Finished goods burnt by fire- reg

[vinay wakde]

We are manufacturer finished goods namely Direct Reduced Iron (DRI) i.e. Sponge Iron (CH No. 7203 10 00). There was fire in our finished goods stock yard and we have submitted an application for remission of duty under Rule 21. We have now received a letter from the Department to reverse the CENVAT credit involved on duty paid inputs contained in finished goods with interest and brief report from us about the steps taken to avoid fire accident.

Presently, huge amount of Input service credit is accumulated in our Input service credit account. Kindly let us know whether accumulated credit of input services can be used to reverse the Excise duty involved in the Inputs/auxiliary chemicals contained in the finished goods i.e. DRI, burnt by fire? Kindly advise in the matter. As regards, the payment of interest, the same shall be paid by us in cash.

Regards,

VINAY

AI Summary

Manufacturer Faces CENVAT Credit Reversal After Stockyard Fire; Duty Remission Hinges on Fire Prevention Proof A manufacturer of Direct Reduced Iron experienced a fire in their stockyard, leading to a query about reversing CENVAT credit on inputs in the burnt goods. The Department requested a reversal of the credit with interest and a report on fire prevention measures. Experts advised that CENVAT credit on input services can be used for this reversal, but it should occur only after duty remission approval. The manufacturer is advised to document preventive measures taken to support their remission application. If denied, they may need to pay duty on the destroyed goods. Legal precedents emphasize the manufacturer's responsibility to prove the fire was unavoidable.