2008 (3) TMI 101 - AT - Central Excise

Remission - observation of the Commissioner that the appellant had claimed insurance on the part of the excise duty & insurance company had indemnified the appellant for loss of finished goods as well & raw materials is borne out by records - appellant failed to discharge the burden of proving that the incident occurred due to natural or unavoidable causes - rejection of the remission application in the facts and circumstances does not warrant any modification assessee s appeal dismissed

Summary

Issues:
Remission of Central Excise duty under Rule 21 of the Central Excise Rules, 2002 due to a fire incident at the factory premises causing destruction of goods.

Analysis:
The appellant, engaged in manufacturing television sets, faced a fire incident at their factory premises leading to the destruction of various items, including raw materials and finished goods. The appellant reported the incident to the local police and the Deputy Commissioner of Central Excise. Subsequently, the appellant applied for remission of Central Excise duty amounting to Rs. 7,63,350 on finished goods valued at Rs. 47,70,930. The jurisdictional Deputy Commissioner of Central Excise verified the salvaged goods and prepared a comparative chart showing discrepancies in the values claimed for insurance purposes. The Commissioner found that the insurance company indemnified the appellant for the loss of finished goods and raw materials but rejected the remission application on grounds of negligence, failure to follow fire security norms, and inability to prove the incident as a natural or unavoidable cause, as required by Rule 21.

The Commissioner observed that the fire incident occurred during daylight with staff present, yet no preventive measures were taken to control the fire. Additionally, the appellant failed to adhere to fire security norms specified in the National Building Code of India, 1983. The Commissioner noted discrepancies in the values claimed for insurance compared to the assessable values, indicating a possible claim on the excise duty component. The rejection of the remission application was based on these findings, emphasizing the lack of evidence supporting the incident as a natural or unavoidable cause, as stipulated by Rule 21.

Upon review, the Tribunal concurred with the Commissioner's findings, highlighting the discrepancies in the values claimed for insurance and the failure to prove the incident's nature as required by Rule 21. The Tribunal noted that the appellant did not discharge the burden of proof regarding the cause of the fire incident. Consequently, the Tribunal dismissed the appeal, upholding the rejection of the remission application based on the established facts and circumstances.