Remission must be decided first where excisable goods are destroyed before removal, before any duty is determined.

Excise duty on goods destroyed in an accidental fire before removal from the factory could not be determined until the pending remission request was decided. On the combined reading of Rules 9 and 49 of the Central Excise Rules, the obligation to pay duty arises on removal of excisable goods, and an adjudicating authority must first consider remission where destruction occurred before removal. The order was set aside and the matter remanded for consideration of remission first, followed by determination of duty, if any.

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Issues: Whether duty could be determined and recovered on excisable goods destroyed in fire before removal from the factory, and whether the remission request had to be considered first.

Analysis: The goods were found to have been destroyed in an accidental fire and were not removed from the factory. On the combined reading of Rule 9 and Rule 49 of the Central Excise Rules, liability to pay duty arises only when excisable goods are removed, though duty may be attracted on manufacture. Where the request for remission is pending before the competent authority, determination of duty by the adjudicating authority without first deciding remission is inconsistent with the scheme of the rules.

Conclusion: The impugned order was set aside and the matter was remanded with direction to consider remission first and thereafter determine duty, if any.

Ratio Decidendi: In the case of excisable goods destroyed before removal, duty cannot be determined without first deciding the pending claim for remission, because the obligation to pay duty arises upon removal.

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