2017 (10) TMI 395 - AT - Central Excise

Remission of duty - inputs and semi-finished goods lost on account of fire in the premises - time limitation - Held that - there is no time limit prescribed for filing the claim of remission and therefore, the time period between the fire broke out and the filing of the claim of remission is not very long - the Commissioner (Appeals) have not given any findings with respect to the remission under Rule 23 of the Customs Act and therefore, to that extent the said order is not a speaking order. Also, the Commissioner has come to the conclusion that the fire broke out due to negligence and not un-avoidable accident, without any concrete basis - matter remanded to the original adjudicating authority to decide afresh after going into the final report of the insurance company and after examining the claim of the appellant under Section 23 of the Customs Act - appeal allowed by way of remand.

Summary

Issues:
Denial of remission of duty on inputs and semi-finished goods lost in a fire due to negligence.

Analysis:
The appeal was filed against the denial of remission of duty on lost goods due to a fire incident. The denial was based on three grounds: delay in filing the claim, the nature of goods (raw materials and semi-finished goods), and negligence leading to the fire. The Commissioner held that the fire was due to negligence, making it not an unavoidable accident as per Rule 21 of the Central Excise Rules, 2002. The appellant argued that the claim should be allowed under Section 23 of the Customs Act, as they were an EOU with goods in a bonded area. They also contended that Rule 21 of the Central Excise Rules should apply to semi-finished goods. Additionally, the appellant presented the final insurance claim report during the Tribunal hearing.

The Tribunal noted that there was no specific time limit for filing the remission claim, and the delay between the fire incident and the claim filing was not significant. It was observed that the Commissioner did not address the remission claim under Section 23 of the Customs Act in the order. Furthermore, the conclusion of negligence causing the fire was deemed unsubstantiated, especially since the final insurance report, not available during the initial adjudication, might shed light on the cause of the fire. The Tribunal decided to set aside the impugned order and remand the matter to the original adjudicating authority. The authority was directed to reconsider the case in light of the final insurance report, evaluate the claim under Section 23 of the Customs Act, and determine the applicability of Rule 21 of the Central Excise Rules to the semi-finished goods for which remission was sought. The appeal was allowed for a fresh decision by the adjudicating authority.