Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2009 (7) TMI 596

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... /removed clandestinely”. This notice also demanded duty of Rs.3,16,889/- on the packing materials and other chemicals “claimed to be destroyed in fire/removed clandestinely”. Interest on the above amounts was also demanded under Section 11AB of the Central Excise Act. Penalty was proposed under Rule 25 of the Central Excise Rules, 2002/Rule 13 of the CENVAT Credit Rules, 2002. Held that- The challenge against the remission of duty of Rs.8,17,271/- on the finished goods is rejected and the condition attached to the remission of duty in para 32(i) of the order is set aside.The decision recorded in para 33 of the Commissioner’s order is set aside and the question whether the assessee should be required to reverse any CENVAT credit on raw mater .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s (inputs) destroyed in the fire, amounting to Rs.3,16,889/- under section 11A of the Central Excise Act, 1944 read with Rule 12 of the Cenvat Credit Rules, 2004. The assessee is also to pay interest on this amount under Section 11AB of the Central Excise Act, 1944." 2. The assessee's appeal is against the condition No. (i) stipulated by the Commissioner as also against the demand of Rs.3,16,889/-. On the other hand, the Revenue's appeal is directed against the grant of remission of duty of Rs.8,17,271/- to the assessee. After examining the records, I note that the assessee had claimed remission of duty of Rs.9,73,080/- on finished goods, semi-finished goods, inputs and packing materials on the ground that these goods were destroyed in fi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... he show-cause notice and the remission application were adjudicated upon by the Commissioner and the aforesaid order was passed. 4. The learned counsel for the assessee submits that there can be no resistance to the remission of duty allowed by the Commissioner. This relief was expressly permitted by Rule 21 of the Central Excise Rules, 2002 where the goods were destroyed in fire at a stage prior to removal from factory. With reference to the demand of duty on the inputs and packing materials which were also destroyed in fire, counsel submits that such demand is against the view taken by the Tribunal's Larger Bench in Grasim Industries v. CCE, Indore , 2007 (208) E.L.T. 336 (Tri.-LB). It is pointed out that the learned Commissioner ref .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the remission application. The first question, therefore, is whether the assessee is entitled to remission of duty on the goods claimed to have been destroyed in fire. It is not in dispute that, at the material time, Rule 21 permitted remission of duty on goods destroyed in fire. The show cause notice which was subsequently issued relied on a surveyor's report albeit for the limited purpose of quantifying the duty to be demanded on raw materials and packing materials. The surveyor's report, admittedly, proceeded on the premise that the goods had been destroyed in fire. Moreover, in the show-cause notice, the department did not categorically allege that the goods had been clandestinely removed. The department demanded duty on finished goods .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ondition attached to such grant of remission, I have found a valid point in the assessee's appeal which is to the effect that this condition is contrary to the view taken by the Tribunal's Larger Bench in Grasim Industries (supra). In the context of interpreting Rule 49 of the Central Excise Rules, 1944 and Rule 21 of the Central Excise Rules, 2002, the Larger Bench held that where remission was allowed of duty paid on any finished goods destroyed in any accident or due to natural causes, there was no provision for reversal of credit taken on the inputs used in the manufacture of such goods. The view taken by the Commissioner is that the Larger Bench decision is no longer valid after promulgation of Notification No. 33/2007-C.E. (N.T.). Obv .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates