2012 (10) TMI 643 - AT - Central Excise

Denial of Remission of duty - 100% EOU fire accident took place on 1-5-2003 in the factory premises - remission of duty was not granted on the ground that they did not file any application for remission of duty at the relevant time and only at the time of reply to the show-cause notice they had made a claim for remission - Held that - when the statute does not prescribe any time limit, then the action has to be initiated within a reasonable time - Other than intimating about the incident they did not make any efforts whatsoever to estimate the quantity and value of the goods lost/destroyed in the fire accident and the duty liability involved in such goods - plea for remission of duty was made only in the reply to the show-cause notice in 2009, that is after a lapse of more than six years from the date of occurrence of the incident - remission of duty is not sustainable in law

Summary

Issues Involved:
1. Duty liability on goods lost/destroyed in fire.
2. Remission of duty under Rule 21 of Central Excise Rules, 2002 and Section 23 of the Customs Act.
3. Compliance with procedural requirements for remission.
4. Quantum of pre-deposit required.

Detailed Analysis:

1. Duty Liability on Goods Lost/Destroyed in Fire:
The appellant, a 100% Export Oriented Unit (EOU), imported raw materials under Notification No. 52/03-Cus and procured indigenous materials under Notification No. 1/95-C.Ex. for manufacturing goods for export. A fire accident occurred on 1-5-2003, leading to the loss of goods. The department issued a show-cause notice demanding Customs/Excise duty amounting to Rs. 1,39,23,140/- under Sections 22 & 28 of the Customs Act, 1962, and Section 11A of the Central Excise Act, 1944, along with interest and penalties.

2. Remission of Duty Under Rule 21 of Central Excise Rules, 2002, and Section 23 of the Customs Act:
The appellant sought remission of duty for the goods lost in the fire. The remission was not granted as the appellant did not file an application at the relevant time and only claimed remission in response to the show-cause notice. The department argued that remission could not be granted as the appellant failed to comply with procedural requirements and did not provide necessary information regarding the loss.

3. Compliance with Procedural Requirements for Remission:
The appellant did not submit detailed information about the goods lost/destroyed despite several reminders from the department. The appellant also failed to appear before the authorities when summoned. The department emphasized that remission under Section 23 of the Customs Act and Rule 21 of the Central Excise Rules requires an application and satisfactory evidence of the loss, which the appellant did not provide.

4. Quantum of Pre-deposit Required:
The Tribunal considered the appellant's argument that only 2,02,115 Kgs of goods were affected by fire and sold as waste after paying appropriate duty. The Tribunal directed the appellant to make a pre-deposit of Rs. 40 lakhs, approximately 30% of the total duty confirmed, within eight weeks. Upon compliance, the balance of dues would be waived, and recovery stayed during the pendency of the appeals.

Conclusion:
The Tribunal found that the appellant did not comply with procedural requirements for remission and failed to provide necessary information about the loss. The Tribunal directed a pre-deposit of Rs. 40 lakhs, considering the appellant's claim that only a portion of the goods was lost and sold as waste.