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TMI Blog2024 (8) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... ,93,121) to the Commissioner of Central Excise along with required details and documents. The show cause notice dated 08.01.2007 was issued proposing demand of Central Excise Duty of Rs. 60,54,137 on the finished goods destroyed and Cenvat Credit of Rs. 65,74,632/- (19,28,129 + 45,71,069) availed on inputs destroyed as such and contained in the finished goods destroyed. The appellant filed a detailed reply to the said show cause notice. Thereafter the letter dated 22.01.207 was issued intimating the appellant that the request for remission of duty amounting to Rs. 60,78,683/- has not been considered as the conditions of this Commissionerate's Trade Notice No. 16/2005 dated 16-06-2005 were not fulfilled. Against the said letter dated 22.01.2007, the appellant had preferred an appeal against the said letter before the CESTAT. As regard the show cause notice dated 08.01.2007, the Commissioner of Central Excise had confirmed the demand of duty Rs.. 60,54,137/- in relation to the finished goods destroyed during fire; confirmed the demand of Cenvat Credit Rs. 65,74,632/- and Rs. 75,434/- availed on the inputs destroyed as such and inputs contained in the finished goods destroyed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that to reject the application for remission of duty, the Certificate issued by the Insurance Company has been relied upon. Based on this certificate, the adjudicating authority contended that the claim is settled for Rs. 6,72,71,819/- which includes Cenvat credit Rs. 19,28,129/- pertains to the inputs destroyed as such and Rs. 45,71,069/- pertains to the inputs contained in finished goods destroyed and hence which is breach of condition-VIII of the Trade Notice. In this context, it is submitted that merely the Insurance company has sanctioned the claim of Cenvat credit reversed, application for remission of duty cannot be rejected. The fact that the Insurance company has approved the claim of Cenvat credit availed on inputs destroyed whether as such or contained in the finished goods destroyed, does not have any relevance so far as remission of duty is concerned. 2.3 He submits that the adjudicating authority has rejected the application for remission of duty on the ground that the appellant has not been able to establish Rs. 6,07,18,622/- as value of finished goods does not include Central Excise duty. On this he submits that the Certificate issued by the Insurance Company no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 161 (Bom.) CCE V/S M. Kumar Udhyog (P) Ltd. 2014 (306) ELT 19 (All.) CCE V/S Joy Foam Pvt. Ltd. - 2015 (322) ELT 209 (Mad.) CCE V/S Indchem Electronics 2003 (151) ELT 393 (T.) [Against this judgement, the department had filed the SLP, but it was dismissed by the Honourable Supreme Court reported in 2003 (157) E.L.T. A206 (S.C.)] Nectar Life Sciences Limited V/S CCE - 2013 (293) ELT 247 (T) M/s Tata Advanced Material Vs. CCE 2009 (241) ELT 92 (T) CCE Vs. M/s Tata Advanced Material - 2011 (271) ELT 62 (Kar.) Themis Medicate Limited V/S CCE reported in 2014 (303) ELT 141 (T-Ahmd.) Pragna Dyechem Pvt. Ltd Vs. CCE, Surat-II - 2013 (294) ELT 117 (T). Libra International Ltd Vs. CCE-2013 (293) ELT 63 (T). Barodia Plastics Pvt. Ltd. V/s CCE 2015 (315) E.L.T. 357 (P&H) Sarada Ply Wood Ind. Ltd. V/s CCE-1987 (32) ELT 116 (T) Dsm Anti-Infectives India Ltd. V/s CCE 2014 (300) ELT 460 Jindal Vijayanagar Steel Ltd. Vs. CCE-2006 (201) ELT 18 (T) CCE V/S Welspun Terri Towels -2002 (149) ELT 593 3. Shri R.R Kurup, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order 4. We have carefully considered the submission m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, the same is set aside. 4.3 As regard the reversal of Cenvat credit on input as such destroyed in the fire, the appellant is not contesting as the same as has been reversed by the appellant. Accordingly, the said reversal is maintained. 4.4 As regard the remaining amount of Rs. 46,46,503/- (Rs. 45,71,069 +75,434), the same is contained in the finished goods destroyed in fire. During the relevant period there was no provision for the reversal of Cenvat credit for the inputs contained in the finished goods, in order to allow the remission of duty for goods destroyed in fire . There is no dispute that the inputs have been used in the manufacture of finished product. In terms of Rule 3 of Cenvat Credit Rules,2004, the Cenvat credit is allowed when the following ingredients are satisfied. (i) The inputs must be used in or in relation to the manufacturing process of the final product. (ii) The inputs should have been received under duty paying documents. (iii) The Central Excise duty must have been paid on the inputs, by the supplier. (iv) Receipt and utilization/consumption of inputs, in or in relation to manufacture, should not be in a dispute. 4.4 In the facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause or by unavoidable accidents or in case goods become unfit for consumption or for marketing at any time before removal does not provide reversal of credit in respect of inputs used in the manufacture of such goods. The Modvat rules prohibits the credit of duty paid in respect of the inputs which are used in the manufacture of exempted goods or which are chargeable to nil rate of duty. The Tribunal in both the cases, that is Mafatlal Industries (supra) and in the case of Inalsa Ltd. (supra) held that in case the goods were destroyed due to natural cause or by unavoidable accident during handling or storage, cannot be equated with exemption to goods and the inputs can be considered to have been put to intended use for manufacture of the final product. Reading of rules under which remission is granted in respect of goods which were lost or destroyed by natural cause or by natural accident, does not provide any condition regarding reversal of credit taken in respect of inputs used on such goods, hence we are unable to support the view taken in the case of Mafatlal Industries (supra) whereby it has been held that assessee has to reverse the credit taken of inputs used in such goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise authorities where it has been lawfully taken by a manufacturer. Therefore, the credit accrued at the moment the raw material or the input was used in manufacturing of a final product which was neither exempt from duty nor carried nil rate of duty. Such being the provision, as it stood in the Cenvat Credit Rules prior to September 7, 2007, there is no scope of application of equitable doctrine against the assessee and in favour of the Revenue on the ground that it will amount to conferring of double benefit. The moment sub-rule (5C) was introduced, the Legislature made its intention clear that from the date of coming into force of the said amended rule, in case of future remission on the ground mentioned in the said sub-rule, there will be reversal of the credit. 17. In this connection, we may profitably refer to the following observation of the Supreme Court in the case of Delta Engineers v. State of Goa reported in (2009) 12 SCC 110 laying down the principles to be followed in determining whether a statutory amendment is retrospective or clarificatory in nature : "We may next consider whether the 1992 and 1994 Amendments to the Rules were retrospective in operation. In Zi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be held to be prospective. 19. We are consequently unable to accept the contention of Mr. Parikh and Mr. Ravani, the learned counsel appearing on behalf of the Revenue, that the said amended rule is clarificatory in nature. It is apparent from the notification that the same was given effect to from a specified date, i.e., September 7, 2007. 20. Such being the position, we hold that sub-rule (5C) of the Rules is effective from September 7, 2007 and for input credited earlier, there is no scope of reversal of the credit if the finished product becomes unfit for human consumption unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed. 21. We, accordingly, answer the Reference in the above way. The Reference is thus disposed of. Let the matters be placed before the appropriate Bench as per the roster." c) Addressing the same issue in another case of CCE V/S Biopac India Corporation Ltd. 2010 (258) ELT 56 (Guj.), the Hon'ble High Court of Gujarat passed the following order :- "6. From the facts noted hereinabove, it is apparent that the capital goods wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of law arises. 10. For the foregoing reasons, it cannot be stated that the impugned order of the Tribunal suffers from any legal infirmity so as to warrant interference. No question of law, much less any substantial question of law, can be stated to arise out of the impugned order of the Tribunal. The Appeal is, accordingly, dismissed." d) The same issue was also considered by the Hon'ble Bombay High Court in the case of CCE V/S Hindalco Industries Ltd. 2011 (272) ELT 161 (Bom.) wherein it was held that prior to insertion of Sub Rule 5 (D) (C) in Rule 3 of Cenvat Credit Rules, there was no provision for reversal of the Cenvat credit on inputs contained in the finished goods which were destroyed in fire. The relevant portion of the order is reproduced below:- "5. The period involved in the present Appeal is prior to the insertion of sub-rules (5B) and (5C) in Rule 3. 6. In Commissioner of Central Excise v. Indian Petrochemicals Corporation Limited, 2008 (226) E.L.T. 339 a Division Bench of this Court had noted that the Tribunal in a long line of judgments had taken the view that where the goods have been shown as written off goods, the benefit is available. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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