2013 (12) TMI 223 - AT - Central Excise

Remission of duty - Fire broke into the factory to be treated as unavoidable factor or not Raw materials, semi- finished goods as well as finished goods destroyed by fire -Held that - The fire broke in the appellants factory on account of short circuiting, which is attributable to electric malfunctioning - The appellants have rightly contended that no sane industrialist will cause huge loss of money invested in plant and machinery in the factory by fire accident, due to negligence - The fire caused by short circuiting cannot be avoided by taking precautionary measures Relying upon Union of India vs. Hindustan Zinc Ltd. 2008 (10) TMI 63 - HIGH COURT RAJASTHAN nobody intentionally invites such accidents to happen and they happen on account of various natural causes and have to be held as unavoidable accident. Denial of Remission Held that - Following Grasim Industries vs. CCE, Indore 2006 (8) TMI 69 - CESTAT,NEW DELHI - When the Larger Bench decision of the Tribunal has decided the issue, the law gets declared on the disputed issue and is required to be followed by all the adjudicating authorities, unless the same is reversed by the higher appellate forum - the Commissioner was bound to follow the Larger Bench decision - rejection of the remission application cannot be upheld. Remission of duty on the semi-finished goods - Held that - The Revenue cannot call for any duty on the said semi-finished goods - Either they are non-dutiable in which case no duty can be demanded or the same or have to be granted remission from payment of duty, having been admittedly damaged in fire accident order set aside Decided in favour of Assessee.

Summary

Issues:
1. Denial of remission application for duty paid on destroyed goods due to a fire accident.
2. Rejection of remission application based on non-reversal of credit on destroyed goods.
3. Dispute over remission of duty on semi-finished goods destroyed in the fire.

Analysis:
1. The appellant, engaged in footwear manufacturing, sought remission of duty on goods destroyed in a fire. The jurisdictional Assistant Commissioner recommended rejection citing non-reversal of credit on burnt goods and ineligibility of remission for semi-finished goods. The Commissioner upheld the rejection, questioning fire prevention measures and previous incidents. However, the Tribunal found the fire caused by short circuiting, deeming it an unavoidable accident per judicial precedents. The Commissioner's reference to a prior fire incident was deemed irrelevant.

2. The Commissioner also denied remission due to non-reversal of raw material credit, citing a circular over a Tribunal decision. The Tribunal disagreed, stating the Tribunal's decision should prevail unless overturned by a higher authority. The Commissioner's reliance on a circular was deemed improper, emphasizing the binding nature of judicial decisions over circulars.

3. The dispute over remission for semi-finished goods centered on marketability. The Tribunal ruled that if goods were damaged, they should either be non-dutiable or eligible for remission. The Revenue's demand for duty on damaged semi-finished goods was deemed inappropriate.

In conclusion, the Tribunal set aside the impugned orders, ruling in favor of the appellant on all issues and disposing of the appeal accordingly.