2018 (3) TMI 1117 - AT - Central Excise

Principles of natural justice - Remission of duty - Held that - The issue raised being one of denial of principles of natural justice it would be appropriate for the matter to be considered afresh by the original authority after giving an opportunity to the appellant to be heard - appeal allwoed by way of remand.

Summary

Issues:
Denial of remission of duty on sugar destroyed by fire - Interpretation of Central Excise Rules 2002 - Principles of natural justice.

Analysis:

The dispute in this case revolved around the denial of remission of duty amounting to ?9,55,995/- claimed on 9770 quintals of sugar packed in jute bags that were allegedly destroyed by fire at the factory of the appellant. The Commissioner of Central Excise and Customs rejected the remission application, citing that a portion of the sugar was salvaged and re-processed, and there was no evidence to prove that the fire was accidental. The Commissioner also noted that the claim was filed more than a year after the incident and seemed prompted by the possibility of a duty recovery notice. The Commissioner relied on Rule 21 of the Central Excise Rules 2002, which allows remission only in cases of goods lost or destroyed by natural causes, unavoidable accidents, or when goods become unfit for consumption or marketing before removal. The original authority focused on the aspect of unavoidable accident, stating that sugar is not prone to self-combustion and as the cause of the fire was not indicated in the surveyor's report, the remission claim was rejected.

The appellant's consultant referred to a decision by the Hon’ble High Court of Allahabad in a similar case involving sugar self-combustion, where remission was allowed. The High Court held that destruction due to self-combustion is considered a natural cause, contradicting the original authority's reasoning. The consultant argued that the adjudicating authority did not allow the appellant to present evidence regarding the combustible nature of sugar. Considering the denial of natural justice in this regard, the Tribunal decided to set aside the impugned order and remand the remission claim back to the original authority for a fresh decision in compliance with the law.

The Tribunal's decision was pronounced on 27/02/2018, emphasizing the importance of considering the combustible nature of sugar and ensuring that the principles of natural justice are upheld in the adjudication process. The case highlights the significance of proper interpretation of relevant rules and the need for a fair opportunity for parties to present their arguments and evidence in legal proceedings.