2016 (11) TMI 633 - AT - Central Excise

Whether the excise duty is payable on semi finished goods which was destroyed in the fire broke out in the factory of the appellant or not? - Held that - Similar issue came up before this Tribunal in the case of M/s Steelbird Hi Tech India Ltd Versus CCE. Delhi-II 2015 (4) TMI 602 - CESTAT NEW DELHI wherein it was held that 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. The appellant is not required to pay duty on semi-finished circuit card raw assembly destroyed in fire broke out in their factory - appeal allowed.

Summary

Issues involved: Whether excise duty is payable on semi-finished goods destroyed in a fire at the factory.

Detailed Analysis:

Issue 1: Excise duty on finished goods destroyed in fire.
The appellant claimed remission of duty on finished goods lost in the fire. The Tribunal referred to a previous case, Grasim Industries, where it was observed that remission rules do not require the reversal of credit taken on inputs used in such goods. The Tribunal held that the appellant is entitled to claim remission of duty on finished goods destroyed in the fire, and therefore, not required to pay duty.

Issue 2: Excise duty on semi-finished/unfinished goods destroyed in fire.
The appellant also sought remission of duty on semi-finished/unfinished goods lost in the fire. The Tribunal considered the marketability of these goods and relied on the decision of Deepak Tandon that such goods are not marketable. However, following the decision of Grasim Industries, the Tribunal concluded that since the inputs had gone into the manufacturing process, there is no requirement to reverse Cenvat Credit on inputs used in the production of these goods. Therefore, the appellant is not required to pay duty on semi-finished goods destroyed in the fire.

Issue 3: Excise duty on capital goods destroyed in fire.
The Tribunal did not explicitly mention the decision regarding the remission of duty on capital goods. However, based on the analysis of finished and semi-finished goods, it can be inferred that the same principles would apply to capital goods as well.

The Tribunal cited previous cases like Park Nonwoven Pvt. Ltd. and M. Kumar Udyog Pvt. Ltd. to support its decision. In conclusion, the Tribunal set aside the impugned order and allowed the appeal, stating that the appellant is not required to pay duty on the semi-finished circuit card raw assembly destroyed in the fire at their factory.