2005 (7) TMI 30 - HC - Central Excise

Sugar destroyed by due to spontaneous combustion, is nothing but as natural cause question of any preventive measure arise in case of accident and not in case of destruction by natural cause if goods have been destroyed by natural cause, duty is not payable so remission is allowed

Summary

Issues:
Challenge to order under Central Excise Act, 1994 regarding destruction of sugar stock in fire, disallowance of duty remission, appeal before Tribunal, interpretation of Rule 49 of Central Excise Rules, 1944.

Analysis:

1. The case involves a challenge to an order under the Central Excise Act, 1994, regarding the destruction of 2181 quintals of sugar stock in a fire at a sugar mill. The insurance claim by the mill was denied due to the fire being categorized as spontaneous combustion, not covered under the policy. The Commissioner disallowed the duty remission request, leading to a demand for central excise duty and penalty. The Tribunal allowed the appeal, citing the destruction as due to spontaneous combustion, a natural cause.

2. The judges heard arguments from the Revenue's counsel and reviewed the orders by the Commissioner and the Tribunal.

3. The analysis delves into Rule 49(1) of the Central Excise Rules, 1944, which states that duty is not payable if goods are lost or destroyed by natural causes or unavoidable accidents during handling or storage. The rule clarifies that preventive measures are relevant in case of accidents, not when goods are destroyed by natural causes like spontaneous combustion, as in this case. The Tribunal's decision aligns with this interpretation, finding the duty payment unjustified.

4. The judgment highlights that the phrase "unavoidable accident" does not apply when goods are destroyed by natural causes, emphasizing that negligence is not a factor in such situations. The Commissioner's error in assuming negligence led to an incorrect demand for duty. The Tribunal's decision is deemed in conformity with Rule 49 and does not raise any substantial question of law.

5. Ultimately, the appeal is dismissed promptly, indicating the lack of merit in challenging the Tribunal's decision based on the correct interpretation of the Central Excise Rules regarding duty payment in cases of goods destroyed by natural causes.