Remission of duty for fire-destroyed excisable goods cannot be refused arbitrarily absent assessee negligence.

Rule 49 of the Central Excise Rules was applied to goods destroyed by fire in the factory, and the order refusing remission was held appealable. The refusal to grant remission failed because the destruction by fire was not in dispute, there was no evidence of fault or negligence by the assessee, and remission for goods lost or destroyed by unavoidable accident must be exercised judicially on relevant facts. On that basis, remission of duty could not be denied arbitrarily, and the rejection of remission was set aside, with relief granted on both maintainability and merits.

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Issues: (i) Whether an appeal lay against the order rejecting remission of duty for goods destroyed in fire under the central excise framework; (ii) Whether remission of duty ought to be granted where finished goods were destroyed by fire in the factory.

Issue (i): Whether an appeal lay against the order rejecting remission of duty for goods destroyed in fire under the central excise framework.

Analysis: Rule 49 of the Central Excise Rules permits remission where goods are lost or destroyed by natural causes or unavoidable accident during handling or storage. The provision relied upon by Revenue dealing with exclusion of certain loss situations did not cover a case of destruction by fire in the factory in the manner asserted. The dispute therefore arose from an order on remission under Rule 49, and not from a category of loss excluded from appellate scrutiny.

Conclusion: The order was appealable and the objection to maintainability failed.

Issue (ii): Whether remission of duty ought to be granted where finished goods were destroyed by fire in the factory.

Analysis: The destruction of goods by fire in the factory was not disputed. The refusal of remission rested only on the view that the destruction was neither natural nor unavoidable. The governing principle is that the discretion to grant remission for goods lost or destroyed by unavoidable accident must be exercised judicially and on relevant facts, and refusal cannot be arbitrary. In the absence of any proof that the fire was caused by the assessee or by its negligence, remission could not be denied on the facts found.

Conclusion: Remission of duty was wrongly denied and the assessee succeeded on merits.

Final Conclusion: The rejection of remission was set aside and the assessee obtained relief on both maintainability and merits.

Ratio Decidendi: Where excisable goods are destroyed by fire and there is no evidence of fault or negligence on the part of the assessee, remission of duty under the relevant rule cannot be refused arbitrarily and must be determined by a judicial exercise of discretion on the facts of the case.

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