TMI Blog2003 (3) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the finished goods in the fire. He states that the excise authorities and police were also intimated. The New India Insurance Company Ltd. have drawn a survey report and have settled the claims regarding the burnt/damaged goods which does not include duty. The appellants were issued a show cause notice demanding central excise duty of Rs. 44,33,998/- on the finished goods burnt/damaged in the fire and also another amount of Rs. 2,28,834/- representing Modvat credit on the inputs contained in such burnt/damaged goods. He states that the Commissioner has confirmed these duty demands and has also imposed equivalent amount of penalty apart from charging interest at the of 24% on the ground that the benefit of remission of duty cannot be gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, 1944 provides as under : "Payment of duty shall not be required in respect of excisable goods made in a factory until they are about to be issued out of the place or premises specified under Rule 9 or are about to be removed from a store-room or other place of storage approved by the (Commissioner) under Rule 47 : Provided that the manufacturer shall on demand pay the duty leviable on any goods which are not accounted for in the manner specifically provided in these rules, or which are not shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in such store-room or other approved premises : Provided further that the proper officer may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants when they had taken all necessary fire fighting measures and had also called the fire brigade immediately on detection of the fire. It is also pertinent that the insurance company has settled the claim for the value of the goods destroyed on the basis of the said survey report. If there was any doubt that the appellants were any way responsible for the fire, the insurance company would not have obviously settled their claim. It is also seen that the excise authorities were informed about the fire accident and there is no report from the excise officers to the effect that the fire was not the cause of unavoidable accident. 4. The case law relating to Inalsa Ltd. cited by the learned Advocate has ruled that the inputs used in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the inputs can be considered to have been put to the intended use of manufacturing of final products. However, with great respect we disagree with the conclusion of the said Bench that in a case where the duty is remitted on finished goods destroyed in fire, a manufacturer can avail of the credit of inputs duty and use the same for paying duty on other goods. The appellants have already been compensated by the insurers for the value of the finished goods which is inclusive of the value of the inputs. We are allowing remission of duty on the finished goods. The intention of the Modvat scheme is that the duty paid on inputs can be taken credit for paying duty on the finished goods to give relief against the cascading effect of excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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