Remission of duty for flood-damaged stock was allowed where loss was timely reported and supported by contemporaneous records.

Remission of duty under the second proviso to Rule 49 of the Central Excise Rules, 1944 was treated as available where finished goods, raw materials and packing materials were damaged by flood. Timely intimation to the department, a subsequent remission application, contemporaneous correspondence, and undisputed damage supported the claim, while the insurance record showed coverage only for the damaged stock and not the excise duty element. On those facts, the delayed disposal of the remission application was considered unjustified, and remission was allowed for the damaged finished goods as well as the Cenvat availed on the damaged raw materials and packing materials.

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Issues: Whether remission of duty was admissible under the second proviso to Rule 49 of the Central Excise Rules, 1944 in respect of finished goods, raw materials and packing materials damaged by flood.

Analysis: The goods were damaged by flood, timely intimation was given to the departmental authority, and a remission application was filed thereafter. The loss was supported by contemporaneous correspondence, and the fact of damage was not in dispute. The materials also showed that the insurance claim was entertained only for the damaged stock and did not cover the excise duty element. In these circumstances, the delay in disposing of the remission application was found unjustified, and the statutory proviso permitting remission for goods lost by natural causes was held applicable.

Conclusion: Remission of duty was allowed in favour of the assessee for the damaged finished goods as well as the Cenvat availed on the damaged raw materials and packing materials.

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