2015 (3) TMI 122 - AT - Central Excise

Waiver of pre deposit - Whether the appellant is liable to pay central excise duty on the finished products manufactured by them lying in the factory destroyed during the course of violence by the employees and members of the public on 27/01/2012 - Held that - Having regard to the fact that appellants had sought protection and had approached the High Court and as per the High Court directions, protection had been given and even on the day of violence they had filed many FIRs would show that appellants had done whatever they could do on a prima facie basis. If a huge crowd gathers, even police force cannot completely control such a crowd and prevent happenings in mob violence. Further the loss incurred by the company is much more than the loss to the Government in terms of Central Excise revenue. It has to be noted that appellants lost property worth more than ₹ 50 crores in the incident. Having regard to all these circumstances, we consider that appellant has made out a prima facie case for waiver of pre-deposit and stay against recovery - Stay granted.

Summary

Issues:
1. Liability to pay central excise duty on finished products destroyed during violence at factory.

Analysis:
The primary issue in this case revolves around the liability of the appellant to pay central excise duty on finished products destroyed during a violent incident at their factory. The appellant's factory was destroyed during a violent episode involving employees and the public, resulting in significant damage. Despite the appellant's efforts to seek protection and file FIRs, the factory was set on fire, leading to the destruction of finished goods. The Range Superintendent estimated the duty involved in the finished goods destroyed in September 2012.

The subsequent proceedings initiated by the authorities aimed at recovering the duty on the destroyed goods, imposing interest and penalties under relevant sections and rules. The basis for the demand, interest, and penalty included allegations of negligence on the appellant's part for not seeking sufficient protection from the police, failure to reverse CENVAT credit, and not applying for remission under Rule 21. The appellant, however, had reversed the CENVAT credit of inputs used in the destroyed goods as required and had sought remission under Rule 21 in their response to the show-cause notice.

Considering the circumstances and actions taken by the appellant, including seeking protection, approaching the High Court for assistance, filing FIRs, and the substantial loss suffered by the appellant exceeding Rs. 50 crores, the tribunal found that the appellant had made a prima facie case for waiver of pre-deposit and stay against recovery. The tribunal acknowledged that even with police protection, controlling a huge crowd during mob violence is challenging, and the loss to the appellant far exceeded the loss to the government in terms of central excise revenue. Therefore, the tribunal waived the requirement of pre-deposit and granted a stay against recovery during the appeal process.