2009 (3) TMI 305 - AT - Central Excise

Loss of inputs/capital goods in the fire - Recovery of credit on inputs lying in stock in refinery on date of fire SCN issued under the provisions of Rule 57-I of erstwhile Central Excise Rules, 1944. The said show cause notice is issued on 18-6-2002. It is undisputed that provisions of Central Excise Rules, 1944 were rescinded from statute with effect from 1-7-2000 and new rules were introduced. If that be so, provisions of Rule 57-I of erstwhile Central Excise Rules, 1944 are not applicable demand is set aside appeal is allowed

Summary

Issues:
Recovery of credit on inputs destroyed in a fire incident under Rule 57-I of Central Excise Rules, 1944.

Analysis:
The appeal was against Order-in-Original No. 21/2003-04 dated 31-7-2003, concerning a fire accident at the appellant's refinery resulting in loss of records, goods, and machinery. The Revenue alleged that the appellant did not provide details of the loss despite notifications. The show cause notice demanded recovery of credit on inputs destroyed in the fire and penalties. The Adjudicating Authority disallowed the credit and demanded the recovery of amounts with interest. The appellant argued that the demand was under Rule 57-I, which was rescinded in 2000, citing a Tribunal decision in Dutta Metal Industries case.

The Tribunal noted that the show cause notice sought recovery under Rule 57-I, which was not applicable post its rescindment in 2000. Citing the Dutta Metal Industries case, the Tribunal held that proceedings initiated after the substitution of rules were not saved. The Tribunal analyzed various legal precedents and concluded that the impugned order was not valid due to the change in rules. The judgment in Dutta Metal Industries case was followed, and the impugned order was set aside, allowing the appeal with consequential relief.

In conclusion, the Tribunal found in favor of the appellant, setting aside the impugned order due to the inapplicability of Rule 57-I post its rescindment in 2000. The Tribunal relied on legal precedents and the Dutta Metal Industries case to support its decision, emphasizing the importance of the rule change in determining the validity of the demand for credit recovery on destroyed inputs.