2016 (12) TMI 474 - HC - Central Excise

Court Upholds Decision on Duty Remission Appeal under Central Excise Act

The court upheld the decisions of the Commissioner and the Tribunal, ruling in favor of the department in an appeal under Section 35-G of the Central ... Remission of duty - Rule 49 (1) (A) of the Central Excise Rules, 1944 - Held that: - as per the units own statement, the clandestine removal or theft as they call it took place in April 2001 and they filed an FIR only in October 2001 i.e. after 6 months. What took them so long to inform the police is not forthcoming. Moreover, they never informed the department about the said 'theft' and the department on its own, based on the news item in the local news paper, took further action which culminated in the issue of a demand notice. This is a clear violation of the provision of Board Circular No. F. No. 40/73-CX-1 & F.No. 21/29/65-CX-IV, which stipulates that the first information regarding such loss or destruction etc. to be sent within 24 hours of the occurrence. That they have failed to inform the department at all is not disputed. Moreover, what took them 4 years to file the remission of duty application with the department also remains unexplained. Hence, even without going into the issue whether 'thefts' would fall with the ambit of cases to which remission duty can be claimed, for which they have cited some case laws, I find that the remission application is liable to be rejected on this ground alone. Appeal disposed off - decided in favor of Department. Issues:1. Appeal under Section 35-G of the Central Excise Act against Tribunal's order.2. Substantial questions of law regarding remission of duty for stolen molasses.3. Application for remission under Rule 49 of Central Excise Rules.4. Commissioner's rejection of remission application.5. Appeal against Commissioner's order dismissed by Tribunal.6. Interpretation of Rule 49 (1) (A) of Central Excise Rules.7. Admissibility of remission for theft under Rule 49 (1) (A).8. Delay in filing FIR and remission application.9. Tribunal's confirmation of Commissioner's decision.10. Final judgment in favor of the department.Analysis:The case involves an appeal filed under Section 35-G of the Central Excise Act against the Tribunal's order dated 25.3.2009. The appellant raised substantial questions of law related to the remission of duty for stolen molasses. The application for remission was made under Rule 49 (1) (A) of the Central Excise Rules, 1944. The Commissioner rejected the remission application citing delays in reporting the theft and filing the application, along with procedural violations. The appellant's appeal against the Commissioner's order was dismissed by the Tribunal.The Commissioner's order highlighted the delay in reporting the theft and filing the remission application, questioning the genuineness of the claim. The Commissioner emphasized the requirement of immediate reporting as per Board Circulars and raised doubts about the authenticity of the theft claim. The Tribunal confirmed the Commissioner's decision, interpreting Rule 49 (1) (A) to cover only losses due to natural causes or unavoidable accidents, excluding theft.The legal counsel for the appellant argued that Rule 49 (1) (A) allows remission for losses due to natural causes and does not explicitly exclude theft. However, the court upheld the Commissioner's decision, stating that the delay in reporting the theft and filing the remission application supported the rejection. The court agreed with the Tribunal's interpretation of Rule 49 (1) (A) and dismissed the appeal in favor of the department.In conclusion, the court ruled in favor of the department, upholding the decisions of the Commissioner and the Tribunal. The judgment emphasized the importance of timely reporting of incidents and the limited scope of remission under Rule 49 (1) (A) for losses caused by natural factors or unavoidable accidents, excluding theft.