2015 (3) TMI 121 - AT - Central Excise

Remission of duty - Goods destroyed in fire - Reversal of CENVAT Credit - Held that - Revenue is not disputing the fact of occurrence of fire and resultant destruction of t the goods either in the appellant s factory or in the job workers factory. As a result, mere observation of the Commissioner that no reasonable steps were taken to avoid the fire cannot be appreciated inasmuch as nobody likes to invite fire resulting in destruction and loss of stock. As regards the destruction of the goods in the job workers factory admittedly the receipted goods were work-in-progress and were not the finished goods. Though I am of the view that such semi finished goods are also entitled to the remission of duty but even if the Commissioners stand is accepted, no duty liability would arise in respect of semi-finished goods to duty of excise. It has to be kept in mind that the proceedings before the Commissioner were for remission of duty and not for demand of duty in respect of inputs sent to the job workers factory and non-receipt back in terms of provisions of Rule 16 B of the Central Excise Rules, 2002. As such, I find no merits in the impugned order of Commissioner which is set aside - Decided in favour of assesse.

Summary

Issues:
1. Reversal of Cenvat credit on destroyed inputs.
2. Rejection of remission application for destroyed goods.
3. Duty liability for goods destroyed at the job worker's factory.

Analysis:
1. The appellant, engaged in manufacturing PU foam, experienced a fire incident resulting in the destruction of inputs and final products. The Central Excise Officer conducted a survey, documenting the damage. The appellant voluntarily reversed Cenvat credit of Rs. 3,50,798 on destroyed inputs, which was undisputed. Similarly, duty of Rs. 16,451 on confiscated goods was also not contested.

2. Subsequently, the appellant applied for remission of Rs. 11,90,775 for goods destroyed in their factory and the job worker's factory. The Commissioner rejected the remission, citing lack of evidence showing reasonable care to prevent the fire. Additionally, the Commissioner held that Rule 21 did not apply to the job worker's factory, requiring duty payment for goods destroyed there, as per Rule 16B of Central Excise Rules, 2002.

3. Upon review, the judge noted that the occurrence of fire and destruction of goods in both factories were undisputed. The judge disagreed with the Commissioner's assertion that reasonable steps were not taken to prevent the fire, emphasizing that no party would intentionally risk fire damage. Regarding goods destroyed at the job worker's factory, even if duty liability were to be considered, it would not apply to semi-finished goods. The judge clarified that the remission application was not about demanding duty for inputs sent to the job worker's factory but about remission of duty, leading to the setting aside of the Commissioner's order and granting relief to the appellant.