2015 (4) TMI 602 - AT - Central Excise

Denial of remission of duty - Goods lost in fire - Held that - For claim of remission of duty on unfinished / semi-finished goods destroyed in fire I do agree with the contention of the Ld. Commissioner (A) relying on the decision of Deepak Tandon (supra) that these goods are not marketable. Therefore, remission of duty cannot be claimed. But at the same time relying on the decision of Grasim Industries (Supra) when the input have gone in manufacturing process, therefore they are not required to reverse Cenvat Credit on input contained in unfinished goods / semi-finished goods lost in fire as there is no provision of reversal of Cenvat Credit in respect of inputs used in manufacturing of such goods. - appellant has taken Cenvat Credit correctly and there is also no provision in the Cenvat Credit Rules to reverse proportionately Cenvat Credit on capital goods which was lost in fire or were not used. Therefore, I hold that the appellant is not required to reverse Cenvat Credit on capital goods. - appellant is not required to pay duty on finished goods and not required to reverse the Cenvat Credit on inputs contained in unfinished goods and semi-finished goods and not required to reverse the Cenvat Credit of capital goods - Decided in favour of assessee.

Summary

Issues:
1. Entitlement to remission of duty on goods lost in fire
2. Liability to pay duty on finished goods, semi-finished goods, and capital goods lost in fire

Analysis:

Issue 1: Entitlement to remission of duty on goods lost in fire
The appellant appealed against the denial of remission of duty on goods lost in a fire incident and the subsequent demand for duty on the lost finished goods, semi-finished goods, and capital goods. The appellant claimed remission of duty based on the argument that a previous decision by a larger bench of the Tribunal had reversed a similar decision, entitling them to remission on finished goods. The Tribunal agreed with the appellant, citing the previous ruling that did not require the reversal of credit taken on inputs used in goods granted remission. Therefore, the Tribunal held that the appellant was entitled to claim remission of duty on finished goods lost in the fire, and consequently, was not required to pay duty on them.

Issue 2: Liability to pay duty on finished goods, semi-finished goods, and capital goods lost in fire
Regarding the remission of duty on semi-finished/unfinished goods lost in the fire, the Tribunal concurred with the decision of the Commissioner that these goods were not marketable, thus remission of duty could not be claimed. However, following the precedent set by another case, the Tribunal ruled that the appellant was not required to reverse the Cenvat Credit on inputs contained in the lost semi-finished goods and unfinished goods, as there was no provision for such reversal. Similarly, on capital goods, the Tribunal found that the appellant had correctly taken the Cenvat Credit and that there was no provision to proportionately reverse the credit on capital goods lost in the fire. Consequently, the Tribunal held that the appellant was not required to reverse the Cenvat Credit on capital goods. In conclusion, the Tribunal ruled in favor of the appellant, stating that they were not obligated to pay duty on finished goods and were not required to reverse the Cenvat Credit on inputs in unfinished goods, semi-finished goods, and capital goods.

In summary, the Tribunal allowed the appeal, thereby concluding the case in favor of the appellant.