2017 (5) TMI 393 - AT - Central Excise

Remission of duty - Rule 21 of CER, 2002 - goods destroyed by fire - As per report of the Fire Officer and the Police the cause of fire is electric short-circuit - denial of remission on the ground that the incident does not appear to be an accident by natural cause and does not fall under the ambit of Rule 21 of CER, 2002 - Held that - it was found that the fire occurred due to electric short-circuit. There is no involvement of any human being in causing the fire. No one is to be blamed for it and it is just an unavoidable unforeseen event that has happened - On reading Rule 21 of the CER, 2002, it is clear that the assessee is entitled to remission of Excise duty, if he is able to satisfy the Commissioner that the goods in question were destroyed as a result of unavoidable accident - This satisfaction envisaged by the rule is not arbitrary satisfaction but the judicial satisfaction of the Commissioner based upon objective analysis of the facts - the appellant is entitled to the remission claim under Rule 21 of CER, 2002 - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Rejection of application for remission of duty for goods destroyed in fire under Rule 21 of Central Excise Rules, 2002.

Analysis:
1. The appellant, a manufacturer of moulded parts, appealed against the rejection of their remission claim for goods destroyed in a fire incident at their factory. The fire, caused by an electric short-circuit, led to substantial damage. The Commissioner, in the Order-in-Original, denied the remission claim citing reasons such as lack of insurance coverage for plant and machinery, non-provision of surveyor report, and failure to prove that duty element was not covered by insurance claims. The Commissioner also highlighted delays in intimation to authorities and non-compliance with safety norms as factors for the rejection.

2. The appellant challenged the Commissioner's decision before the Tribunal, arguing that there was a lack of proper consideration and communication of crucial reports and observations. The appellant emphasized that the fire was accidental, supported by reports from fire and police departments. Furthermore, the appellant had applied for waiver of export obligation due to the fire incident, which was considered by the EPCG committee. The committee acknowledged the fire's impact on the factory and recommended customs duty deposit with interest for unfulfilled export obligations.

3. Upon reviewing the contentions and records, the Tribunal found that the Commissioner erred in concluding that the loss was not due to an unavoidable accident. The Tribunal noted that the fire report confirmed the accidental nature of the fire, caused by an electric short-circuit. Additionally, the Tribunal observed that the appellant had cooperated with investigations and that no human involvement in causing the fire was established. Referring to Rule 21 of CER, 2002, the Tribunal emphasized the requirement for judicial satisfaction based on objective analysis for remission claims. The Tribunal deemed the rejection unjustified and arbitrary, ruling in favor of the appellant's entitlement to remission under Rule 21.

4. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential benefits to the appellant. The Tribunal's decision highlighted the lack of evidence supporting the Commissioner's rejection and affirmed the appellant's right to remission under the Central Excise Rules. The judgment emphasized the importance of objective analysis and judicial satisfaction in evaluating remission claims based on unavoidable accidents.