Remission for fire-destroyed goods upheld; clandestine removal was not proved, so duty demand and penalty failed.

Remission of central excise duty was found admissible where goods were destroyed in a fire accident duly reported to the excise authorities and supported by the record. The demand based on alleged clandestine removal failed because the show cause notice and adjudication order did not establish evidence of unauthorised clearance, and the insurance survey report and partial settlement did not prove removal without payment of duty. Once the foundation for the duty demand collapsed, the connected penalty also could not survive. The order was set aside with consequential relief to the assessee.

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Issues: Whether remission of central excise duty was admissible for goods destroyed in a fire accident, and whether the duty demand and penalty could be sustained on the allegation of clandestine removal.

Analysis: The record showed that the fire accident was reported to the excise authorities, and the materials on record supported the occurrence of the fire. The demand was founded on an allegation that the goods were removed in the garb of a fire accident, but the show cause notice and adjudication order did not disclose evidence establishing clandestine removal. The denial of the insurance survey report and the partial insurance settlement did not supply proof that the goods had been cleared without payment of duty. On the facts, the finding that the goods were not destroyed and had been clandestinely removed was held to be contrary to the evidence on record. As the basis for duty demand failed, the connected penalty also could not survive.

Conclusion: Remission was held admissible and the duty demand and penalty were unsustainable; the order was set aside with consequential relief to the assessee.

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