2010 (6) TMI 752 - HC - Central Excise

High Court Upholds Tribunal Decision on Remission of Duty and Cenvat Credit

Commissioner Versus Pololight Industries Ltd.

The High Court dismissed the appeal challenging the Tribunal's decision to allow remission of duty, citing the credibility of the respondent's explanation ... Remission of duty - Rule 23 of the CER, 2002 - non-compliance with the rules - Held that: - According to the Tribunal it was clear that the fire was accidental in view of the explanation in the panchnama wherein it was recorded that a worker had noticed the fire and immediately action had been taken to douse the fire - there was no doubt that the fire had occurred because of an accident. Non-reversal of Cenvat credit - It was urged that the respondent had not reversed the cenvat credit on inputs and had not produced any evidence to show that it had not claimed/received the duty element of the value of the goods destroyed from the insurance company - Held that: - the Tribunal upon verification of the value in the invoices has recorded satisfaction that the insurance claim did not include the excise duty portion - it cannot be stated that the conclusions arrived at by the Tribunal are in any manner perverse or contrary to the evidence on record so as to warrant interference. Appeal dismissed - decided against Revenue. Issues:- Challenge to remission of duty by the Tribunal under Rule 21 of the Central Excise Rules, 2002- Lack of evidence for goods lost in an unavoidable accident or due to natural cause- Reversal of Cenvat credit on destroyed inputs- Compliance with Rule 23 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982Analysis:1. Challenge to Remission of Duty:The appellant-Revenue challenged the Tribunal's decision to allow the respondent's claim for remission of duty. The issue revolved around whether the Tribunal was justified in interfering with the discretionary order passed by the Commissioner under Rule 21 of the Central Excise Rules, 2002. The Tribunal based its decision on the credibility of the respondent's explanation regarding the fire incident, where the Surveyor of the Insurance Company attributed the fire to cinders from nearby fields. The Tribunal found the respondent's explanation credible, emphasizing the accidental nature of the fire. The Tribunal's decision was supported by factual findings, and the Revenue did not raise any question of perversity in these findings, leading to the dismissal of the appeal.2. Lack of Evidence for Unavoidable Accident:Another issue raised was the lack of evidence provided by the respondent to demonstrate that the goods were lost in an unavoidable accident or due to natural causes. The Senior Standing Counsel for the appellant highlighted this deficiency, arguing that the respondent failed to prove the circumstances leading to the goods' damage. However, the Tribunal, after examining the panchnama and the circumstances surrounding the fire incident, concluded that the fire was accidental. The Tribunal found the respondent's explanation credible, especially considering the actions taken to extinguish the fire promptly. This issue was crucial in determining the justification for remission of duty.3. Reversal of Cenvat Credit on Destroyed Inputs:The Tribunal's decision not to require the reversal of Cenvat credit on the destroyed inputs was also contested. The Tribunal relied on a previous ruling by the Larger Bench of the Tribunal, which held that Cenvat credit did not need to be reversed in such cases. Additionally, the Tribunal verified that the insurance claim did not include the excise duty portion, supporting its decision. The appellant did not challenge the factual basis of these findings, leading to the acceptance of the Tribunal's conclusions on this matter.4. Compliance with Rule 23 of the Tribunal Rules:The issue of compliance with Rule 23 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 was raised by the Senior Standing Counsel. However, upon examination, it was found that the proposed questions did not address this issue. The lack of specific questioning on this matter indicated that the issue of non-compliance with Rule 23 was not a significant factor in the appeal. Consequently, this aspect did not impact the final decision of the Court.In conclusion, the High Court dismissed the appeal due to the absence of any legal infirmity in the Tribunal's order. The detailed analysis of each issue highlighted the factual basis and legal reasoning behind the Tribunal's decision, ultimately leading to the rejection of the Revenue's challenge.