2018 (3) TMI 608 - AT - Central Excise

Remission of duty - it was alleged that the appellant did not file a remission application in terms of the provisions of Rule 21 - it was also alleged that the returns for the period was not filed within the time - time limitation - Held that - The Revenue has taken a period of four years in issuing the show cause notice even though the fact of the fire having occurred in their factory and having destroyed the final product was brought to the notice of the Revenue. The Tribunal in the case of CCE, Daman Vs. Mayank Electro Ltd. 2007 (3) TMI 645 - CESTAT, AHMEDABAD has observed that the fire accident having brought to the notice of the Revenue, there could be no ground for any suppression, fraud or mis-statement and as such the show cause notice having been issued by invoking the longer period of limitation was barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Failure to file a remission application under Rule 21 of Central Excise Rules.
2. Non-filing of returns within the stipulated time period.
3. Barred by limitation - Delay in issuing show cause notice after the fire incident.

Analysis:

1. The appellant, a manufacturer of Master Batch and PP Compound, faced a fire incident on 28.4.2008, resulting in the destruction of their entire stock, including inputs, goods in process, final products, and plant machinery. The Revenue issued a show cause notice in 2012, demanding duty payment of ?33,02,559, citing non-filing of a remission application under Rule 21 of Central Excise Rules and delayed return filing.

2. The appellant's advocate argued that a penalty of ?40,000 was imposed and paid for late return filing, and a remission application was subsequently submitted. He contended that failure to file a remission application should not confirm duty demand for destroyed goods, as established by Tribunal precedents. The advocate emphasized timely notification of the fire incident to the Revenue within 6-7 days, challenging the show cause notice's validity after four years.

3. The Tribunal acknowledged the fire incident and destruction of stock, noting the appellant's prompt notification to the Revenue. Despite the non-filing of a remission application, the Tribunal found the duty demand on destroyed goods unjustifiable, especially when not cleared from the factory. Citing a precedent where delayed show cause notice issuance was deemed barred by limitation due to prior knowledge of the fire incident, the Tribunal ruled in favor of the appellant, setting aside the impugned order and granting relief.

In conclusion, the Tribunal's decision highlighted the importance of timely notification to tax authorities, the inapplicability of duty demands on destroyed goods not cleared from the factory, and the limitation on delayed show cause notices post-incident awareness.