2017 (5) TMI 1287 - AT - Central Excise

Remission of duty - rejection on the ground that the loss due to fire accident was a result of negligence on the part of the appellant-assessee - Held that - the ld. Commissioner have erred in rejecting the claim due to misappreciation of facts of record, in view of the consent given by the Fire Department dated 19/02/2006, wherein the Fire Department has found everything is in satisfactory condition during test. Thus, there is no case of negligence attributable to the appellant. Further, from the Fire Report, the reason of fire is evident, that the fire occurred due to short circuit of electricity, which is definitely beyond the control of the appellant-assessee and there is no foul play - remission allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of claim for remission
2. Demand raised against the appellant with interest and penalty

Analysis:

Issue 1: Rejection of claim for remission
The appellant-assessee filed appeals regarding the rejection of their claim for remission. The rejection was based on the grounds that the loss due to a fire accident was deemed a result of negligence on the part of the appellant. The Fire Department report indicated that the fire was caused by a short circuit of electricity. The appellant argued that they had taken adequate measures to prevent fire accidents, as evidenced by a 'No Objection Certificate' issued by the Fire Department. The appellant contended that the rejection of their claim by the Insurance Company should not be a valid reason for the Central Excise Department to reject their claim. The appellant asserted that the loss was beyond their control and that the rejection of their claim was erroneous. The Commissioner's decision was found to be flawed as there was no negligence on the part of the appellant, and the fire was caused by factors beyond their control. The Tribunal set aside the impugned order and held that the appellant was entitled to remission for the destroyed goods due to the fire accident.

Issue 2: Demand raised against the appellant with interest and penalty
Another appeal was related to a demand of a specific amount raised against the appellant by the Additional Commissioner, along with interest and penalty under the Central Excise Act and Rules. The demand was confirmed due to the rejection of the claim by the Commissioner (Appeals). However, upon review, the Tribunal found that the rejection of the claim for remission was incorrect. The Tribunal allowed the appeals of the appellant with consequential benefits, if any, in accordance with the law. It was clarified that the remission claim did not include destruction of raw materials, and the appellant was entitled to remission for the semi-finished/finished goods destroyed in the fire accident.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the rejection of the remission claim and allowing the appeals with consequential benefits, emphasizing that the fire incident was beyond the appellant's control and did not involve negligence on their part.