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TMI Blog2019 (8) TMI 1684X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay duty on the damaged finished goods at the normal sale price/transaction value, as worked out by the Department and further, whether the extended period of limitation has been rightly invoked and further, imposition of penalty under Section 11 AC read with Rule 25 has been rightly done. 3. The brief facts of the case are that the appellant having Central Excise Registration No. AACCS8784LXM001 are engaged in the manufacture of Polypropylene Filament Yarn falling under chapter heading 5402 of the first schedule to the Central Excise Tariff Act, 1985. A fire accident had occurred in the factory premises of the appellant on 02.12.2007. Due to fire accident, 40474 Kgs of finished goods was burnt in fire. The appellant had availed Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed appeal mainly on the grounds before the Commissioner (Appeals):- A. That Rule 3(5B) shows that it does not cover a situation of loss of finished goods fully or partially by fire. This provision is applicable only when inputs or capital goods are written off fully or partially, before being put to use. In the present case admittedly no input or capital goods has been written off in the books of account without putting the same to use. Further it is case of loss of finished goods which itself shows that corresponding inputs had been put to use. Therefore none of the situation mentioned in Rule 3(5B) is applying in the present case. B. That fire affected yarn was not cleared as waste. They had sold yarn as 'burnt and damaged yar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Jaipur regarding fire and loss due to fire. Therefore the incidence of fire was suitably informed and was in the notice of the Department. In such circumstances confirmation of demand for extended period cannot sustain. 5. The Commissioner, Central Excise, Jaipur-I examined and reviewed the adjudication order and, in exercise of the powers conferred upon him under Section 35E (2) of the Central Excise Act, 1944 directed the Assistant Commissioner, Central Excise Division-II, Jaipur to file an appeal before the Commissioner (Appeals-I), Customs & Central Excise, Jaipur. Therefore, the department filed appeal mainly on the grounds that the adjudicating authority has ignored the fact that, had the goods had been damaged by fire (which comes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pleased to hold that there is no requirement to reverse the cenvat credit in respect of the inputs used in the manufacture of the finished goods, which were partly burnt/destroyed in the fire accident. As regards the second issue, being the applicable value for levy of duty on the burnt goods, it was held that as the appellant has received the insurance claim of Rs. 41,32,899/- in respect of the damaged finished goods, and further he realized some amount by way of transaction value on the sale of damaged goods. Thus, the appellant was liable to pay duty on the transaction value based on the sale price of the similar goods by the appellant, in November, 2007, before the event of fire occurred in December, 2007. Thus, the Commissioner (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative for the Revenue has relied upon the impugned order. 11. Having considered the rival contentions and on perusal of the records, I find that leviability of excise duty under Section 3 of the Central Excise Act arises at the event of manufacture of finished goods. Admittedly, the goods destroyed in fire in the present case were finished goods, duly entered in the RG-I Register maintained by the appellant. Only the duty payment is under the Rules, at the time of clearance from the factory of production for the sake of convenience, as central excise is an indirect tax and thus, the manufacturer has to collect and pay to the Government. In the facts of the present case, definitely, the liability to excise duty has arisen when the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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