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TMI Blog2013 (7) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... o of Mafatlal Industries [2003 (3) TMI 153 - CEGAT, MUMBAI] has become ineffective. Under such circumstances. Government is of opinion that lower authorities reliance upon Circular dated 1-10-2004 for reversal of Cenvat credit, is not legally sustainable. - Decided in favor of assessee. However, no remission on Cenvat credit availed on inputs/raw materials destroyed in fire - Decided against the assessee. - 195/29/2011-RA-CX - 1349/2012-CX - Dated:- 1-10-2012 - Shri D.P. Singh, J. Shri R.S. Sharma, Advocate, for the Assessee. None, for the Department. ORDER The revision application is filed by M/s. Puskher Paint Industries against the Order-in-Appeal No. 332-CE/LKO/10, dated 19-10-2008 passed by Commissioner of Central Excise (Appeals) Lucknow with respect to Order-in-Original passed by the Additional Commissioner of Central Excise, Lucknow Central Excise Commissionerate. 2. Brief facts of the case are that the Applicants engaged in manufacture of Paints Varnish falling were availing Cenvat facility available to them. The applicants informed the department that a fire broke out in their factory on 12-6-2002 at 01.00 AM due to short-circuit and high voltag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant has not claimed/got the insurance of excise duty involved on finished goods or raw materials used in finished goods and raw material destroyed in fire. Therefore, the applicant is entitled for remission of duty/credit involved on raw materials and the condition of reversal of credit involve on inputs used in finished goods destroyed by fire is required to be dispensed with. 4.2 The issue has already been settled by the Larger Bench of CESTAT in favour of the applicant in case of Grasim Industries v. Commissioner, Indore - AIT-2007-41-CESTAT, E/Appeal No. 925/2006-SM Order dated 7-8-2006 [2007 (208) E.L.T. 336 (Tribunal - LB)] wherein it has been held as under :- Reading of rules under which remission is granted in respect of goods which were lost or destroyed by natural cause or by natural accident, does not provide any condition regarding reversal of credit taken in respect of inputs used on such goods, hence we are unable to support the view taken in the case of Mafatlal Industries whereby it has been held that assessee has to reverse the credit taken of inputs used in such goods on which remission is granted. Therefore, we approve the view of the Tribunal taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disallowed by the original authority. In this regard Government finds that the appellate authority has observed that as per provision of the Rule 3 of the Cenvat Credit Rules, 2002, Cenvat can be availed on inputs/raw materials which are used in or in relation to the manufacture of finished product. Since, in this case the raw materials/inputs were destroyed in fire and were not used in or in relation to the manufacture of final product, the credit taken on such raw materials/inputs was not admissible. Government agrees with the findings of appellate authority and hence, finds that remission of duty amounting to Rs. 2,08,992/- on raw materials/inputs lost in fire, was correctly disallowed by the original authority. 9. Government observes that lower authorities have relied upon C.B.E. C. s Circular No. 800/33/2004-CX., dated 1-10-2004, while allowing remission of duty involved in finished goods destroyed in fire subject to condition of reversal of Cenvat credit availed on inputs used in the finished goods. Government observes that the relevant para of the said circular, dated 1-10-2004 read as follows :- Attention is drawn to the decision of the Tribunal in case of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Grasim Industries v. CCE, Indore - 2007 (208) E.L.T. 336 (Tri.-LB), wherein it has been held that Cenvat Credit availed on the inputs used in finished goods destroyed in fire is not required to be reversed. Government further observes that in case of CCE, Lucknow v. Varun Beverages in Excise Appeal No. 2801 of 2007, the Tribunal has held that as the Larger Bench of Tribunal in case of Grasim Industries overruled decision of Tribunal in the case of Mafatlal Industries Ltd., the Circular dated 1-10-2004 issued on the basis of ratio of Mafatlal Industries has become in effective. Under such circumstances. Government is of opinion that lower authorities reliance upon Circular dated 1-10-2004 for reversal of Cenvat credit, is not legally sustainable. 10. Government observes that the applicant mainly contested that provisions of reversing the Cenvat credit availed on the inputs used in the manufacture of finished product lost in fire were introduced by insertion in the Cenvat Credit Rules, 2004 only w.e.f. 7-9-2007 vide Notification No. 33/2007-C.E. (N.T.), dated 7-9-2007. The relevant provision of the said notification read as follows : G.S.R. (E). In exercise of the powers confe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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