2005 (8) TMI 261 - AT - Central Excise

Summary

Issues: Appeal against denial of credit for stolen inputs.

The judgment involves an appeal filed by the Revenue against the Order-in-Appeal passed by the Commissioner (Appeals) regarding the denial of credit for inputs that were stolen. The respondents, engaged in the manufacture of Tin Containers, had availed Modvat credit for duty paid Tin plates used in their final product. However, 23.524 MT inputs were stolen from their factory, leading to a show cause notice for reversal of credit. The adjudicating authority confirmed the demand by denying the credit and imposing a penalty. On appeal, the Commissioner (Appeals) allowed the appeal, citing a Tribunal decision in a similar case. The Revenue contended that as the stolen inputs were not used in the final product, the respondents were not entitled to credit, referencing different case laws to support their argument.

The Tribunal noted that the Commissioner (Appeals) relied on a case involving stolen fabrics, where remission was allowed as they were the final product. However, in the present case, the stolen inputs were not used in the final product before being stolen. Citing a High Court decision, it was held that theft is not considered an accident, thus remission for stolen goods is not available. Referring to another Tribunal case, it was emphasized that inputs lost before being used in the final product must result in credit reversal. Therefore, the Tribunal set aside the Order-in-Appeal and restored the adjudication order, allowing the appeal filed by the Revenue against the credit denial for stolen inputs.