TaxTMI 
TaxTMI 
2010 (5) TMI 700
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....ne co-relation Appellant is liable to pay Modvat/Cenvat involved on raw material destroyed in fire? II. Whether the Tribunal has failed to pass a Speaking Order? 3. The Appellant during 2000-01 was engaged in the manufacture of Acrylic/Polyester Yarn falling under Chapter Heading 55 of First Schedule to Central Excise Tariff Act, 1985. In August 2000 due to fire in the factory of the Appellant, stock lying in the factory burnt. The stock involved raw material such as semi-finished material and finished material. The Appellant filed an Application for remission of duty. The Respondent issued a Show Cause Notice dated 14-8-2001 raising the demand of duty of Rs. 11,60,367/- i.e. equal to Cenvat Credit involved in the material burnt. The ....
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.... Rule 21 of Central Excise Rules, 2002 provides for remission of duty in respect of goods lost or destroyed. But it does not provide for reversal of credit in respect of inputs. The Modvat Rules prohibits the credit of duty availed in respect of inputs, which are used in the manufacturing of exempted goods or which are chargeable to Nil rate of duty. But there is no Rule requiring the Assessee to reverse the credit in case of destruction of inputs in fire. The Counsel also contends that in CEA No. 22 of 2006 [2010 (255) E.L.T. 204 (P & H)], this Court has held that Cenvat Credit is allowable on inputs in case inputs are destroyed in fire provided amount of Cenvat Credit is not received from the Insurance Company. The Counsel further relies ....
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....e credit by the Excise Authorities except where it has been illegally or irregularly taken, in which event, it stands cancelled or if utilized, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken agains....
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....held that "the Assessee is entitled to claim Cenvat credit on the inputs destroyed in a fire accident, but in the event of settlement by the Insurance Company, they would remit the benefit back to the Department." 10. In the present case, it is on record that the Assessee has not received amount of Cenvat Credit involved on inputs, as compensation from the Insurance Company. It means, Assessee has borne loss of goods incident. It is undisputed fact that the Appellant has paid duty on inputs at the time of purchase of goods. The Assessee took credit and utilized the same for the payment of duty on finished goods. There is no one-to-one co-relation between the inputs and finished goods. In the absence of one-to-one co-relation, it is unjus....