2003 (10) TMI 148 - AT - Central Excise

Summary

Issues:
1. Alleged removal of sugar without payment of Central Excise duty.
2. Imposition of penalty under Rule 173Q for contravention of law.
3. Admissibility of evidence regarding fire incident and loss of goods.
4. Reliance on SDM's report versus Insurance Company's surveyor report.
5. Compliance with Rule 49 of the Central Excise Rules, 1944 for remission of duty.
6. Comparison with relevant case laws supporting the appellants' case.

Analysis:
1. The appellants, manufacturers of sugar, informed the Central Excise Range officer about the fire incident at their godown where sugar was stored. The Department alleged removal of 39,897 bags of sugar without payment of duty, leading to a demand of Rs. 33,91,245 under Rule 9(2) read with Section 11A. The Commissioner confirmed the duty demand and imposed a penalty of Rs. 34 lakhs, resulting in the present appeal.

2. The appellants argued that the duty demand based on clandestine removal was unjustified as they had promptly informed the Department about the fire incident and loss of goods. They contended that the Commissioner erred in not considering the SDM's report, which indicated no solid evidence of sugar bag removal. The appellants also challenged the reliance on the Insurance Company's surveyor report, which was under dispute before another authority.

3. The Tribunal noted the SDM's report, which highlighted the possibility of fire due to a short circuit and lack of evidence for sugar bag removal. The report confirmed the fire incident and loss of goods, supported by the appellants' timely intimation to the Department. The absence of Departmental reports on the fire cause or goods damage post-inspection did not prejudice the appellants, as per the SDM's findings.

4. The Tribunal emphasized that the SDM's report was unchallenged and fulfilled the requirements for remission of duty under Rule 49. Contrary to the Commissioner's decision, the Tribunal found no substantial basis for the duty demand or penalty imposition. The appellants' compliance with notification and prompt reporting of the incident were crucial in determining the lack of duty liability.

5. Citing relevant case laws, the Tribunal supported the appellants' claim for remission of duty based on established evidence of the fire incident and loss of goods. The comparison with similar cases highlighted the necessity of factual findings and independent agency reports to ascertain liability accurately.

6. Ultimately, the Tribunal ruled in favor of the appellants, granting remission of duty on the destroyed sugar bags and overturning the duty demand and penalty imposed by the Commissioner. The decision emphasized the importance of factual evidence, timely reporting, and adherence to procedural requirements in excise duty cases.