2009 (2) TMI 151 - AT - Central Excise

Remission of duty Rule 21 goods destroyed due to fire - The report of the Chief Fire Brigade Officer notes that consequent upon specific enquiry conducted by the Fire Brigade Officers it was noticed that there was no staff working in the factory to make any attempt to capture the fire for the reason that there was scarcity of water inside the factory. The Commissioner has also noted that huge quantity of highly inflammable raw materials in drums was stacked in such a way that a sequential explosion occurred which thus aggravated the fire. He has also noted that the entrance and exit as well as windows were not proper and that narrow rooms and cabins were constructed with the use of small flaps, which also aggravated the fire. Therefore, the destruction of the goods cannot be said to have occurred beyond the control of the assessee i.e. it cannot be said due to unavoidable accident Remission of duty not allowed.

Summary

Issues:
- Rejection of claim for remission of duty on goods destroyed in a fire accident.
- Consequential demand of duty on destroyed goods.

Analysis:
The judgment by the Appellate Tribunal CESTAT, NEW DELHI dealt with the rejection of the assessee's claim for remission of duty on goods destroyed in a fire accident and the consequential demand of duty. The Tribunal noted that duty can be remitted on goods destroyed due to natural causes or unavoidable accidents. In this case, a fire occurred in the assessee's factory due to a short circuit. The Commissioner found that the safety and security arrangements for excisable goods were not proper, leading to the fire. The report by the Chief Fire Brigade Officer highlighted the lack of staff to control the fire due to water scarcity inside the factory. Additionally, the presence of highly inflammable raw materials stacked in a hazardous manner aggravated the fire. The inadequate entrance, exit, and construction of narrow rooms further contributed to the fire. Consequently, the destruction of goods was deemed to be within the control of the assessee and not due to an unavoidable accident.

Regarding the case laws cited by the assessee's counsel, the Tribunal distinguished them on the basis that in those cases, the fire was caused by circumstances beyond the control of the assessee, allowing for remission of duty as the goods were destroyed due to unavoidable circumstances. However, in the present case, the department contended that the fire was avoidable due to the lapses in safety measures. As a result, the Tribunal upheld the impugned orders rejecting the claim for remission and the consequent duty demand, dismissing the appeals. The judgment emphasized the importance of proper safety measures and control in preventing such incidents and the consequential duty liabilities.