Remission after fire damage and no reversal of Cenvat credit apply absent proof of clandestine removal.

Remission of duty on finished goods destroyed in a fire is not to be denied where the evidence does not reliably establish clandestine removal or identity between the destroyed goods and goods alleged to have been cleared elsewhere. On the facts stated, the alleged link between drums found at another premises and the remission claim was not proved by independent corroboration, so duty demand on the finished goods was unsustainable. Cenvat credit taken on inputs used in goods destroyed by fire is also not required to be reversed under settled precedent. The impugned order was therefore set aside and relief followed in favour of the assessees.

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Issues: (i) Whether the appellants were liable to duty on the finished goods allegedly cleared as salvage after the fire and whether remission of duty on the destroyed finished goods was to be denied. (ii) Whether Cenvat credit taken on inputs used in finished goods destroyed in fire was required to be reversed.

Issue (i): Whether the appellants were liable to duty on the finished goods allegedly cleared as salvage after the fire and whether remission of duty on the destroyed finished goods was to be denied.

Analysis: The duty demand rested on an alleged link between drums found at another premises and the goods covered by the remission claim. The available material did not establish identity between the damaged goods and the goods allegedly found elsewhere. No independent corroborative evidence showed clandestine clearance, and the quantity and markings relied upon did not satisfactorily match the remission goods. The goods actually cleared under invoice were treated as scrap and damaged articles, and that clearance was not disputed.

Conclusion: The demand of duty on the finished goods was unsustainable, and remission of duty was allowable in favour of the appellants.

Issue (ii): Whether Cenvat credit taken on inputs used in finished goods destroyed in fire was required to be reversed.

Analysis: The dispute on reversal of credit on inputs used in goods destroyed in fire was governed by settled precedent holding that such reversal is not required.

Conclusion: The demand for reversal of Cenvat credit was unsustainable in favour of the appellants.

Final Conclusion: The impugned order was set aside and the appeals succeeded with consequential relief.

Ratio Decidendi: In the absence of reliable evidence of clandestine removal, remission of duty on destroyed finished goods cannot be denied; and Cenvat credit on inputs contained in goods destroyed in fire is not reversible merely because the goods were destroyed.

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