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2023 (5) TMI 513 - AT - Central ExciseRemission of Duty - goods destroyed by fire in factory - Rule 21 of Central Excise Rules, 2002 - HELD THAT - The issue in the present case is no longer res integra. In the case of VOLTAMP TRANSFORMERS LTD. VERSUS COMMISSIONER OF C. EX., VADODARA 2009 (12) TMI 743 - CESTAT AHMEDABAD it was held that all the assessees are required to account for all the goods manufactured/produced and when some goods are destroyed because of fire accident or natural cause, in terms of provisions relating to accountal, assessee would be required to explain reasons for non-accountal. Therefore, demand for duty would be natural consequential action and when the appellant replies, the adjudicating authority would take into consideration the replies submitted by the assessee and come to a conclusion whether remission under Rule 21 is required or not and there was no requirement of application for remission in this case and the reply to the show cause notice is sufficient for claiming the remission if the appellant is otherwise liable for remission as per the legal provisions. In the present case the entire case has been made out against the appellant for failure to get a proper order for remission - taking into account all facts that the goods have been destroyed in fire, remission could have been ordered at the time of adjudication of this case. There is no case made out that the goods destroyed have ever been cleared from the factory premises. Duty could not have been demanded without such clearances. Appeal allowed.
Issues involved:
The issues involved in this case include the liability of Central Excise duty on goods destroyed by fire, the application of Rule 21 of Central Excise Rules, 2002 for remission of duty, and the authority's decision regarding the duty payment and penalty imposition. Liability of Central Excise duty on destroyed goods: The appellant, a manufacturer of excisable goods, faced a fire incident resulting in the destruction of finished goods valued at Rs. 6,32,646, with a central excise duty of Rs. 1,03,247. The Commissioner of Central Excise (Appeals) confirmed the duty amount and ordered its recovery under Section 11A of the Central Excise Act-1944, along with interest and a penalty under Rule 25 of Central Excise Rules-2002 read with Section 11AC of the Act. Application of Rule 21 for remission of duty: The appellant failed to produce an order of remission under Rule 21 of Central Excise Rules, 2002 for the duty on the destroyed goods. The Commissioner (Appeals) held that in the absence of a valid remission claim approved by the proper officer, the duty on the goods destroyed in fire becomes payable and recoverable under Rule 4 read with Rule 8 of the Rules. Precedent decisions and Tribunal rulings: The Tribunal referred to past decisions, including the case of Voltamp Transformers Ltd., emphasizing that duty liability arises only upon removal of goods, and in the absence of a remission application, the duty payment becomes mandatory. Similarly, in the case of Petrox Containers, the duty demand was set aside for finished goods still in the factory, highlighting the requirement to file a remission application under Rule 21. Conclusion and Decision: The Tribunal found that the duty demand against the appellant lacked merit as the goods were destroyed in fire and had not been cleared from the factory premises. It was determined that remission could have been ordered at the time of adjudication, and duty could not have been demanded without clearances. Consequently, the Tribunal set aside the order and allowed the appeal.
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