We are manufacturer finished goods namely Direct Reduced Iron (DRI) i.e. Sponge Iron (CH No. 7203 10 00). Recently, there was fire in our finished goods stock yard where the DRI was stored. We have submitted an application for remission of duty under Rule 21 to the jurisdictional Central Excise authorities. We have now decided to recycle/consume the said burnt material with our raw material in proportion 10:90 in the plant, after seeking necessary permission from the Central Excise.
Kindly let us know, whether proportionate CENVAT taken to be reversed to the extent of quantity consumed for manufacture of DRI which is subsequently burnt? is there any duty demand in future from the Department?
With Best regards,
VINAY
Manufacturer Seeks Duty Remission Under Rule 21 After Fire; Faces Uncertainty Over CENVAT Credit Reversal for Burnt Goods A manufacturer of Direct Reduced Iron (DRI) experienced a fire that destroyed some of their finished goods. They applied for remission of duty under Rule 21 and planned to recycle the burnt material with raw materials in a 10:90 ratio. They inquired whether CENVAT credit should be reversed for the burnt goods. A respondent advised prioritizing remission of duty and stated that full reversal of CENVAT credit on inputs is required. They mentioned a Supreme Court case where remission was denied due to lack of evidence on fire prevention measures. The respondent noted that while no explicit provision exists for the proposed recycling method, compliance with certain parameters might allow for proportionate credit, though it could lead to litigation. (AI Summary)
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