2018 (5) TMI 1513 - AT - Central Excise

Remission of duty - Rule 21 of Central Excise Rules 2002 - denial on the ground that the goods were neither been lost/stolen nor destroyed due to natural cause or by unavoidable accident nor the claim has been filed before removal of goods but actually goods were damaged in an accidents after removal of goods form the factory - Held that - the issue is covered by the Larger Bench decision of this Tribunal in the matter of Honest Bio-Vet Pvt. Ltd 2014 (11) TMI 579 - CESTAT AHMEDABAD , in which the Larger Bench of this Tribunal, held that in cases where goods removed from factory for export under bond are destroyed before export, due to unavoidable accidents then in such situation the goods destroyed are to be treated as having being destroyed before involve in terms of Rule 21 of CER, 2002 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Rule 21 of Central Excise Rules, 2002 regarding remission claim for destroyed goods.
2. Application of Tribunal decisions in similar cases.
3. Consideration of the "place of removal" in the context of duty liability.

Analysis:
1. The appeal was filed challenging the Order-in-Appeal which denied remission claim for damaged goods. The Commissioner (Appeals) based the decision on the Tribunal's ruling in a previous case, emphasizing that the basic conditions of Rule 21 of CCR, 2002 were not met as the goods were damaged after removal from the factory, not lost/stolen or destroyed due to natural causes. The appellant argued that a prior Tribunal's Larger Bench decision in Honest Bio-Vet Pvt. Ltd case held that goods destroyed before export under bond should be considered destroyed before removal, making them eligible for remission. The Tribunal agreed that goods destroyed before export should be treated as destroyed before removal, fulfilling the conditions of Rule 21. The High Court's judgment supported this interpretation, rendering the reference to other precedents academic.

2. The appellant also cited a subsequent Tribunal order in the Periwal Exports case, where it was held that remission of duty should be allowed for goods lost or destroyed before removal, in line with Rule 21. The appellant highlighted that in cases of goods cleared for export, the "place of removal" is the port of export, as supported by previous Tribunal decisions. The Department's representative did not contest this argument, acknowledging that the issue was addressed by the Larger Bench in the Honest Bio-Vet Pvt. Ltd case. Consequently, the Tribunal allowed the appeal and set aside the impugned order, affirming the eligibility of remission for goods destroyed before export.

3. The judgment underscores the significance of the "place of removal" in determining duty liability and remission eligibility. It clarifies that in cases where goods cleared for export under bond are destroyed before export due to unavoidable accidents, such goods should be considered destroyed before removal, aligning with Rule 21 provisions. The decision emphasizes the need to interpret the phrase "at any time before removal" in conjunction with the concept of "place of removal," ensuring a fair application of remission rules in cases of destroyed goods intended for export.