TMI Blog2019 (6) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ced or manufactured. When should be duty which is payable, to be paid? - Rule 8 of the Central Excise Rules 2002 - HELD THAT:- The levy of duty would be as soon as the goods are manufactured or produced. But the duty becomes payable only if the goods are removed from the factory and the duty so payable has to be paid only by 5th to 6th of next month. In the absence of any specific legal provision, duty cannot be demanded on the goods which are lost or destroyed in the factory. It does not matter whether the assessee has sought remission or not. The duty, though leviable, does not become payable in such cases and there is no date by which the said duty has to be paid - the demand of CENVAT Credit on the lost/destroyed goods treating them as final products, is not sustainable. As far as CENVAT on the inputs contained in the final products is concerned, the same has already been reversed by the appellant and he is not contesting the same. Demand set aside - appeal allowed - decided in favor of appellant. - Excise Appeal No. 31253 of 2018 - A/30543/2019 - Dated:- 3-6-2019 - SHRI P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) Shri R. Muralidhar, Advocate fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed Total 1719447 1578987 4. He submits that as far as S.No. 1 to 4 above are concerned, they concede that CENVAT credit was wrongly availed and have already paid the same along with interest. The penalties imposed upon them have been set aside by the first appellate authority and the department has not appealed against such orders. Therefore, the issues have reached finality. The only point of dispute is S.No. 5 above. He submits that this pertains to CENVAT Credit on the goods which were destroyed during Hudhud cyclone. The department raised a demand on a value of ₹ 97,37,301/- after taking into account the assessee s claim with the Insurance Company for the destroyed goods. The details of this claim are available in the table in para 3.5.3 of the Order-in-Original. He submits that, as can be seen, their claim before the Insurance Company covered not only the value of the goods but also overheads associated with the goods. He would submit that no CENVAT Credit was availed on the overh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Rules, 2002. However, the appellant has not done so. Therefore, they are liable to pay Central Excise duty on them. The demand in the show cause notice was also for Central Excise duty on the final products. He further draws the attention of the Bench to the various products on which demand was raised and a print out of the website of the company which shows that these products were their final products. If the goods were not destroyed in the cyclone, they would have been able to sell the goods as their final products. In fact, the Insurance claim filed by the appellant was also for their final products. Therefore, duty has to be paid on the final products as per the demand. It is true, that the appellant has reversed the CENVAT Credit on the inputs which have gone to the manufacture of these final products and this amount has been appropriated towards the demand raised. Therefore, there is no infirmity or incorrectness in the impugned order. He prayed that the appeals of the appellant may therefore be rejected. 6. I have considered the arguments on both sides and perused the records. The short question to be decided is whether the appellants were liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is an unusual case where the goods are lost or destroyed in the cyclone but the assessee has neither sought nor got remission of duty. The goods have not been removed from the place of manufacture because they are destroyed. In such a case, can Central Excise Duty be demanded? The CBEC Circular No. 907/27/2009-CX, dt. 07.12.2009 addressed this issue and it reads as follows: Circular No 907/27/2009-CX dated 7.12.2009 Clarification on issues related to reversal of CENVAT credit on WIP/ finished goods written off in the books of accounts -reg. References have been received from field formations stating that as per Rule 3(5B) of CENVAT Credit Rules, 2004, if the value of inputs is fully written off, then the manufacture is required to pay an amount equal to cenvat credit taken. However, there is no provision to demand reversal of credit taken on inputs which have gone into manufacture of work in progress (WIP), semi finished goods and finished goods which have also been written off fully in the books of accounts. 2. The matter has been examined. Rule 3(5B) of the CENVAT Credit Rules, 2004, provides that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age when it can be considered as manufactured goods, the same treatment as is applicable to finished goods discussed above would apply. However, if the activity carried out on WIP cannot be considered as manufacture of goods, they should be considered as inputs and the CENVAT Credit has to be reversed. What the Board circular does not clarify is under what rule or section the duty becomes payable. There is no doubt that if the goods are manufactured, the duty is leviable but it becomes payable as per Rule 4 only and the payment has to be made by 5th or 6th of the following month. As long as the goods are not removed at all and are lying in the factory, no duty is payable at all, regardless of how long after the manufacture they remain there. If the goods are destroyed, the assessee can claim remission to duty. But, where the goods are destroyed and the assessee has not claimed remission of duty, I do not see any provision in the Act or the rules under which duty becomes payable. The aforesaid circular of the Board also does not indicate under which rule duty becomes payable when the goods are not removed. To that extent, there is a gap in the Central Excise Rules 2002 because the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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