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2016 (7) TMI 1024 - AT - Central ExciseCenvat credit availed on inputs and inputs contained in final products lost due to fire - correctness of denial of credit which are attributable to the credit on inputs which are already used in the manufacture of final products and such final products is lost in fire - Levy of penalty - Held that:- when the final product is lost in fire accident subsequently the question of reversal can be decided only in terms of Rule 3 (5C) of Cenvat Credit Rules, 2004. Since, in the present case there is no order of remission and as such I find that reversal of credit on such inputs contained in final product is pre-mature and unjustified. The appellants are not contesting the reversal of credit on the inputs lost in fire accident. Regarding the penalty imposed, there is no finding by the lower Authorities justifying the imposition of equal amount of penalty under Rule 15 (2) of Cenvat Credit Rules, 2004. Admittedly the credit has been rightly taken by the assessee and there is no illegality in that. The intervening fire accident resulted in possible loss of credit for the appellant which in any case cannot be penalized by invoking Rule 15 (2) without any reason attributed. In view of the above discussion, the finding in the impugned order w.r.t. Cenvat credit on inputs contained in final products lost in fire accident as well as the whole of penalty imposed on the appellant is set aside. - Decided in favor of assessee.
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