2009 (12) TMI 650 - CGOVT - Central Excise

Revision application - goods destroyed in fire accident - requested for remission of duty - Commissioner (Appeals) rejected the appeal on the ground that the loss of goods is not due to natural causes but due to negligence on the part of the applicant, hence remission of duty under Rule 49 of the Central Excise Rules, 1944 is not available to them Held that - applicant s remission application was rejected by Commissioner Central Excise, order-in-appeal relates to demand of duty and appeal against said order also lies before CESTAT. Both the orders are not of the nature referred to in the first proviso to sub-section (1) of Section 35B of Central Excise Act, 1944, Govt. rejects this revision application is not maintainable as filed beyond jurisdiction

Summary

Issues:
Appeal against order-in-appeal rejecting remission of duty due to loss of goods in a fire accident.

Analysis:
The revision application was filed against the order-in-appeal rejecting remission of duty after a fire accident at the factory premises. The applicant, a manufacturer of electric control panels, notified the jurisdictional Range officer about the fire accident and subsequently provided details of the destroyed goods, seeking remission of duty. The department alleged negligence on the part of the assessee for failing to protect non-duty paid goods and raw materials on which Modvat credit had been availed, resulting in loss of goods. A Show Cause Notice was issued demanding Central Excise Duty on the destroyed goods. The Assistant Commissioner confirmed the duty demand, citing negligence as the cause of the fire. The Commissioner (Appeals) upheld the decision, stating that remission of duty was not available due to negligence.

The applicant challenged the order-in-appeal on various grounds. They argued that reports from the Fire Fighting Department, Police Station, and Insurance Company did not raise doubts on the incident's cause, questioning the allegation of negligence. Citing legal precedents, the applicant contended that Modvat credit on inputs lost after issuance for manufacturing final products is not recoverable. They referred to cases where Modvat credit was allowed for inputs destroyed in fire accidents, emphasizing that loss due to fire should not result in denial of Modvat credit. The applicant highlighted discrepancies in the Commissioner's reliance on a judgment related to loss during transit, contrasting it with the present case of loss due to fire post-issuance of inputs for manufacturing.

The Government rejected the revision application, stating that the applicant failed to demonstrate that the loss was due to natural causes, as the Commissioner attributed it to negligence. The rejection was based on the grounds that the orders of the lower authorities were not of the nature eligible for appeal to the Appellate Tribunal. Consequently, the revision application was deemed not maintainable within the jurisdiction, leading to its rejection.

In conclusion, the judgment emphasized the importance of establishing the cause of loss in duty remission cases, distinguishing between losses due to natural causes and negligence. The legal arguments presented by the applicant regarding Modvat credit and precedents related to loss scenarios were considered in the analysis. Ultimately, the rejection of the revision application was based on jurisdictional grounds, highlighting the need for clarity in legal proceedings related to duty remission post-loss incidents.