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2018 (2) TMI 1667 - AT - Central ExciseDestruction of goods by fire - raw material completely destroyed - time limitation - whether the demand dropped by the learned Commissioner (Appeals) on limitation is correct and legal or otherwise? - Held that - the respondent have given the details for damages, this communication was sufficient for the Revenue to investigate if they deemed fit to find out whether there is some more damages of inputs or other goods. However the Revenue has not taken any step to make any enquiry - Merely on the basis of statement given by one of the employee of the respondent to the police the same cannot be taken as gospel truth regarding the actual quantum of damage. The show-cause notice was issued almost after 5 years therefore there is no suppression of fact on the part of the respondent - appeal dismissed - decided against Revenue.
Issues:
1. Appeal against Order-in-Appeal setting aside demand on limitation. Analysis: The appeal was directed against Order-in-Appeal No.CD/395/M-III/2016 dated 26.05.2016, where the Commissioner of Central Excise (Appeals), Mumbai-II, set aside the Order-in-Original on limitation grounds. The case revolved around a fire incident in the respondent's factory on 22.03.2010, resulting in the destruction of certain raw materials. The respondent informed the Police Department on 23.03.2010 and the Division office on 09.04.2010 about the damages, stating a value of affected stock at ?4,93,995/- with duty of ?51,631/-. The department alleged that the raw material worth ?2 crore was destroyed, holding the respondent liable for duty on ?1,95,06,005/-. A show-cause notice was issued for demanding duty of ?20,09,119/-, leading to an adjudication order on 24.11.2015. The Commissioner (Appeals) allowed the appeal by setting aside the demand, prompting the Revenue to file this appeal. The Revenue contended that the Commissioner erred in setting aside the demand on time bar, arguing that the respondent provided information on the damaged goods only on 13.03.2015, within the 5-year limitation period, alleging suppression of facts by the respondent. On the other hand, the respondent's counsel argued that detailed information was provided on 09.04.2010 about the fire damages and credit reversal, denying any suppression of facts. It was emphasized that the Commissioner's decision was legal and correct, not warranting interference. Upon careful consideration, the main issue was whether the demand dropped by the Commissioner (Appeals) on limitation was legally correct. The Tribunal noted that the respondent had informed the Department about the damages and credit reversal due to the fire incident. The communication provided by the respondent was deemed sufficient for the Revenue to investigate further if necessary, but no such steps were taken. It was observed that the respondent did not file a claim for remission of duty, indicating no obligation to apply for remission. The Revenue initiated an investigation only after the issue was raised in an audit, not immediately after receiving the initial communication. The Tribunal found no suppression of facts by the respondent, especially considering the absence of an insurance claim for the alleged ?2 crore worth of raw material damage. Relying solely on an employee's statement to the police for the quantum of damage was deemed insufficient. As the show-cause notice was issued after almost 5 years, the Tribunal upheld the Commissioner's decision to set aside the demand on limitation grounds, dismissing the Revenue's appeal and disposing of the cross-objection. This comprehensive analysis highlights the legal intricacies surrounding the limitation period, suppression of facts, and the sufficiency of information provided by the respondent, ultimately leading to the Tribunal's decision to uphold the Commissioner's order.
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