty, interest and penalty shall stand waived and recovery thereof stayed till the disposal of the appeal

Summary

Issues:
Application for waiver from pre-deposit of Central Excise duty demand, remission of duty on lost molasses, rejection of remission application by Commissioner, imposition of penalty, appeal against Commissioner's order.

Analysis:
The appellant, engaged in sugar and molasses manufacturing, sought waiver from pre-deposit of Central Excise duty demand of Rs. 36,20,345 confirmed against them, related to 46855.30 quintals of molasses lost due to bursting of a steel tank. The Commissioner rejected the remission application, confirming the duty demand, interest, and imposing an equal penalty under Section 11AC of Central Excise Act. The appellant contended that the loss was due to an unavoidable accident, supported by the Jurisdictional Superintendent's confirmation and FIR filing. The Departmental Representative opposed the waiver application, emphasizing Rule 21 of Central Excise Rules allowing remission only for losses due to natural causes or unavoidable accidents.

The Tribunal analyzed Rule 21, permitting duty remission for goods lost by natural causes or unavoidable accidents. The appellant claimed remission due to molasses loss from a burst tank, indicating substandard tank maintenance. Despite an FIR, the absence of a police report raised doubts on the accident's unavoidability. Consequently, the Tribunal directed the appellant to deposit Rs. 12,00,000 within eight weeks, with the balance duty, interest, and penalty requirement waived upon compliance, and recovery stayed pending appeal disposal.

This judgment highlighted the necessity for appellants to prove the unavoidability of accidents leading to duty remission claims under Rule 21, emphasizing the importance of evidence such as police reports to substantiate claims. The Tribunal's decision to require a partial deposit due to insufficient evidence underscores the significance of thorough documentation and substantiation in duty remission cases to support claims effectively and secure favorable outcomes.