2015 (7) TMI 667 - HC - Central Excise

Remission of duty - plant, machinery, stock, goods in process of manufacturing and manufactured goods have been destroyed in an accidental fire - Held that - A perusal of the Tribunal s order reveals a consideration which is neither logical nor founded in law as insurance companies do not provide insurance against payment of taxes much less payment of Excise duty. The finding recorded by the Tribunal that the appellant has not proved that the insurance claim does not include Excise duty, is in our considered opinion perverse and, therefore, could not form the basis for dismissing the appeal. The appellant having placed the letter issued by the insurance company before the Tribunal and having filed relevant documents before this Court, it would be appropriate and in the interest of justice to allow the appeal, set-aside the order passed by the Tribunal and remit the matter to the Tribunal for adjudication afresh and in accordance with law. - Decided in favour of assessee.

Summary

Issues:
Remission of excise duty on goods destroyed in a fire accident - Rejection of remission application by Commissioner of Central Excise - Appeal dismissed by Tribunal based on insurance claim not clarifying exclusion of duty element - Appellant's plea for re-examination of insurance claim and letter accepted by insurance company.

Analysis:
The case involves the appellant seeking remission of excise duty due to the destruction of plant, machinery, raw material, and finished goods in a fire accident. The appellant lodged an FIR, filed an insurance claim, and applied for remission, which was rejected by the Commissioner of Central Excise. The appeal against this rejection was dismissed by the Tribunal, citing the lack of evidence proving that the insurance claim did not include the duty element. The Tribunal emphasized the necessity for the insurance claim amount to exclude duty to qualify for remission. However, the appellant argued that insurance companies do not cover taxes, including excise duty, in their claims, making the Tribunal's decision illogical and legally unfounded.

Upon review, the High Court found the Tribunal's reasoning flawed and arbitrary, as insurance policies typically do not cover excise duty payments. The Court considered the appellant's submission of the insurance company's letter and other relevant documents as sufficient evidence to warrant a re-examination of the case. Consequently, the High Court set aside the Tribunal's order, directing a fresh adjudication by the Tribunal in line with the law and principles of justice.

In conclusion, the High Court allowed the appeal, emphasizing the need for a logical and lawful assessment of the insurance claim and the duty element exclusion. The matter was remitted back to the Tribunal for a fair and proper reconsideration, ensuring a just outcome for the appellant.