2018 (2) TMI 889 - AT - Central Excise

Remission of duty - rule 21 of Central Excise Rules, 2002 - Held that - Hon ble High Court of Punjab & Haryana in Barodia Plastics Pvt Ltd v. Commissioner of Central Excise 2015 (7) TMI 667 - PUNJAB AND HARYANA HIGH COURT , where it was held that A perusal of the Tribunal s order reveals a consideration which is neither logical nor founded in law as insurance companies do not provide insurance against payment of taxes much less payment of Excise duty - remission of duty allowed.

Summary

Issues involved: Appeal against rejection of application for remission of duty under rule 21 of Central Excise Rules, 2002.

Analysis:
1. The appellant, M/s Apex Home Appliances, appealed against the rejection of their application for remission of duty under rule 21 of Central Excise Rules, 2002, related to goods destroyed in a fire. The application sought remission of duty amounting to ?6,83,269 for goods valued at ?82,92,100 destroyed in a fire on 1st October 2010. A portion of the goods had been seized earlier. The competent authority initially required the appellant to provide a surveyor's report and insurance settlement details.

2. The remission was denied as the appellant failed to produce the required documents. However, the Tribunal set aside this decision and remanded the case back to the original authority. In the subsequent proceedings, the authority rejected the remission claim again, citing the absence of clear exclusion of excise duty from the insurance settlement. This led to the current appeal.

3. The appellant cited a judgment by the Hon'ble High Court of Punjab & Haryana in a similar case, emphasizing that insurance companies do not cover payment of taxes, including excise duty, in insurance claims. The appellant argued that the rejection of the remission claim lacked legal support and highlighted the illogical reasoning behind it.

4. The Authorized Representative supported the rejection based on a circular mandating the exclusion of duty on inputs in insurance claims for remission of duty. However, the Tribunal found this argument unconvincing as the competent authority did not reference this circular or consider the context of CENVAT credit availment.

5. The impugned order acknowledged the appellant's non-availment of credit on duties paid on inputs, making the cited circular irrelevant. Additionally, the appellant had withdrawn the insurance claim, further complicating the situation.

6. Considering the precedent set by the Barodia Plastics Pvt Ltd case and the limited applicability of the circular mentioned by the Revenue, the Tribunal deemed the rejection of remission unauthorized by law and set it aside, allowing the appellant's claim for remission.