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TMI Blog2013 (8) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... 209 - CESTAT MUMBAI ] as upheld by the Hon’ble Supreme Court ; Commissioner of Central Excise Chennai vs. Indchem Electronics [ 2002(9)TMI 195 – CEGAT, CHENNAI, it has been held that where inputs were actually issued and thereafter destroyed in fire accident, there is no requirement of reversal of Cenvat credit. The factual position, as disputed by the Revenue, is required to be ascertained - The Revenue is contending that it was actually the inputs which were destroyed, the appellants stand is that it was the work-in-progress, which was destroyed in the fire - Appellant, right from their first letter onwards, in all their communications addressed to the Revenue, have repeatedly submitted that the fire broke out in the bulk drug unit of the appellant, which unit is located in the manufacturing section. Inasmuch as the bulk drug manufacturing section of the plant is away from the stores, where the inputs were stored, the said fact itself establishes that the inputs had been issued for manufacturing and were work in progress - Manufacturing unit, where drugs are being manufactured is separate from the stores, formulation unit, solvent storage etc. There is a dividing road between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional Central Excise authorities by way of writing a letter to them on 8.5.07. For better appreciation, we reproduce the contents of the said letter : We wish to inform you that yesterday there was fire in our Bulk Drugs Production area. The amount of loss incurred is not known presently. Details are being worked out. This is for your information and records please. 3. Thereafter various letters were written by their range office in the month of June, July and August, 2008 requiring the appellant to produce documentary evidence of duty involved in respect of inputs, inputs lying in process and final product destroyed in fire. In response to said letter, the appellant vide their letter dated 25.8.08, intimated the Revenue that the entire material lost in fire was work in process material and as such, credit on the inputs which have been used in the manufacturing process and were lying at work in process stage is not required to be reversed. They also clarified that inasmuch as the goods had not reached the final stage, and as such cannot be held to be fully manufactured goods, no remission of duty is required to be availed. That explains as to why no application in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit reversal cannot be arrived at by applying the rate of duty applicable on the final product. For the above proposition, they relied upon various decision of the Tribunal as detailed below:- 1. CCE vs. Indechem Electronics [2003 (1511) ELT 393 (Tri)] 2. Asian Paints vs. CCE [2004 (173) ELT 187 (Tri)] 3. Berger Paints India Ltd. vs. CCE Kolkatta [2006 (206) ELT 987 (Tri-Kolkatta)] The appellant also contended that the Revenue cannot invoke the provisions of Rule 3 (5B) and Rule 3(5C) for reversal of credit inasmuch as the said Rules are not applicable having been introduced in the legislation, after the date of incidence of fire. The appellant also assailed the impugned demand on the point of limitation by submitting that damage of goods was on 7.5.07 and the resultant loss of the goods was intimated to the Revenue immediately on 8.5.07 and as such, the show cause notice issued on 15.10.09 was hopelessly barred by limitation. 6. The above pleas of the appellant were not accepted by the Commissioner who by referring to the provisions of Rule 3(5B) and 3(5C) as also to the Boards circular No. 907/27/2009 CX dated 7.12.09, confirmed the demand of duty as proposed in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. I find that all these judicial decisions pertains to the period prior to incorporation of Rule 3(5B) and 3(5C) in Cenvat Credit Rules, 2004. I find that the impugned SCN is based on these two Cenvat Credit Rules and Supplementary Instructions/ circulars issued by the CBEC in this regard. Rule 3(5B) has been incorporated in Cenvat Credit Rules on 11.5.2007 vide Notification No. 26/2007-CE (NT) dated 11.5.2007 and Cenvat credit Rule 3(5C) has been incorporated on 7.9.07 vide Notification No. 33/2007-CE (NT) dated 7.9.2007, whereas all the aforesaid judicial pronouncements of the Hon ble Tribunal pertain to the period prior to incorporation of these Cenvat Rules in Cenvat Credit Rules, 2004. Hence, these judgments of the Hon ble Tribunal do not come to their rescue. 11. Learned advocate has seriously refuted the above stand of the Revenue by submitting that Rule 3(5B) and 3(5C) were introduced with effect from 11.5.07 and 7.9.07 whereas the fire broke in the appellants factory on 7.5.07. As such, the reference and reliance on the said provisions, which were not even in existence on the date of fire are not justified. On this point, we find that the law declared by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the course of manufacture of the goods, no reversal of Cenvat credit is called for. For the above proposition, reference can be made to the Tribunals decision in the case of Commissioner of Central Excise and Customs, Pune vs. Spectra Speciality [2008 (231) ELT 346 (Tri-Mum)] as upheld by the Honble Supreme Court as reported in [2009 (240) ELT A 77 ]. To the same effect is another decision of the Tribunal in the case of Commissioner of Central Excise Chennai vs. Indchem Electronics [2003 (151) ELT 393 Tri-Chennai)] wherein it stand held that where inputs were actually issued and thereafter destroyed in fire accident, there is no requirement of reversal of Cenvat credit. The said decision also stands upheld by the Hon ble Supreme Court, when the appeal filed by the Revenue was dismissed, as reported in 2003 (157) ELT A 206 SC]. The list is unending and we do not feel any need to refer to all such decisions as the issue is almost settled. 14. As such, in the light of the said decision as detailed above, the factual position, as disputed by the Revenue, is required to be ascertained. Whereas the Revenue is contending that it was actually the inputs which were destroyed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d findings that the destroyed goods were actually inputs, which were not issued for further manufacturing. 15. As such, we are of the view that the impugned order of Commissioner confirming reversal of credit and imposition of penalty on the appellant is not sustainable. 16. Though, we have held in favour of the appellants on merits, we also note that the demand having been raised after a period of around two years from the date of incidence of fire and consequent destruction of goods is hopelessly barred by limitation. Revenue is not disputing that the fact of fire was intimated to them on the next date. The Revenues stand that inspite of repeated reminders, the appellant did not provide the detailed list of the destroyed goods and as such, invocation of extended period is justified cannot be appreciated. The jurisdictional Central Excise authorities are expected to visit the factory of the assessee within a period of 24 hours in case of any report of fire incident and are required to assess the losses. Though we note that the appellant had been responding to all the communications of the Revenue, but presuming that they were not, the Revenue was within their right and power ..... X X X X Extracts X X X X X X X X Extracts X X X X
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