2023 (6) TMI 693 - AT - Central Excise

Rejection of remission of duty in respect of the goods lost in fire - failure to inform the department in due time - not taking necessary precautions to safeguard the goods - non-insurance of the goods - failure to claim in any proper pro-forma claim was filed in proper pro-forma only on 01.07.2011 i.e. after almost one year after the fire accident on 07.06.2010 - HELD THAT - There is no dispute that the fire has occurred accidentally in the factory of the appellant and the goods were destroyed. The appellant has intimated to the range officer who visited the factory and drawn the panchnama. In the panchnama there is no whisper about any mischief done by the appellant for the fire accident took place in the factory of the appellant therefore nothing is on record that the fire accident has taken place not accidental but intentional by the act of the appellant. In this position without any evidence the allegation of the lower authorities that the appellant have not taken precaution has no basis. It is further found that the appellant have filed an insurance claim with the National Insurance Company Ltd. against the goods lost in fire and the appellant have been granted the insurance claim in the survey report for the purpose of insurance it is nowhere coming out that the fire has not occurred accidental but due to lack of precaution by the appellant or any mischief of the appellant therefore the allegation made by the lower authorities for rejection of remission claim is based on assumption and presumption. It is pertinent to note that the revenue s stack is very minuscule as against the stack of insurance company. Therefore once insurance company has granted the insurance claim for the principal amount of the goods destroyed which is much more than the duty implication in the goods destroyed. It can be conveniently inferred that the insurance company has scrutinized minutely each and every aspect of the accident of fire taken place and only thereafter the insurance claim was granted. It is also to be considered that the appellant as against the duty involvement of Rs. 1, 38, 233/- have reversed the cenvat credit involved in the destroyed goods amounting to Rs. 92061/- therefore appellant have made out a fit case for remission of duty which could not have been rejected by the lower authorities accordingly the impugned order is set aside. Appeal allowed.

Summary

Issues involved:
The issues involved in this case include rejection of remission of duty for goods lost in a fire accident, compliance with guidelines for remission of duty, and the consequential demand of excise duty.

Rejection of Remission of Duty:
The appellant, a pharmaceutical company, filed for remission of duty on finished goods destroyed in a fire accident. The remission application was rejected by the adjudicating authority under Rule 21 of the Central Excise Rules, 2002, citing non-compliance with guidelines such as not informing the department in due time, failure to take necessary precautions, and delayed filing of the claim. The rejection was upheld by the Commissioner (Appeals), leading to the filing of appeal E/11131/2014.

Compliance with Guidelines for Remission of Duty:
The appellant argued that they had intimated the range officer about the fire accident, informed the fire brigade and insurance company, and reversed the cenvat credit involved in the destroyed goods. They contended that the fire was accidental and not due to their carelessness. The appellant cited various judgments where remission of duty was allowed in similar circumstances. The tribunal found that the fire was accidental, the appellant had filed an insurance claim which was granted, and had reversed the cenvat credit. Therefore, the tribunal set aside the rejection of the remission application and allowed the appeal E/11131/2014.

Consequential Demand of Excise Duty:
The rejection of remission of duty in appeal E/11131/2014 had a consequential effect on appeal E/12646/2013, which was towards the confirmation of demand of duty for the same goods lost in the fire accident. As the remission of duty was granted in appeal E/11131/2014, the tribunal also set aside the consequential demand of duty in appeal E/12646/2013.

Conclusion:
The tribunal allowed both appeals, setting aside the rejection of remission of duty and the consequential demand of excise duty. The decision was based on the finding that the fire was accidental, the appellant had followed necessary procedures, and had reversed the cenvat credit involved in the destroyed goods. The appeals were pronounced in the open court on 15.06.2023.