2013 (12) TMI 109 - AT - Central Excise

Remission of duty Goods damaged by fire determination of quantum of goods lost - Held that - The adjudicating authority has correctly observed that as per records maintained by the assessees and as per report of the inspection which were given immediately after the fire loss is to the extent of around 39.580 MT - if the differential quantum of fabrics has not been destroyed by the fire and inasmuch as the same are not available also with the assessee, there is no explanation by the Revenue where said quantum has gone - There is no allegation of clandestine removal or evidence of the same - Decided against Revenue.

Issues:
1. Appeal against order passed by Commissioner for remission of duty.
2. Discrepancy in quantity of damaged goods between respondent and insurance surveyor.
3. Assessment of duty remission and demand by the Commissioner.

Issue 1: Appeal against order passed by Commissioner for remission of duty

The appeal was filed by the Revenue against the order passed by the Commissioner regarding the remission of duty for damaged goods. The respondent, a 100% EOU, had filed for remission after a fire incident in their factory resulting in loss of final products. The Commissioner, in denovo proceedings, allowed the remission and dropped the demand for duty. The Revenue contended that the remission should be restricted to the quantity determined by the insurance surveyor, which was lower than claimed by the respondent. However, the Commissioner, after considering the facts and submissions, accepted the respondent's claim for remission of duty on the goods totally lost in the fire but rejected the remission for partly burnt goods. The Commissioner's decision was upheld as there was no evidence of clandestine removal of goods and no discrepancy in the quantity claimed by the respondent. The appeal by the Revenue was rejected based on the findings of the Commissioner.

Issue 2: Discrepancy in quantity of damaged goods between respondent and insurance surveyor

The main point of contention was the difference in the quantity of damaged goods as claimed by the respondent and as determined by the insurance surveyor. The insurance surveyor's report indicated a lower quantity of damaged goods compared to what the respondent had claimed. The Commissioner noted that the respondent had not contested the insurance claim for the balance amount, as it was relatively small compared to the overall claim of Rs. 10 crores for other losses. The Commissioner observed that if the differential quantity of fabrics was not destroyed by the fire and was not available with the respondent, there was no explanation provided by the Revenue as to where that quantity had gone. Since there was no evidence of clandestine removal or any other discrepancies, the Commissioner accepted the respondent's claim based on the records and inspection reports. The discrepancy in quantity did not affect the decision on remission of duty.

Issue 3: Assessment of duty remission and demand by the Commissioner

The Commissioner, after considering all the facts and submissions, made a detailed assessment of the duty remission and demand. The Commissioner accepted the remission for the goods totally lost in the fire based on the records and inspection reports. However, the remission for the partly burnt goods was rejected. The Commissioner's decision was based on the lack of evidence of clandestine removal, the absence of discrepancy in the quantity claimed by the respondent, and the respondent being a 100% EOU. The Commissioner's order was found to be in order, and the appeal by the Revenue was dismissed. The judgment highlighted the importance of maintaining accurate records and following due process in cases involving duty remission and demand.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision rendered by the Commissioner and subsequently upheld by the appellate tribunal.

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