Committee authorisation and fire-loss Cenvat credit: Revenue appeal failed, and reversal was not required after accidental destruction.

Proper authorisation by the statutory committee was required for a Revenue appeal under Section 35B(2) of the Central Excise Act, 1944, and a single-Commissioner authorisation was held insufficient; the preliminary objection therefore succeeded. Cenvat credit validly taken on inputs, intermediate goods and capital goods was not required to be reversed merely because the goods were destroyed in a factory fire, as destruction by fire or other unavoidable accident does not defeat credit lawfully availed for intended use in manufacture; the assessee accordingly succeeded on merits.

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Issues: (i) Whether the appeal filed by the Revenue was validly authorised under Section 35B(2) of the Central Excise Act, 1944; (ii) whether Cenvat credit taken on inputs, intermediate goods and capital goods destroyed in a fire accident was liable to reversal.

Issue (i): Whether the appeal filed by the Revenue was validly authorised under Section 35B(2) of the Central Excise Act, 1944.

Analysis: The authorisation placed on record was signed by only one Commissioner, though the statutory scheme contemplated a decision by the Committee of Commissioners. The Tribunal treated the requirement of authorisation as one that had to be satisfied by the competent collective decision-making authority and held that a single-Commissioner authorisation was not proper.

Conclusion: The Revenue appeal was not validly authorised and the preliminary objection succeeded.

Issue (ii): Whether Cenvat credit taken on inputs, intermediate goods and capital goods destroyed in a fire accident was liable to reversal.

Analysis: The credit had been lawfully taken on the basis of proper documents under the Cenvat credit regime. The destruction of the goods occurred due to a fire accident in the factory, and the Tribunal applied the Larger Bench principle that there is no requirement to reverse credit merely because the goods, after valid availment of credit, were destroyed by fire or unavoidable accident. Such destruction does not negate the intended use of the inputs in manufacture.

Conclusion: Reversal of Cenvat credit was not warranted and the assessee succeeded on merits as well.

Final Conclusion: The Revenue's challenge failed both on maintainability and on merits, and the assessee's relief against reversal of credit was sustained.

Ratio Decidendi: A valid appeal under Section 35B(2) of the Central Excise Act, 1944 requires proper authorisation by the competent committee, and Cenvat credit lawfully availed on inputs or capital goods is not required to be reversed merely because the goods are destroyed in a fire or similar unavoidable accident.

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