2005 (12) TMI 190 - AT - Central Excise

Tribunal overturns duty demand due to lack of communication, finds manufacturing doubts

SUNPAC INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., ROHTAK

SUNPAC INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., ROHTAK - 2006 (202) E.L.T. 843 (Tri. - Del.) Issues:Claim for remission of duty on goods lost in fire; Non-receipt of order rejecting remission application; Variation in figures supplied by appellants; Failure to establish insurance claim coverage; Adverse effect of non-intimation of rejection on defense.Analysis:1. The appellants, engaged in manufacturing laminated plastic films, faced a fire incident resulting in the destruction of goods, raw materials, and machinery. They promptly informed Central Excise authorities, requested a survey of the damage, and filed a claim for remission of duty on the lost goods. Subsequently, a show cause notice was issued demanding duty on finished goods treated as removed without payment. The Commissioner rejected the remission request, leading to the demand confirmation by the adjudicating authority and the Commissioner (Appeals), citing lack of order receipt by the appellants as a defense hurdle.2. The appellants contended that they were unaware of the rejection of their remission application until the adjudicating authority's order, emphasizing their inability to contest the rejection findings or defend against the duty demand due to non-disclosure of grounds for rejection. They argued that the delayed remand would hinder their defense, and any discrepancy in the claimed destroyed goods should not lead to additional demands.3. On the Revenue's behalf, it was acknowledged that failure to inform the appellants about the rejection adversely impacted their defense. The reasons for rejection included discrepancies in figures provided by the appellants and doubts regarding the manufacturing of goods from raw materials issued before the fire incident. The Revenue admitted the appellants' lack of opportunity to appeal the rejection or defend against the duty demand, highlighting the negative impact of non-communication of rejection on the appellants' defense.4. Upon reviewing both parties' submissions, the Tribunal noted the non-communication of the rejection of the remission application to the appellants, preventing them from presenting a proper defense. As the rejection was based on doubts about the manufacturing of goods, the Tribunal concluded that demanding duty on those goods was unwarranted. Consequently, the Commissioner (Appeals)'s decision was overturned, and the appeal in favor of the appellants was allowed, considering the lack of communication regarding the rejection's outcome as a critical defense issue.