2004 (12) TMI 145 - AT - Central Excise

Summary

Issues:
Appeal against demand of duty for destroyed sugar during fire in storage premises.

Analysis:
The appeal was filed against the demand of duty for Brown (BISS sugar) destroyed during a fire in the storage premises. The Commissioner had rejected the remission application, stating that the appellant had misrepresented facts and failed to take preventive measures to safeguard the product. The Commissioner directed the Insurance Company to pay the duty equal to the amount leviable on the lost sugar, along with interest and penalty. However, the learned Counsel argued that there was no dispute regarding the fire incident and loss of sugar. The Insurance Company issued a certificate stating that the claim was not paid as the fire was due to spontaneous combustion, which was not covered under the insurance policy. It was also mentioned that even if the claim was payable, the excise duty would not have been covered. The Tribunal found that the in-process sugar was destroyed due to natural causes, specifically spontaneous combustion, and concluded that the demand of duty was not justified. Consequently, the appeal was allowed, and the impugned order was set aside.

This judgment highlights the importance of considering the circumstances leading to the loss of goods, especially when determining the liability for duty payments. In this case, the Tribunal recognized that the destruction of sugar was due to natural causes, specifically spontaneous combustion, and not due to any fault or negligence on the part of the appellant. The certificate from the Insurance Company played a crucial role in establishing the cause of the fire and the coverage under the insurance policy. By considering all relevant evidence and arguments, the Tribunal made a fair decision to allow the appeal and set aside the demand for duty, emphasizing the need for a thorough examination of the facts before imposing financial obligations on the parties involved.