2024 (10) TMI 909 - AT - Customs

Revenue's demand for differential duty with penalty fails due to insufficient evidence after genuine fire accident

M/s. Sennar Paper and Boards Ltd. Versus Commissioner of Customs, Trichy

M/s. Sennar Paper and Boards Ltd. Versus Commissioner of Customs, Trichy - TMI Issues:- Failure to intimate department about loss of goods due to fire- Allegation of claiming insurance for goods destroyed by fire with intention to evade duty- Allegation of not using impugned goods in the manufacture of kraft paperAnalysis:The appeal was filed against an order demanding differential duty and penalty for the import of waste paper under a concessional rate of duty. The appellant's unit experienced a fire accident leading to the destruction of imported waste paper. The appellant notified the department immediately after the fire accident, fulfilling the requirement under Rule 21 of Central Excise Rules and Section 23 of Customs Act, 1962. The appellant argued that the imported waste paper was intended for use in the manufacture of kraft paper, meeting the conditions of the end-use based exemption Notification. The appellant cited relevant Supreme Court cases and a Tribunal decision to support their argument that duty cannot be demanded when goods intended for use are destroyed due to unavoidable accidents like fire.The Tribunal found that the appellant had indeed informed the department about the loss of goods due to fire through email and written correspondence. The department's allegation that the appellant claimed insurance for the destroyed goods with an intention to evade duty was unfounded, as there was no proof that the appellant received insurance money towards the tax amounts involved. The Tribunal emphasized that mere assumptions and allegations do not constitute proof, and the department failed to provide documentary evidence to support their claim.Regarding the allegation that the impugned goods were not used in the manufacture of kraft paper, the Tribunal referred to legal precedents to establish that goods intended for use but destroyed by unavoidable accidents like fire are eligible for remission of duty. The Tribunal highlighted that destruction by fire is considered an unavoidable accident, and the impugned goods being destroyed did not violate the conditions of the undertaking given. Therefore, the demand for duty was deemed unsustainable, and the appeal was allowed with consequential relief as per law.In conclusion, the Tribunal set aside the impugned orders, ruling that the demand for duty cannot be sustained, and there was no basis for imposing fines or penalties. The judgment was pronounced in open court on 15.10.2024.