2008 (9) TMI 328 - AT - Central Excise

Theft of export goods remission of duty - The sole ground taken in the appeal to challenge the impugned order is that the respondent had received insurance claim for value of the goods lost which was in excess by Rs. 73,539/- of the actual and that by paying duty, the respondent would not incur any additional burden. - Once the goods cleared for export are shown to have been examined, assessed and allowed for export by Customs and the jurisdictional Assistant Commissioner admitted proof of export, department cannot raise a claim for duty on the ground that the goods had not been exported. Even otherwise, duty due on the goods lost in theft before the same reached the port of export should be held to be qualified for remission under Rule 49 of Central Excise Rules 1944 (Rule 21 of central excise rules, 2002) - appeal of Revenue dismissed.

Issues:
1. Duty liability on goods lost during transit from EOU to port.
2. Remission of duty on goods lost due to theft.
3. Compensation received by EOU from insurance for the lost goods.
4. Applicability of Rule 49 of Central Excise Rules 1944.

Analysis:

1. Duty liability on goods lost during transit from EOU to port:
The case involved a situation where an Export Oriented Unit (EOU) exported a consignment of cotton yarn, but a portion of the goods was found to be short exported due to theft during transit. The Revenue contended that duty was not collected initially on the export goods, and as the goods had not been exported, duty was payable by the EOU. However, the Tribunal held that once the goods were examined, assessed, and allowed for export by Customs, the department could not claim duty on the grounds of non-export. The jurisdictional Assistant Commissioner had already admitted proof of export, which precluded the department from raising a duty claim post-export.

2. Remission of duty on goods lost due to theft:
The central issue revolved around the remission of duty on goods lost due to theft. The Revenue argued against remission, citing lack of vigilance by the EOU and the fact that the EOU had received compensation from insurance for the lost goods. However, the Tribunal referred to various decisions where remission was allowed in cases of theft, emphasizing that unless there was evidence of willful act, negligence, or default on the part of the EOU, remission could not be denied. The Tribunal found no such evidence against the EOU in this case and upheld the remission of duty.

3. Compensation received by EOU from insurance for the lost goods:
The EOU had received compensation from insurance for the goods lost during transit. The Revenue argued that since the EOU had already received compensation exceeding the actual value of the lost goods, paying duty would not impose an additional burden on the EOU. However, the Tribunal did not find this argument sufficient to challenge the impugned order, as the duty liability was separate from the insurance compensation received.

4. Applicability of Rule 49 of Central Excise Rules 1944:
The Tribunal analyzed the applicability of Rule 49 of the Central Excise Rules 1944 concerning the remission of duty on goods lost in theft. It was emphasized that unless there was a finding of willful act, negligence, or default on the part of the EOU leading to the theft, remission could not be denied. The Tribunal concluded that the duty due on the goods lost in theft should be qualified for remission under Rule 49, as there was no evidence of negligence on the part of the EOU.

In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the impugned order that the EOU was not liable to bear the duty on the lost goods or suffer any penalty, as the loss was deemed an unavoidable accident due to theft during transit, without any fault attributed to the EOU.

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