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2024 (8) TMI 6 - AT - Central Excise100% EOU - remission of duty under Section 23 of the Customs Act 1962 read with Rule 21 of the Central Excise Rules, 2002 and in terms of N/N. 22/2023-CE dated 31.03.2003 - HELD THAT - The undisputed facts are that the goods that were imported by the appellant who is an 100% EOU and stored in the warehouse licenced under Section 58 of the Customs Act, 1962 were destroyed in a fire accident. It is an admitted fact the goods were insured only for the value of the goods and not for the duty foregone at the time of import. It is also a fact that due to unforeseen circumstances, the fire accident occurred at the factory premises and the insurance company after thorough investigation, having satisfied that the fire was caused due to unavoidable circumstance, settled the claim of insurance. The department also had drawn Mahazar and taken stock of the goods that were destroyed in the fire. The fact that the goods were not insured for duty element does not prove that there was any negligence on the part of the appellant. The issue stands settled in as much as in similar set of facts in appellant s own case of M/S AMERICAN POWER CONVERSION (INDIA) PVT. LTD. (now known as M/s. Schenider Electric IT Business India Pvt. Ltd.) VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE, BANGALORE. 2023 (10) TMI 1422 - CESTAT BANGALORE has held 'as per the above provisions when the Assistant/Deputy Commissioner of Customs is satisfied that the imported goods have been lost, the question of demanding duty on these goods does not arise.' In the present case since the fire occurred due to unforeseen reasons and the goods were destroyed in the fire, the question of demanding duty does not arise. In the result, the impugned order is set aside - Appeal allowed.
Issues Involved:
1. Eligibility for remission of duty under Section 23 of the Customs Act, 1962 read with Rule 21 of the Central Excise Rules, 2002. 2. Requirement of insurance coverage for duty forgone. 3. Compliance with Notification No. 22/2003-CE dated 31.03.2003 and Board Circular No. 99/1995 dated 20.09.1995. 4. Allegation of negligence by the appellant in safeguarding the goods. Detailed Analysis: 1. Eligibility for remission of duty under Section 23 of the Customs Act, 1962 read with Rule 21 of the Central Excise Rules, 2002: The appellants sought remission of duty amounting to Rs. 2,12,09,971/- on goods destroyed in a fire accident. They argued that under Rule 21 of the Central Excise Rules, 2002, remission of duty is allowed for goods lost or destroyed due to natural causes or unavoidable accidents. The Tribunal noted that the fire was an unavoidable accident and the requirements under Rule 21 were fulfilled. The Tribunal referenced previous decisions, including the appellant's own case, where remission was granted under similar circumstances. The Tribunal concluded that the appellant is eligible for remission of duty as the destruction of goods was due to an unavoidable accident. 2. Requirement of insurance coverage for duty forgone: The Commissioner denied remission on the grounds that the appellant did not insure the goods for the duty forgone, citing Board Circular No. 99/1995. The appellant argued that Rule 21 of the Central Excise Rules, 2002, does not mandate insurance for duty forgone as a pre-condition for remission. The Tribunal agreed with the appellant, stating that remission cannot be denied based on the lack of insurance for duty forgone. It was emphasized that the primary requirement is satisfying the nature of the cause of destruction, which was met. 3. Compliance with Notification No. 22/2003-CE dated 31.03.2003 and Board Circular No. 99/1995 dated 20.09.1995: The Commissioner held that the appellant failed to comply with Notification No. 22/2003-CE and Board Circular No. 99/1995 by not ensuring the goods were insured for the duty forgone. The appellant contended that these conditions are procedural and should not override the substantive right to remission under Rule 21. The Tribunal noted that the notification and circular aim to ensure goods are used for the intended purpose in the EOU. The Tribunal found no evidence of misuse or diversion of goods and held that the destruction due to fire does not constitute a violation of the notification's conditions. 4. Allegation of negligence by the appellant in safeguarding the goods: The Commissioner attributed negligence to the appellant for not insuring the goods for the duty forgone. The appellant argued that the fire was an unavoidable accident, and they had taken sufficient precautions. The insurance company also settled the claim, indicating no negligence. The Tribunal observed that the lack of insurance for duty forgone does not inherently prove negligence. The Tribunal referenced previous decisions where remission was granted despite similar circumstances and concluded that the appellant was not negligent. Conclusion: The Tribunal set aside the impugned order and allowed the appeal, granting remission of duty to the appellant. The Tribunal held that the appellant fulfilled the requirements under Rule 21 of the Central Excise Rules, 2002, and the destruction of goods due to an unavoidable fire accident warranted remission of duty. The Tribunal emphasized that procedural conditions should not override substantive rights and found no evidence of negligence or misuse of goods by the appellant. The appeal was allowed with consequential relief, if any. (Order pronounced in Open Court on 26.07.2024.)
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