2014 (4) TMI 186 - AT - Central Excise

Court overturns duty demand on goods destroyed in fire, grants relief to appellants

M/s. Golden Eagle Shoe Factory Versus CCE, Kanpur

The court allowed the appeal in a case concerning the demand of duty on fully manufactured goods destroyed in a fire accident at the appellant's factory. ... Rejection of remission claim - Demand in respect of fully manufactured goods which were destroyed in the fire accident - Held that:- though it is a fact that the entire manufactured goods along with the statutory records maintained in the ordinary course of business were destroyed in the fire. If that be so, the numbers of pairs of footwear becomes irrelevant in as much as it was the entire stock which was damaged. We also take into notice a subsequent show cause notice raising the demand of duty against the appellant in respect of 4200 pairs of shoes which were destroyed in the fire. This indicates that the Revenue accepts the appellant contention that prior to the fire accident, the figures appearing in RGI register of 4200 shoes. Further, from the insurance papers, it becomes clear that the claim was made in respect of same quantity of footwear in as much as the same tallies with the value. It is also on record that while claiming the insurance, the appellant has not claimed the excise duty. Otherwise also, we find that if the number of shoes destroyed in the fire were not 4200 but 42, the claim has to be accepted in respect of entire quantity and no demand of duty on any quantum of footwear can be raised - Decided in favour of assessee. Issues:1. Dispute regarding demand of duty on fully manufactured goods destroyed in a fire accident.2. Rejection of claim of remission on grounds of lack of intimation, cause of destruction, and exact quantity destroyed.Analysis:1. The judgment revolves around the dispute concerning the demand of duty on fully manufactured goods destroyed in a fire accident at the appellant's factory. The primary issue was the rejection of the appellant's claim of remission on various grounds.2. The first ground for denial of remission was the lack of proper intimation to the Revenue authorities within 24 hours. However, this charge was dropped by the Commissioner in the impugned order.3. The second ground for denial was the cause of destruction of the goods. The Commissioner disputed that the destruction was not due to a natural cause. However, the judges found that the fire, which originated from a short circuit in the neighboring unit and spread to the appellant's factory, should be considered a natural cause or unavoidable accident. They referred to a previous ruling by the Hon'ble Rajasthan High Court to support this interpretation.4. Regarding the third objection, the exact number of pairs of footwear destroyed in the fire was contested. The judges emphasized that since all manufactured goods and statutory records were damaged in the fire, the specific number of pairs becomes irrelevant. They noted that subsequent actions by the Revenue, such as raising a demand for duty on 4200 pairs of shoes, indicated acceptance of the appellant's claim. The judges concluded that regardless of the exact quantity destroyed, the claim should be accepted for the entire stock.5. Ultimately, the judges set aside the impugned order and allowed the appeal, providing consequential relief to the appellants. This decision was based on the findings related to the cause of the fire, the irrelevance of the exact quantity destroyed, and the actions taken by the Revenue in response to the incident.