9911796707
TMI Blog2007 (11) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... . Intimation to that effect was given to the Central Excise authority vide letter dated 15.4.2004, who visited factory on 21.12.2004 and drew a Panchanama taking stock of the finished goods, semi finished goods, inputs and capital goods/ machinery fully destroyed in the said fire accident. Statements of various persons were also recorded, wherein it was revealed that appellants' factory was fully equipped with around 34 nos. of fire-fighting extinguishers and their staff are fully competent and properly trained to use fire extinguisher in case of fire accident. In fact, we need not dwell upon the statements of various persons recorded at the time of drawing of Panchaname or subsequent investigation, inasmuch as the fact of fire and resultan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referring to Centvat Credit Rules, he has observed that credit is allowed only when the capital goods are used in or in relation to manufacture of the final products. Inasmuch as in the present case, when the capital goods have been destroyed, they cannot be used for the intended purpose and as such credit so availing becomes wrongly availed. 5. We do not agree with the above reasoning of the adjudicating authority. Admittedly when the credit in respect of capital goods was availed, the same was in order. These capital goods have been put to use for a number of years, when the same were ultimately destroyed in the fire. The provisions of the Modvat Rules seek reversal of credit only in a situation where the capital goods are either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Larger Bench decision of the Tribunal in the case of Grasim Industries Vs. CCE, Indore -2007 (208) ELT 336 (Tri-LB), wherein it has been held that credit availed on the inputs destroyed in the fire is not required to be reversed. Accordingly, confirmation of demand on this count is also set aside. 8. The demand on all the counts having been set aside, the penalty of Rs.25 lakhs imposed upon the appellants is also set aside. In any case, we fail to understand that the reasoning and justification of the adjudicating authority in imposing such a heavy penalty of Rs.25 lakhs on the appellants, who have already suffered huge loss on account of fire accident. The penalty stands imposed upon the appellants on the ground that the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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