2018 (6) TMI 472 - AT - Central Excise

Remission of duty - destruction of goods in flood - Rule 21 of the CER - rejection on the ground that such remission can be allowed in terms of Rule 21 of the Central Excise Rules, only if the goods have been destroyed at the time before removal - rejection also on the ground that the application for remission in respect of goods cleared prior to 25/26.7.2005, when flood took place, was filed on 21.4.2008 and as such there was delay in filing the application. Whether remission can be granted when goods are cleared for export from the factory and the same are destroyed before export? - Held that - The decision of Larger Bench of the tribunal in the case of Honest Vio-Bet Pvt. Ltd. 2014 (11) TMI 579 - CESTAT AHMEDABAD is relevant, where it was held that the claim of remission cannot be rejected on the ground that the goods were destroyed after clearance from the factory in the circumstances when the goods were cleared for the purpose of export. Delay in giving intimation to department - Held that - The impugned order does not identify in what manner the procedure prescribed in the Central Excise Manual has not been followed. To that extent, the said order is not speaking order. The impugned order is therefore set aside and matter is remanded to the original adjudicating authority for fresh decision - Appeal allowed by way of remand.

Summary

Issues:
1. Remission of duty on goods destroyed before export.
2. Delay in filing remission application.
3. Rejection of refund claim dependent on remission decision.

Analysis:
1. The appeals involved a dispute regarding the remission of duty on consignments destroyed before export. The appellant, M/s Glenmark Pharmaceuticals Ltd., argued that the goods were cleared for export but were destroyed due to a flood before actual exportation. The lower authority rejected the remission application citing reasons such as the goods not being destroyed "at the time before removal" and a delay in filing the application. The appellant contended that the goods were cleared under ARE-I form for export and relied on relevant case law to support their claim.

2. The Assistant Commissioner (AR) for the respondent disputed the remission claim, stating that the remission application lacked proof of reversal of CENVAT Credit and quantification of the actual destruction. The AR also questioned the discrepancy in the value of goods destroyed and the remission claim amount. The AR referenced a decision of the High Court of Gujarat to emphasize the importance of following procedures outlined in the Central Excise Manual.

3. The Tribunal analyzed the submissions and highlighted that the goods' destruction due to the flood was not contested by either party. The Tribunal referred to a decision by a Larger Bench regarding the ownership and duty liability of goods cleared for export under bond. It was concluded that if goods cleared for export are destroyed before actual exportation, the duty liability remains with the assessee, making them eligible for remission under Rule 21 of the Central Excise Rules. The Tribunal also noted that the impugned order lacked specifics on non-compliance with the Central Excise Manual procedures and emphasized the reliance on the survey report for quantification in such exceptional circumstances.

4. Consequently, the Tribunal allowed the appeal related to remission of duty, setting aside the impugned order, and remanded the matter to the original adjudicating authority for a fresh decision. The appeal concerning the rejection of the refund claim was also allowed by way of remand, awaiting the resolution of the remission issue by the Commissioner. Both appeals were remanded to the original adjudicating authority for further consideration and decision.