2008 (3) TMI 118 - AT - Central Excise

Remission of duty in respect of the goods damaged by natural causes i.e. flood - there was no dispute about the damage of the goods - loss not being in dispute and non-recovery of duty from insurance company not also being in dispute it would be proper at the interest of justice to invoke second proviso to Rule 49 of Central Excise Rules, 1944 to grant remission

Summary

Issues:
1. Denial of remission of duty for goods damaged by natural causes.
2. Interpretation of the second proviso to Rule 49 of Central Excise Rules, 1944.
3. Delay in disposing of the remission application by the Authorities.
4. Entitlement to remission under Rule 49 despite insurance claim.

Analysis:

1. The Appellant challenged the denial of remission of duty for goods damaged by a flood in September 2000. The Appellant argued that necessary correspondences from authorities and proof of damage were submitted. The Appellant's claim included finished goods, raw materials with Cenvat credit, and packing materials. The insurance company confirmed the damage but did not pay the excise duty liability. The Appellant faced a delay in the process, with a show cause notice issued almost a year after the remission application. The Commissioner initially directed the disposal of the remission application but later rejected it, leading to the appeal.

2. The Revenue contended that since the Appellant disposed of the damaged stock and received money from the insurance company, their claim under Rule 49 was not valid. However, the Tribunal noted that the Appellant had taken steps promptly after the flood, including filing intimation and a remission application. The delay in disposing of the remission application was criticized, especially considering the prior appellate order directing its disposal. The Tribunal found that the damage and non-recovery of duty from the insurance company were not in dispute, leading to the invocation of the second proviso to Rule 49 to grant remission to the Appellant for the finished goods and raw materials.

3. The Tribunal, after hearing both sides and examining the record, acknowledged the Appellant's proactive steps following the flood. The delay in considering the remission application was highlighted, noting the loss was undisputed and the duty non-recovery from the insurance company was confirmed. In the interest of justice, the Tribunal invoked the second proviso to Rule 49 and allowed the appeal, setting aside the impugned order denying remission. The decision was pronounced in open court, granting relief to the Appellant for the goods damaged by natural causes.

This detailed analysis of the judgment addresses the issues raised, the arguments presented by both parties, and the Tribunal's reasoning leading to the decision to grant remission to the Appellant.