2017 (12) TMI 704 - AT - Central Excise

Remission of duty - onus to prove - finished goods lost in fire - Held that - there is no doubt that it is onus on the appellant to prove that the fire accident was unavoidable. The appellant has produced the documents like FIR with panchnama drawn by the police, claim of insurance sanctioned by the insurance company on the basis of survey report - nowhere it is coming out from the police report or the survey report that the appellant was negligent and have not taken proper care to avoid the fire accident. In that circumstances, the claim of remission of duty cannot be rejected on the ground that the appellant has not taken due care to avoid fire accident - the claim of remission of duty cannot be rejected on the said ground. CENVAT credit - Held that - Larger Bench of this Tribunal in the case of Grasim Industries 2006 (8) TMI 69 - CESTAT,NEW DELHI held that the appellant was not required to reverse the Cenvat credit attributable to inputs gone in manufacturing of final goods lost in fire accident - no reversal of Cenvat credit was required to be reversed by the appellant. The appellant is entitled to claim of remission of duty of the finished goods lost in fire accident - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against confirmed duty demand by Ld. Commissioner (A) - Claim of remission of duty on finished goods lost in fire accident - Compliance with Notification conditions - Adjudication process - Compliance with Tribunal directions - Onus of proof for unavoidable circumstances in fire accident.

Analysis:
The appellant appealed against the confirmed duty demand by the Ld. Commissioner (A) regarding the remission of duty on finished goods lost in a fire accident. The appellant's factory experienced an accidental fire resulting in the destruction of finished goods and machinery. The appellant promptly informed the department and filed an application for remission of duty under Rule 21 of CER, 2002. Despite initial correspondence indicating potential acceptance of the claim, the application was ultimately rejected after multiple rounds of communication and adjudication. The matter was remanded back to the adjudicating authority twice by the Tribunal for a fair decision following principles of natural justice.

The appellant argued that the Ld. Adjudicating Authority failed to follow Tribunal directions and consider the case in light of the Grasim Industries decision. They contended that the necessary documents, such as the FIR, survey report, and insurance claim, were not adequately considered to prove the unavoidable nature of the fire accident. The appellant emphasized that the insurance company had sanctioned the claim, indicating no malafide intent in seeking remission of duty. They also highlighted that the fire accident was unavoidable and that they should not be required to reverse Cenvat credit as per the Grasim Industries ruling.

On the other hand, the Revenue argued that the onus was on the appellant to demonstrate the unavoidable circumstances leading to the fire accident and their efforts to prevent it, citing relevant case law. The Tribunal considered both parties' submissions and the evidence presented. It noted that the appellant had provided essential documents, including the FIR, survey report, and insurance claim, indicating due diligence in handling the fire accident. The Tribunal found no evidence of negligence on the appellant's part in preventing the fire accident, as supported by the police and survey reports.

In line with the Grasim Industries decision, the Tribunal ruled that the appellant was not obligated to reverse the Cenvat credit related to inputs used in the manufacturing of final goods lost in the fire accident. Consequently, the Tribunal held that the appellant was entitled to the remission of duty on the finished goods lost in the fire accident. The impugned order was set aside, and the appeal was allowed with consequential relief, affirming the appellant's claim for remission of duty.