2007 (11) TMI 160 - AT - Central Excise

A fire accident took place in the factory premises of the appellant which resulted in damage to finished goods - facts were confirmed by the report of the Regional Forensic Science Laboratory - held that fire which took place is an unavoidable accident remission requires to be considered and allowed if the appellant has not received the duty element as compensation from their Insurance Company - appeal is allowed by way of remand to consider the remission

Summary

Issues:
Appeal against Commissioner's order denying remission of duty after a fire accident causing substantial damage to goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad concerned the denial of remission of duty by the Commissioner following a fire accident in the factory premises of the appellant. The fire resulted in significant damage to finished goods and inputs, leading to a claim for remission of duty. The Commissioner's order, dated 29-12-2003, not only denied the remission but also confirmed a demand for duty on the damaged goods, imposed a penalty, and demanded interest under Section 11AB. The appellant contended that the fire was caused by a short circuit, supported by reports from the Regional Forensic Science Laboratory and police investigations. Additionally, the Oriental Insurance Co. settled their claim, further validating the accidental nature of the fire. The appellant also cited relevant Tribunal decisions to support their case for remission.

Upon careful consideration of submissions, the Tribunal analyzed the Commissioner's findings, which highlighted the lack of evidence regarding a foolproof fire prevention system in the factory. However, the Tribunal disagreed with this view, emphasizing that in the absence of any deliberate sabotage, the fire should be construed as an accident. The forensic report attributing the fire to a short circuit, along with the police investigation and the insurance settlement, supported the appellant's claim for remission. The Tribunal also referenced a Tribunal decision in a similar case, emphasizing the need to establish that the fire was accidental, which was evident in the present situation. Consequently, the Tribunal held that the fire was an unavoidable accident, warranting consideration for remission, especially if the duty element had not been compensated by the insurance company.

In conclusion, the Tribunal allowed the appeal by remanding the case to consider the remission, subject to the condition that the appellant had not received compensation for the duty element from their Insurance Company. This comprehensive analysis underscores the importance of establishing the accidental nature of the fire in claims for remission of duty following such incidents.