2015 (1) TMI 411 - AT - Central Excise

Remission of duty - Goods destroyed in transit - Removal was made for export - truck met with an accident in which due to fire not only the truck but the goods loaded in the truck were totally destroyed - Held that - The remission of duty has been claimed under Rule 21 of the Central Excise Rules 2002. - remission of duty in respect of the goods lost or destroyed due to natural causes or by unavoidable accident is permissible only when this loss or destruction has taken place at any time before removal . Thus the point of time when the loss or destruction should take place is the time before the time of removal. In my view the words at any time before removal cannot be read as at any place before the place of removal ; they have to be read as at any time before the time of removal . In terms of the provision of Section 4 (3) (cc) of the Central Excise Act 1944 the time of removal even in respect of the goods sold from the depot or from consignment agent s premises or from any other place is the time when the goods are cleared from the factory. Therefore in respect of the goods cleared for export even if the place of removal is the port from where the goods are exported the time of removal would be the time when the goods have been cleared from the factory and therefore if the goods are lost during transit for the purpose of Rule 21 the time of removal would have to be treated as the time at which the goods were cleared from the factory. - when the goods after clearance from the factory for exports are lost in transit the remission of duty under Rule 21 would not be admissible - Decided against assesse.

Issues:
1. Remission of duty under Rule 21 of the Central Excise Rules, 2002 for goods destroyed after removal.
2. Interpretation of the phrase "at any time before removal" in Rule 21 regarding loss or destruction of goods.
3. Applicability of the concept of "time of removal" in the context of goods cleared for export.

Analysis:

Issue 1: Remission of Duty
The appellant, a 100% EOU engaged in handicrafts manufacturing, cleared a consignment for export which was destroyed in a fire accident after removal. The application for remission of duty under Rule 21 was rejected by the Additional Commissioner and Commissioner (Appeals) citing that the loss occurred after removal, and due care was not taken to protect the goods. The Tribunal upheld this decision, following precedents that disallowed remission when goods cleared for export were lost during transit.

Issue 2: Interpretation of Rule 21
Rule 21 allows remission of duty for goods lost or destroyed by natural causes or unavoidable accident before removal. The Tribunal interpreted the phrase "at any time before removal" to mean the time before the goods are cleared from the factory, not the place of removal. Referring to Section 4(3)(cc) of the Central Excise Act, the Tribunal emphasized that the time of removal is crucial, even for goods cleared for export, and loss after this time does not qualify for remission under Rule 21.

Issue 3: Time of Removal for Exported Goods
In cases of goods cleared for export, the Tribunal clarified that the time of removal is when the goods are cleared from the factory, not the port of export. This distinction is essential in determining the eligibility for remission under Rule 21. Contrary views from other cases were considered, but the Tribunal maintained that loss during transit after clearance from the factory does not warrant remission of duty, aligning with the statutory provisions and established precedents.

In conclusion, the Tribunal dismissed the appeal, emphasizing that loss after the time of removal, even for goods cleared for export, does not entitle remission of duty under Rule 21. The judgment underscores the importance of interpreting statutory provisions in line with the specific context and legal framework governing the remission of duty for lost or destroyed goods.

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