2017 (2) TMI 941 - AT - Central Excise

Remission of duty - burning of tank containing molasses due to internal combustion - denial on the ground that the appellant did not follow any fixed schedule for cooling the tanks and pipes - Held that - What is expected is reasonable care and caution to avoid the accident and not the highest degree of care - Further, there is nothing in the report to conclude that if the cooling and cleaning of tanks as suggested by the institute was resorted by the appellant the incident would not have happened at all. It is pleaded by the appellant that they have adopted reasonable methods for cooling the tank by using water sprays and coils and have been following these methods for many years. That appellant was under bonafide belief that all these methods are sufficient to sustain any mishap. The rejection for request of remission of duty is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of remission of duty on goods destroyed by fire.

Analysis:
1. The appellant, engaged in sugar and molasses manufacturing, faced a fire incident resulting in the destruction of molasses. The appellant sought remission of duty under Rule 21 of the Central Excise Rules, 2002, supported by relevant documents. However, the Commissioner rejected the request, leading to the present appeal.

2. The appellant argued that the fire was due to bio-chemical reactions, categorizing it as an unavoidable accident. The National Sugar Institute's report highlighted the lack of fixed cooling schedules, but the appellant contended that the accident was beyond their control, citing relevant case laws to support their claim.

3. The Department, represented by the Assistant Commissioner, emphasized the Institute's findings regarding the appellant's inadequate maintenance practices. They argued that the accident could have been avoided through proper tank cleaning and cooling, justifying the denial of remission.

4. The judge noted that the fire resulted from bio-chemical and chemical reactions, not intentional acts by the appellant. The Department's interpretation of "unavoidable" was deemed overly restrictive. The report's suggestions for prevention were not conclusive in preventing a similar incident, and the appellant's cooling methods were considered reasonable.

5. Referring to Rule 21, the judge clarified that remission is applicable for goods lost due to natural causes, unavoidable accidents, or being unfit for consumption. The term "unavoidable accident" requires reasonable care, not absolute prevention, and the report did not definitively show that the suggested measures would have averted the fire.

6. Citing precedents like Balarampur Chini Mills Ltd., the judge highlighted that destruction by natural causes, like spontaneous combustion, does not entail duty payment. The lack of preventive measures for an accident does not apply to destruction by natural causes, emphasizing that the appellant's actions were reasonable, and the fire was not intentional.

7. Following the legal interpretations and precedents, the judge concluded that the denial of remission was unjustified. The demand confirmation was set aside, and the appeal was allowed with any consequential reliefs.

This detailed analysis of the judgment showcases the legal arguments, interpretations of relevant rules, and application of precedents in deciding the appeal against the denial of remission of duty on goods destroyed by fire.