Recently fire accident occurred in our plant.

[Nitin Sonwane]

Sir,

Now my question is.

What is the producer in the fire accident in our plant, fire loss is excise able finish goods.

and you also please advice me for what is the time limit of said reversal.

Please reply

Thanking you.

Nitin Sonwane

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sir,

Since the goods are destroyed due to fire, no reversal is required, in my opinion.

[Nitin Sonwane]

Sir,

Excise able goods destroyed to permission from excise dept.

[Mahir S]

Sir,

please refer chapter 18 of CBEC Manual regarding remission of duty and destruction of goods.

[Rajagopalan Ranganathan]

Dear Nitin,

If you seek remission of duty payable on the excisable goods destroyed due to fire under rule 21 of the Central Excise Rules, 2002 then, sub-rule 5C of rule 4 of CENVAT Credit Rules, 2004 stipulates that "where on any goods manufactured or produced by an assessee, the payment of duty is ordered to be remitted under rule 21 of the Central Excise Rules, 2002, the CENVAT credit taken on the inputs used in the manufacture or production of said goods and the CENVAT credit taken on input services used in or in relation to the manufacture or production of said goods] shall be reversed. Therefore if you seek remission of duty payable on the finished excisable goods destroyed in fire, then, you have to reverse the credit taken on inputs used in the manufacture or production of said goods and the credit of service tax paid on input service used for the same.

[KASTURI SETHI]

Remission of duty - Loss of goods due to fire - Onus on assessee to prove happening of accident due to natural causes, unavoidable and beyond his control

The Supreme Court Bench comprising Hon’ble Mr. Chief Justice H.L. Dattu, Hon’ble Mr. Justice Arun Mishra and Hon’ble Mr. Justice Amitava Roy on 3-8-2015 dismissed the Petition for Special Leave to Appeal (C) No. 19620 of 2015 filed by Gangeshwar Ltd. against the Judgment and Order dated 19-3-2015 of Allahabad High Court in C.E.R. No. 8 of 2009 as reported in 2015 (322) E.L.T. 444 (All.) = 2015 (4) TMI 166 - ALLAHABAD HIGH COURT (Commissioner v. Gangeshwar Ltd.).

The Allahabad High Court in its impugned order had held that onus was on assessee to prove that fire accident in godown destroying excisable goods happened due to natural causes on which he had no control and was unavoidable. High Court set aside order of Tribunal placing such onus on Department. It was also held that in instant case opinion of Chief Fire Officer that fire accident could be due to careless smoking of biris and cigarettes has not been disputed by assessee and no other evidence has been adduced to show as to what steps were taken by assessee to avoid fire accident.

[Gangeshwar Ltd. v. Commissioner - 2015 (322) E.L.T. A239 (S.C.)]

AI Summary

Remission of duty requires reversal of CENVAT credit for excisable goods destroyed by fire; assessee bears burden to prove accident. If remission of duty on excisable goods destroyed by fire is sought under the Central Excise framework, the CENVAT credit taken on inputs and input services used in manufacture of those goods must be reversed; claimants must obtain departmental permission for destruction and bear the onus to prove the fire was natural, unavoidable and beyond their control, with procedural guidance in the CBEC Manual.