2017 (6) TMI 812 - AT - Central Excise

Remission of duty - Rule 21 of Central Excise Rules, 2002 - rejection on the ground of Non filing of remission application by the appellant, Non-filing of quantification of shortages of goods lost in flood, Withdrawal of claim of remission by the appellant, appellant was not due diligent in storing their goods - Held that - As there is no prescribed proforma for filing application for remission under Rule 21 of Central Excise Rules, 2002, therefore, the letter dated 04.08.2004 is an application for claiming remission of duty under Rule 21 of the Rules. Therefore, on that ground remission claim cannot be rejected. Rejection on the ground that Non-filing of quantification of shortages of goods lost in flood - Held that - As there is no contrary evidence produced by the Revenue to show that the shortage are not on account of goods lost in flood. In that circumstance, the benefit of doubt goes in favor of the appellant by holding that there was a shortage of goods lost in flood involving duty of ₹ 10,30,874/- - rejection not valid. Rejection on the ground of Withdrawal of claim of remission by the appellant - Held that - In the absence of any evidence on record that remission claim filed by the appellant on 04.08.2004 has been withdrawn, merely on the basis of intent, it cannot be said that appellant has withdrawn the remission claim. Therefore, on that ground remission claim cannot be rejected. Rejection of remission claim on account of that appellant was not due diligent in storing their goods - Held that - Although everybody protects their goods from rain but when there was water logging of 4 to 5 feet, in that circumstances, it cannot be alleged that appellant was not diligent in storing the goods. Therefore, the said allegation for denial of remission claim is vague and baseless. Whether the Insurance claim includes the excise duty or not? - Held that - Admittedly, the goods lying in the factory premises has not suffered duty at that time as the duty is payable at the time of clearance of the goods. In that circumstance, it is obvious that the goods which lying in stock are not duty paid and no duty component was involved in the claim of insurance. Therefore, rejection on this ground is also not sustainable. The remission claim filed by the appellant is correct and appellant is entitled to claim the remission of duty of ₹ 10,30,874/- and is sanctioned - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of remission of duty claim under Rule 21 of Central Excise Rules, 2002.

Analysis:
1. Non-filing of Remission Application:
The appellant's claim of remission of duty was rejected on the ground of non-filing of remission application. However, the letter dated 04.08.2004 addressed to the Commissioner was considered as an application for remission under Rule 21 of the Rules, as there was no prescribed proforma for such application. Hence, the rejection on this ground was deemed incorrect.

2. Quantification of Shortages:
The department alleged shortages were due to clandestine removal, but the Commissioner (Appeals) set aside this allegation. The appellant claimed the shortages were due to goods lost in the flood, and as there was no contrary evidence provided by the Revenue, the benefit of doubt favored the appellant. The duty involved in the shortages was quantified at ?10,30,874, supporting the appellant's claim.

3. Withdrawal of Remission Claim:
Although the appellant had indicated willingness to withdraw the remission application, there was no concrete evidence of the withdrawal. Mere intent to withdraw does not equate to actual withdrawal. Therefore, the rejection based on the assumption of withdrawal was deemed incorrect.

4. Diligence in Storing Goods:
The appellant faced heavy rains causing waterlogging up to 4 to 5 feet in the factory premises. Given the extreme circumstances, it was unfounded to allege lack of diligence in storing goods. The rejection on this ground was considered baseless and vague.

5. Insurance Claim and Excise Duty:
The insurance claim for goods lost in the flood was initially rejected but later allowed by the Consumer Court. Since the duty is payable upon clearance of goods and the goods lost were not duty-paid, the insurance claim did not include any duty component. Therefore, the rejection based on this ground was deemed unsustainable.

In conclusion, the Appellate Tribunal held that the appellant was entitled to claim remission of duty amounting to ?10,30,874. It was also directed that the appellant reverse the Cenvat credit on inputs used in manufacturing the lost goods. The Tribunal found that the Commissioner had not correctly examined the issues and disposed of the appeal in favor of the appellant.