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TMI Blog2024 (8) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... in writing. In the present case, there is no dispute that the goods have been destroyed in fire which is an unavoidable accident and there is no evidence of any mis-chief or malafide intention of the appellant in the fire accident. Therefore, as per the facts and circumstances on record, the appellant s case is clearly covered by Rule 21 of the Central Excise Act, 2002. Reversal of Cenvat credit on input as such destroyed in the fire - HELD THAT:- The appellant is not contesting as the same as has been reversed by the appellant. Accordingly, the said reversal is maintained. In the present case also the period involved is January-2006 during which there is no specific provision for reversal of credit which was brought by Rule 5 (D) (C) of Rule 3 of Cenvat Credit Rules, 2004 vide Notification No 33/2007 CE (NT ) dated 07.09.2007. Therefore, prior to September, 2007 there was no requirement of reversal of Cenvat Credit as held in the above judgments. Therefore, the appellant is not required to reverse the Cenvat credit in respect of inputs contained in the finished goods which were destroyed. The impugned order stands modified - Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ating authority by passing the common Order dated 02-01-2013. During the remand proceedings, the appellant had filed written submission dated 07-11-2014, additional written submissions dated 06-01-2015 & 10-12-2015 also submitted the details & documents related to precautions taken to safeguard the goods, copy of the certificate from the Insurance Company, particulars about the goods saved or salvaged etc. were submitted. The adjudicating authority in the de-novo adjudication did not consider the submissions made and rejected the application for remission of duty Rs. 60,78,682/- & confirmed the demand of duty Rs. 60,54,137/-; and also confirmed the demand of Cenvat credit totally Rs. 65,74,632/- (19,28,129+ 45,71,069+75,434), vide OIO dated 12-01-2016. Therefore, the present appeal is filed against the said OIO. 2. Shri Vinay Kansara, Learned Counsel appearing on behalf of the appellant submits that the learned Commissioner has erred in rejection of application of remission of duty as the fact regarding destruction of finished goods in fire is not in dispute as it has been admitted in the impugned order. Further, the fire accident was unavoidable, is also not in dispute. In such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but not admitted that the Insurance Company has sanctioned the amount of Central Excise duty, in such a situation also application for remission of duty cannot be rejected, in as much as, there is no bar provided in Central Excise Act, 1944, and Rules made there under. He submits that as regard the demand of Rs. 60,54,137/- since the appellant is eligible for remission of duty, this confirmation of demand of duty being consequential will not sustain. 2.5 As regard the demand of Cenvat credit Rs. 65,74,632/- (Rs. 19,28,129 +45,71,069 + 75,434), the Cenvat credit of Rs. 19,28,129/- pertains to inputs destroyed as such and hence the same was reversed vide PLA E. No. 12/6 dated 17-09-2006. This fact is not in dispute. Even the appellant do not dispute the said demand. Since, the appellant reversed the said amount the demand on this count was not supposed to be raised. 2.6 As regard the demand Rs. 46,46,503/- (Rs. 45,71,069 +75,434), it is submitted that since the inputs were consumed in the manufacturing process and the finished goods were also emerged and subsequently, such finished goods were destroyed, as per settled legal position, Cenvat credit cannot be denied. The fact regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inished goods which were destroyed in fire. As regard the issue of remission of duty, we find that there is no dispute that the goods were destroyed in fire . The fire accident was unavoidable and on the entire fire accident the Insurance Company also processed the insurance claimed and the same has been sanctioned to the appellant. In such case the appellant is clearly entitled for the remission of the duty in respect of the goods destroyed in fire as provided under Rule 21 of the Centra Excise Ryles, 2002 which reads as under:- "RULE 21. [(1)] Where it is shown to the satisfaction of the [Principal Commissioner or Commissioner, as the case may be] that goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal, he may remit the duty payable on such goods, subject to such conditions as may be imposed by him by order in writing." 4.1 From the plain reading of the above rule 21 , the objective of the Rule is that if the goods have been lost or destroyed by natural cause or by unavoidable accident at any time before the removal , the commissioner may remit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the finished goods destroyed is required to be reversed or otherwise has been decided in various following judgments:- a) In the case of Grasim Industries V/S CCE-2007 (208) ELT 336 (T-LB). The Larger Bench considered the same issue and passed the following order :- "5. The issue is whether in cases where remission of duty was allowed in respect of goods which have been lost or destroyed by natural cause or by unavoidable accident, whether the input credit taken in respect of inputs used for such goods are to be reversed or not. 6. We find that the Tribunal in the case of Inalsa Ltd. v. CCE, New Delhi (supra) held that the final product has not suffered duty only as a result of remission of duty given on fulfilling the conditions, therefore, under Rule 49, it is not to be equated to a general exemption from duty or goods being charged to nil rate of duty. Therefore, the credit in respect of inputs used in the manufacture of such goods need not be reversed. In the case of Mafatlal Industries (supra), the Tribunal agreed with the earlier view in the case of Inalsa Ltd. (supra) that remission of duty on finished goods cannot be equated with exemption to goods. However, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of CCE V/S Intas Pharmaceuticals Limited - 2013 (289) ELT 256 (Guj.) wherein the Hon'ble High Court passed the following order:- "14. After hearing the learned counsel for the parties and after going through the provisions contained in Central Excise Act as well as the concerned Rules, we find that Cenvat is a scheme under which a manufacturer is allowed to utilize the duty paid on inputs by taking the same from the duty payable on the final product, subject to certain procedures prescribed under the Rules. It is only a benefit available to the manufacturer to utilize the duty paid on the inputs for payment of duty on the final product subject to the procedure laid down in the Rules. It does not directly affect or reduce the assessable value automatically. It, however, will result in reduction in the cost of final product to the extent of the credit but will not automatically reduce the assessable value which is to be determined in accordance with the provisions of the Act. It, therefore, cannot have any effect on the assessable value, which is to be determined in accordance with the provisions of the Act. Further, the assessable value is to be determined in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only…." ( emphasis supplied ) The Amendment Rules do not provide that they are retrospective in operation. Nor do the circumstances warrant such an inference. In fact, the contention of the respondents is not that power to levy fees/charges for use of riverine land was created/vested in the Port Authorities, by virtue of the Amendment Rules and that such power was given to levy fees/charges retrospectively. The contention has been that the power to levy fees/charges existed ever since the Rules came into force on 5-4-1984 and that position was merely clarified by the Amendment Rules in 1992 and 1994. 35. We have already held that the Amendment Rules of 1992 and 1994 are not clarificatory, but are provisions investing the Port Authorities with the power to levy and collect charges for occupation of government riverine land. Therefore, the demand for charges for use of government riverine land is valid only from 3-3-199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the same. Having used the capital goods over a period of time, when the same came to be destroyed in the fire, it cannot be stated that the said goods had not been used in the manufacture of final products so as to call for reversal of the cenvat credit availed in respect of the same. In the circumstances, no infirmity can be found in the approach of the Tribunal in holding that there was no justification for reversal of modvat credit in respect of the capital goods which had been fully destroyed in the fire. 7. Insofar as the demand in respect of the duty involved on finished goods and semi-finished goods destroyed in the fire, the Tribunal has found as a matter of fact that the adjudicating authority had not disputed the fact that the finished goods as well as semi-finished goods were fully destroyed in the fire inspite of the respondent having taken all precautions. The Tribunal placed reliance upon the decision of the Larger Bench of the Tribunal in the case of Grasim Industries v. C.C.E., Indore, 2007 (208) E.L.T. 336 (Tri. - L.B.), wherein it had been held that the credit availed on inputs destroyed in fire was not required to be reversed and accordingly, set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the Revenue has not submitted before the Court that any of those judgments have been overruled by any decision of this Court or of the Supreme Court. This case relates to a period prior to the amendment of Rule 3 by the insertion of sub-rules (5B) and (5C). In that view of the matter and for the reasons already noted, the Appeal would not raise any substantial question of law and shall accordingly stand dismissed. There shall be no order as to costs." 4.6 In the present case also the period involved is January-2006 during which there is no specific provision for reversal of credit which was brought by Rule 5 (D) (C) of Rule 3 of Cenvat Credit Rules, 2004 vide Notification No 33/2007 - CE (NT ) dated 07.09.2007. Therefore, prior to September, 2007 there was no requirement of reversal of Cenvat Credit as held in the above judgments. Therefore, we hold that the appellant is not required to reverse the Cenvat credit in respect of inputs contained in the finished goods which were destroyed. 5. As per our above discussion and finding, the impugned order stands modified to the above extent. Appeal is allowed in the above terms. ( Pronounced in the open court on 29. 08. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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