1997 (12) TMI 312 - AT - Central Excise

Summary

Issues:
1. Denial of remission of duty due to excessive claim.
2. Collector's order denying remission on the ground of unavoidable accident.
3. Uncertainty regarding the cause of the accident.
4. Collector implicitly accepting the remission claimed but denying it.

Detailed Analysis:

1. The appellant, a manufacturer of perfumery compounds, claimed remission of duty after a fire destroyed its factory and all records. The notice issued proposed to deny remission, citing the excessive claim of Rs. 2.40 lakhs calculated on the value of finished goods. The appellant based the claim on the value of finished goods in stock before the fire, including additional costs. The Collector, however, rejected the claim, alleging negligence in causing the fire. The issue was the quantification of duty for remission.

2. The notice did not question remission on the grounds of an unavoidable accident, assuming remission was due. The Collector's order, denying remission based on the fire being unavoidable, exceeded the notice's scope. The appellant was not given an opportunity to address this new issue, leading to a procedural error.

3. The Collector's uncertainty about the fire's cause was evident. Conflicting accounts of the incident, including overflowing resinoids and ethylacetate leakage, were presented. The lack of concrete evidence or material supporting the Collector's conclusion of negligence raised doubts. The appellant's insurance claim settlement indicated an unavoidable accident, necessitating acceptance of the remission claim.

4. The Collector, while implicitly accepting the remission figure, directed the appellant to deposit the duty amount. However, since no duty was payable due to the fire being an unavoidable accident, determining the duty on the burnt goods was unnecessary. In cases of complete destruction, no duty is owed, as per the relevant rule. The appeal succeeded on the grounds of an unavoidable accident, leading to the setting aside of the Collector's order.

In conclusion, the appellate tribunal allowed the appeal, overturning the Collector's order and recognizing the fire as an unavoidable accident, entitling the appellant to remission of duty on the destroyed goods.