2022 (7) TMI 90 - HC - Central Excise

Remission of duty - Rejection of petitioner s application for remission of excise duty - export goods that got destroyed in fire at the Container Warehousing Corporation Ltd. (CWC) warehouse - HELD THAT - There was nothing to prevent the Central legislation from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to that afterwards whether it will be consumed, destroyed or given away. That is not the case. Excise duty is collected when the commodity leaves the factory for the first time and also because the duty is intended to be an indirect duty, which the manufacturer or producer is to pass on to the ultimate consumer, which he could not do if the commodity had, for example upon destroyed in the factory itself. It is for that reason, the Act and the Rules framed thereunder provide for satisfactorily accounting for, in case the goods are not exported etc. and the goods are also allowed to be removed under a bond. If we have to accept what Mr. Mishra submits, the Act and the Rules would not have provided for such eventualities in case goods are destroyed before its removal from the place of manufacturer or provide for place of removal to mean a warehouse or any other place where the goods are permitted to be deposited without payment of duty or the bond would not provide for due arrival of the goods at the place of export and their export therefrom under custom supervision. The goods have been satisfactorily accounted for and petitioner is entitled to the Certificate granting remission of excise duty for the goods, destroyed in the fire - Petition disposed off.

Summary

Issues Involved:

1. Remission of excise duty on goods destroyed by fire.
2. Interpretation of "place of removal" under the Central Excise Act.
3. Compliance with conditions and procedures under Notification No. 42/2001-Central Excise (N.T.).
4. Eligibility for remission of duty under Rule 21 of the Central Excise Rules, 2001.

Detailed Analysis:

1. Remission of Excise Duty on Goods Destroyed by Fire:
The petitioner sought remission of excise duty amounting to Rs. 1,56,900/- for goods destroyed in a fire at the Container Warehousing Corporation Ltd. (CWC) warehouse at Jawaharlal Nehru Port, Nhava Sheva. Despite submitting all necessary certificates from CWC, police, and fire brigade, the petitioner was issued a show-cause notice demanding the duty under Section 11A of the Central Excise Act, 1944, read with Rule 19 of the Central Excise Rules, 2001, and Notification No. 42/2001-CE. The petitioner's appeals were rejected, leading to the current writ petition seeking remission of duty.

2. Interpretation of "Place of Removal" Under the Central Excise Act:
The court examined Section 4(3)(c) of the Central Excise Act, which defines "place of removal" to include a factory, warehouse, or any other place where excisable goods are deposited without payment of duty. The court concluded that the CWC warehouse, where the goods were destroyed, qualifies as a "place of removal" since it was an approved place for holding export goods and the goods were under customs supervision after the Let Export Order (LEO) was issued.

3. Compliance with Conditions and Procedures Under Notification No. 42/2001-Central Excise (N.T.):
The court analyzed the conditions and procedures outlined in Notification No. 42/2001, which allows for the export of excisable goods without payment of duty upon furnishing a general bond. The notification mandates that goods must be exported within six months from the date of clearance and that the general bond or letter of undertaking shall not be discharged unless the goods are exported or otherwise accounted for. The court found that the petitioner had complied with these conditions since the goods had arrived at the place of export and were destroyed before removal, thus fulfilling the requirements for remission.

4. Eligibility for Remission of Duty Under Rule 21 of the Central Excise Rules, 2001:
Rule 21 provides for remission of duty if goods are lost or destroyed by natural causes or unavoidable accident before removal. The court emphasized that the goods were destroyed in a fire at the CWC warehouse, which is considered a place of removal. Therefore, the destruction occurred before removal, satisfying the criteria for remission under Rule 21. The court rejected the respondent's argument that remission is only applicable if the destruction occurs within the manufacturer's premises.

Conclusion:
The court held that the petitioner is entitled to remission of excise duty for the goods destroyed in the fire, as they were destroyed before removal from the place of storage. The court allowed the petition, quashing the impugned orders and directing the respondents to grant remission of duty. The petition was disposed of with the rule made absolute.