2018 (7) TMI 1769 - AT - Central Excise

Remission of duty - semi-finished/finished goods destroyed by fire - claim rejected on the ground that the appellant was in a position to control the fire and to avoid the accident - Held that - To reject the remission application on the ground that the appellant was in a position to control the fire and to avoid the accident cannot be appreciated, inasmuch as nobody invites the fire accident in their factory which may result in destruction of the assessee s goods. Every accident is a result of some negligence or omission on the part of the person concerned of unless such negligence is deliberate, the accident have to be held as unavoidable. An identical issue was considered by this bench in the case of Sumit Chemicals Pvt. Ltd. 2015 (12) TMI 1594 - CESTAT ALLAHABAD wherein it was held that the assessee was entitled to avail remission on loss of semi finished goods and finished goods. In respect of destroyed raw material, the appellant is not contesting. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Remission of duty application for goods destroyed in a fire accident.
2. Rejection of remission application based on negligence and avoidable accident.
3. Interpretation of Rule 21 of CER, 2002 regarding remission eligibility.
4. Applicability of case law in supporting the remission claim.
5. Consideration of negligence in fire accidents for remission eligibility.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved a case where the appellant, engaged in manufacturing Silica products, sought remission of duty for goods destroyed in a fire accident. The Commissioner rejected the remission application, citing negligence on the part of the appellant and deeming the accident avoidable due to an electric short circuit. The Commissioner emphasized the requirement under Rule 21 of CER, 2002 that the accident must be unavoidable to grant remission. He highlighted the absence of evidence regarding fire prevention measures or employee training, distinguishing the case from precedents where remission was granted based on such evidence.

The Tribunal noted that the facts of the fire accident and the destruction of goods were undisputed. The appellant did not contest the remission for raw materials and had already reversed the Cenvat credit. The Tribunal disagreed with the Commissioner's reasoning that the appellant could have controlled the fire, emphasizing that accidents are often a result of negligence and not deliberate actions. The Tribunal referenced a previous case, Sumit Chemicals Pvt. Ltd., where remission was granted for loss of goods, supporting the appellant's entitlement to remission for semi-finished and finished goods.

In conclusion, the Tribunal set aside the impugned order and allowed the remission application for the appellant, except for destroyed raw materials. The judgment highlighted the importance of considering negligence in fire accidents for remission eligibility and upheld the appellant's right to remission for goods lost in the fire, in line with precedents and legal principles governing remission applications.