2018 (3) TMI 1226 - AT - Central Excise

Demand of duty - fire in the factory - the department has confirmed the duty on presuming that goods were received by Kahrani unit against the advance license issued in the name of Ghatal unit - Held that - The fire is not in dispute. The appellant at Kahrani unit received the goods from M/s. Reliance which were used in the manufacture of export goods. Originally, license was issued to present appellant for Ghatal unit and manufacturing activity was done. It is only after fire when the appellant has started production in Kahrani unit in the same area. The license was revalidated in the name of new unit as the DGFT has issued the revalidation letter in favour of new unit. In the new unit transaction entry in the statutory record of export is not denied as per the audit report. When it is so, then we do not find any reason to sustain the impugned order - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against Order-in-Appeal No. 55-16-17 dated 25.10.2016 for the period June 2012 to August 2014.

Analysis:

The appellant had a factory in Ghatal where an advance license was procured for duty-free goods from M/s. Reliance Industries Ltd. due to a fire in June 2011, the factory was destroyed, and production shifted to a new unit in the same area. The Directorate General of Foreign Trade revalidated the license for the new unit. However, the department imposed duty presuming goods were received by the new unit against the license issued for the old unit. The appellant contested this, leading to the present appeal.

Upon hearing both parties and reviewing the evidence, it was established that the license was originally issued for the Ghatal unit, and the fire incident was acknowledged. The appellant at the new unit received goods from M/s. Reliance for manufacturing export goods. The revalidation letter was issued for the new unit by DGFT, and no denial of transaction entry in the export record was found. Consequently, the impugned order was deemed unjustified, and the appellant was held entitled to the benefit. Thus, the appeal was allowed, setting aside the earlier order.

In conclusion, the Tribunal found in favor of the appellant, considering the circumstances of the fire, the revalidation of the license for the new unit, and the absence of any irregularities in the export record. This decision highlights the importance of proper documentation and compliance with licensing procedures in cases of operational changes due to unforeseen events like fire incidents.