TMI Blog2014 (6) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied, the appellant is liable to discharge duty on the raw materials destroyed during storage in the manufacturer's premises - once the goods are procured duty-free under exemption Notifications, the provisions of Section 23 of the Customs Act, will have no application - Following decision of Antarctica Ltd. [2009 (2) TMI 477 - CALCUTTA HIGH COURT ] and S.K. Pattanaik's case [1999 (12) TMI 60 - SUPREME COURT OF INDIA] - Decided against assessee. - APPEAL NO. E/928/2008 - Final Order Nos. A/342-343/2014-WZB/C-II(EB) - Dated:- 7-5-2014 - P R Chandrasekharan (T) and Anil Choudhary, J. For the Appellant : Shri Jitu Motwani, Adv For the Respondent : Dr. B.S. Meena, Additional Commissioner (AR) JUDGEMENT Per: P R Chandrasekharan: The appeal is directed against Order-in-Original No. 03-04/COMMR./Bel-I/R-IV/AKP/2008-09 dated 28/05/2008 passed by the Commissioner of Central Excise Customs, Belapur. 2. Vide the impugned order the learned adjudicating authority has confirmed a duty demand of Rs. 1,12,94,803/- under the provisions of Section 11A of the Central Excise Act, 1944 read with Section 142 of the Customs Act, 1962 and read with the conditions of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the insurer i.e., the appellant. Vide letter dated 06/09/2004, the appellant sought remission of Customs duty on the value of imported inputs contained in the finished products which were destroyed and had sought remission of Customs duty of Rs.38,46,163.92 being the duty involved on the inputs gone into the finished products which were destroyed. 2.3 The Customs authorities vide demand notice dated 13/09/2004 demanded customs duty of Rs. 1,14,81,056/- being the duty on the raw materials contained in the finished products which were destroyed and also on the raw material imported/purchased locally which were damaged due to fire. The appellant paid a sum of Rs. 15 lakhs vide TR-6 challan dated 20/10/2005 and requested for adjudication of the matter. The Range Superintendent as well as the Assistant Commissioner, Belapur I Division directed the assessee to pay balance of the Customs duty immediately amounting to Rs.99,81,056/- vide letter dated 17/03/2006. The said letter dated 17/03/2006 was challenged before the hon'ble High Court of Bombay in Writ Petition No. 1450 of 2006 and the hon'ble High Court dismissed the writ petition and held that it will be open to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty if goods are destroyed by natural causes or by inevitable accident or are claimed by the manufacturer as unfit for consumption or for marketing at any point of time before removal. Therefore, the provisions of remission under the Customs Act and the Central Excise Rules are required to be enforced independent of other provisions. As regards the goods procured domestically following the procedure set out under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, the provisions of the said Rules would apply when goods are lost or destroyed during transport from the place of procurement to the manufacturer's premises or during handling or storage in the manufacturer's premises. When the goods have been used in the manufacture of finished products, the said provisions would not apply. Therefore, denial of remission by the adjudicating authority in respect of both the imported raw material as well as indigenous raw materials is unsustainable in law. 3.1 Reliance is placed on the decision of this Tribunal in the case of Sami Labs Ltd. vs. Commissioner of Customs, Bangalore 2007 (216) ELT 59 wherein it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d binding himself to bring the said goods into the unit or and used them for the specified purpose and pay on demand an amount equal to the duty leviable in case the goods are not so used or in case the goods produced or packaged have not been exported out of India. Accordingly, the appellant has executed a bond with the department. Inasmuch they have failed to export finished goods and also failed to use the duty-free imported raw materials in the manufacture of finished products, they are liable to discharge customs duty liability both on the imported raw materials destroyed as such as also on the imported raw material contained in the finished products which were destroyed. Similarly, on the goods that have been procured domestically under Notification 1/95, the appellant was required to follow the procedure contained in Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001. The said rules prescribed that if the goods are lost or destroyed, either during transportation or during handling and storage, within the manufacturer's premises, it would be deemed that the goods have not been put to use for the intended purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force. 5.2 Similarly, Rule 21 of the Central Excise Rules, 2002, which provides for remission of duty also reads as follows: 21. Remission of duty - Where it is shown to the satisfaction of the Commissioner 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: Provided that where such duty does not exceed ten thousand rupees,] the provisions of this rule shall have effect as if for the expression Commissioner , the expression Superintendent of Central Excise has been substituted: Provided further that where such duty exceeds [ten thousand rupees] but does not exceed [one lakh rupees], the provisions of this rule shall have effect as if for the expression Commissioner , the expression Assistant Commissioner of Central Excise or the Deputy Commissioner of Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods resulting from such operations are exported, import duty shall be remitted on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods exported : Provided that such waste or refuse is either destroyed or duty is paid on such waste or refuse as if it had been imported into India in that form; (b) if the whole or any part of the goods resulting from such operations are cleared from the warehouse for home consumption, import duty shall be charged on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods cleared for home consumption. 5.4 Both the sections 58 and 65 stipulate that they are subject to the conditions prescribed in the licence and also subject to execution of warehousing bond under Section 59. One of the conditions of the licence and warehousing bond executed by the appellant is that the appellant shall insure the goods deposited in the warehouse against theft, pilferage, fire accident and other natural calamities, etc. atleast for a value equal to the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s (supra) case, relied upon by the appellant, the issue did not relate to imported inputs at all but related to indigenously procured inputs and, therefore, the facts of the said case are different from those involved in the present appeal. Secondly, in the present case the appellant had executed a bond to comply with the warehousing provisions and manufacture-in-bond provisions which the appellant breached subsequently and, therefore, in terms of the bond executed, the appellant is liable to discharge Customs duty liability on the imported raw materials destroyed as such in the fire accident or the imported raw materials contained in the finished products destroyed as such. 5.6 As regards the duty demand on raw materials the indigenously procured and kept in the manufacturing premises, which were destroyed, the said goods were procured following the procedure prescribed under the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Rule 6 of the said Rules reads as follows: RULE 6. Recovery of duty in certain cases. - Where the subject goods are not used by the manufacturer for the intended purpose, the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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