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2019 (6) TMI 191

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..... 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 for the Appellant. Shri N. Bhanu Kumar, As .....

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..... th respect to this component of demand. He also shows the documents relating to the settlement of their insurance claim which show that although they claimed an amount of ₹ 97,37,301/-, the actual amount sanctioned by the Insurance Company was only ₹ 77,04,467/-. After debiting some amount towards under-insurance they were actually paid an amount of ₹ 55,20,548/- only. He would urge that no demand can be raised only on the basis of their insurance claim, especially when the claim clearly indicates some amount as overhead charges. No CENVAT Credit was, evidently, availed on the overhead charges. Therefore, their appeal may be allowed and the impugned order may be set aside. He fairly submits that before both the lower authorities and the first appellate authority, they had also contested that they need not reverse the CENVAT Credit but are now not pressing this point and he concedes the payment already made and asserts no demand can be raised beyond this amount. 5. Ld. DR draws the attention of the Bench to the show cause notice and says that it is incorrect to say that the demand was for reversal of CENVAT Credit. In fact, it was a demand of duty (which during the .....

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..... duced and manufactured in India. Therefore, the levy of Central Excise Duty comes from the manufacture itself. Once the goods are manufactured, levy applies. 8. The next question is when it is the duty become payable. Rule 4 of Central Excise Rules, 2002 states every person who produces or manufactures any excisable goods or stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in Rule 8 or under any other law and no excisable goods on which any duty is payable shall be removed without payment of duty from any place where they are produced or manufactured or from a Warehouse unless otherwise provided . There are some exceptions to this rule also which does not include cases of destruction of goods. Thus, while the duty becomes leviable, as soon as the goods are manufactured or produced, it becomes payable when they are removed from the place where they are produced or manufactured. 9. The next question is when should be duty which is payable, to be paid. Rule 8 of the Central Excise Rules 2002 provides that the duty on goods removed from the factory or Warehouse during a month shall be paid by 6th of the following month, if the duty is p .....

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..... are destroyed due to natural causes etc., Rule 21 of Central Excise Rules, 2002, provides for remission of duty. Further, Rule 3(5C) of CENVAT Credit Rules, 2004, also requires reversal of credit on the inputs when the duty is ordered to be remitted under the said Rule 21. Therefore, if the goods have been manufactured, in that case, a manufacturer is liable to pay excise duty unless duty is remitted under Rule 21. Therefore, if the value of finished goods is written off, the manufacturer would be liable to pay excise duty or he would be required to reverse the credit on the inputs used, if duty has been remitted on finished goods. 3. As regard writing off work in progress (WIP), it is stated that if the WIP has reached the stage, when it can be considered as manufactured goods, in that case, the same treatment as applicable to finished goods, discussed in para2 above would apply. However, if the activity carried out on the WIP goods cannot be considered as amounting to manufacture, in that case, the said goods should be considered as input and the treatment for reversal of credit applicable to input would be applicable. 11. As can be seen, the Board s Circular states that if the g .....

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