Remission for fire-destroyed goods prevents premature central excise duty demand while the Rule 21 application remains pending.

Central excise duty cannot be confirmed on goods destroyed in a fire before removal when a remission application under Rule 21 of the Central Excise Rules, 2002 is pending. The record showed the goods were destroyed in the fire and not removed from the factory, bringing the claim within the remission framework for loss by natural causes or unavoidable accident. In those circumstances, confirmation of duty was premature and the demand could not be sustained at that stage. The duty demand on the fire-destroyed goods was therefore set aside in favour of the assessee.

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Issues: Whether central excise duty could be confirmed on goods destroyed in a fire accident when the remission application under Rule 21 of the Central Excise Rules, 2002 was still pending.

Analysis: The goods in question were found, on the panchnama and the record of proceedings, to have been destroyed in the fire accident and not removed from the factory. Rule 21 of the Central Excise Rules, 2002 permits remission where goods are lost or destroyed by natural causes or unavoidable accident before removal. Since the applicant had already filed a remission application and it was pending decision, the confirmation of duty on the allegedly destroyed goods was treated as premature. The demand, therefore, could not be sustained at that stage.

Conclusion: The duty demand on the fire-destroyed goods was set aside in favour of the assessee.

Ratio Decidendi: Where goods are shown to have been destroyed by fire before removal and a remission application under Rule 21 of the Central Excise Rules, 2002 is pending, confirmation of duty is premature and cannot be sustained.

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