2007 (10) TMI 268 - AT - Central Excise

Goods destroyed in fire since there is no dispute about destruction of final product and input and capital goods in fire, remission of duty in respect of finished product cannot be denied - consequently demand on the final product is not to be upheld - As regards Modvat credit involved in various inputs or interim product, we find that the issue is covered by the decision of the Larger Bench of the Tribunal in the case of M/s. Grasim Industries held that demand is not sustainable

Summary

Issues:
Appeal against the order of the Commissioner for remission of duty on goods destroyed in a fire accident.

Analysis:
The appellant's premises suffered a fire accident damaging various goods, including finished goods, raw materials, semi-finished goods, and capital goods. The Central Excise duty on the damaged finished goods, Modvat/Cenvat credit on raw materials, semi-finished goods, packing materials, and consumables, as well as credit on capital goods were all significant amounts. The Commissioner initially rejected the remission application, which was later set aside by the Tribunal for reconsideration. Upon reconsideration, the Commissioner again rejected the remission application.

The appellant argued that the Commissioner's reasoning for denying remission on finished goods, inputs contained in finished goods, and capital goods was unsound. The appellant relied on a Tribunal decision in a similar case. The Commissioner, on the other hand, supported his findings.

Upon careful consideration, the Tribunal noted the Commissioner's stance that remission cannot be allowed on raw materials, semi-finished goods, packing materials, and capital goods destroyed in a fire accident. However, the Tribunal disagreed with this approach. The Tribunal found no justification in denying remission on the finished product and held that the demand on the final product should not be upheld. Additionally, the Tribunal referenced a decision by the Larger Bench of the Tribunal to support their stance on Modvat credit involved in various inputs or interim products. Consequently, the Tribunal allowed the appeal with consequential relief.

In conclusion, the Tribunal overturned the Commissioner's decision and allowed the appeal, providing relief to the appellant in the matter of duty remission on goods destroyed in the fire accident.