TaxTMI 
TaxTMI 
2014 (6) TMI 237
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.... Act, 1962. Aggrieved of the same the appellant is before us. 2.1 The appellant, M/s. Sandoz Pvt. Ltd. is a 100% EoU manufacturing bulk drugs and pharmaceutical products falling under Chapter 29 and 30 of the Central Excise Tariff. On 17/10/2002, there was a fire accident in the appellant's factory. In the fire accident, the raw materials procured by the appellant, both imported as well as domestic, for the manufacture of finished products as well as finished products manufactured by using duty-free raw materials, were damaged by fire. As per the insurance survey report, the value of the finished goods destroyed in the fire was Rs. 1,52,38,952/- and the value of raw materials both imported and indigenous, destroyed in the fire was Rs. 69,18,405/-. Duty on the raw materials contained in the finished goods amounted to Rs. 73,46,791.67 and the duty involved in the raw materials which were damaged amounted to Rs. 39,48,011.16. The appellant filed an application for remission of duty. The appellant also, vide letter dated 28/05/2003 sought permission from the department for destruction of the damaged goods. They also sought permission from the department vide letter dated 23/07/2....
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.... duty of Rs.1,12,94,803/- which was payable on the raw materials contained in the finished product which were destroyed as also on the raw materials which were destroyed as such both in respect of imported raw materials as also indigenously procured raw materials. The demand was made in terms of the provisions of Section 72 of the Customs Act read with conditions laid down in the B-17 bond executed by them. The said notice was adjudicated by the impugned order wherein the adjudicating authority has confirmed the above duty demands. Aggrieved of the same the appellant is before us. 3. The learned counsel for the appellant submits that the appellant had procured both indigenous as well as imported raw material for the manufacture and export the finished products. A part of these raw materials were procured duty-free under Notification No. 53/97-Cus and procured duty-free indigenously under Notification 1/95-CE. Part of the raw materials were used in the manufacture of finished products and the balance raw materials were lying in stock when the fire accident broke out. It is not the case of the department that the appellant had violated the conditions of the exemption Notification ....
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....le High Court of Karnataka reported in 2012 (278) ELT 601. Reliance is also placed on the decision of this Tribunal in appellant's own case wherein the goods became unfit for home consumption due to short-shelf life and the appellant sought remission of duty and this Tribunal vide order dated 09/12/2011 reported in 2012 (278) ELT 259 remanded the matter back to the adjudicating authority for reconsideration of the duty demand as per the provisions of Section 22(3) of the Customs Act, 1962 which provides that in the case of damaged and deteriorated goods, the duty demand can be only proportionate to the value of the damaged or deteriorated goods bear to the value of the goods which have not been damaged/deteriorated. Since in the present case, the goods have been completely destroyed, the proportionate duty under Section 22(3) would also be zero and, therefore, the impugned demands are not sustainable in law. 4. The learned Additional Commissioner (AR) appearing for the Revenue, strongly opposes the above contentions of the appellant. He submits that the appellants were granted a licence under Section 58 and 65 of the Customs Act, 1962 for operating as a 100% EoU. Condition N....
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....nce is also placed on the decision of the hon'ble High Court of Calcutta in the case of Antarctica Ltd. vs. Union of India 2010 (258) ELT 206 (Cal.) wherein the hon'ble High Court held that the provisions of Section 23 of the Customs Act, 1962 pre-supposes levy of duty first and thereafter remission thereof under the contingencies as stipulated in the said section. If the goods were allowed to be imported on exemption of Customs duty and Excise duty, no question of remission would arise. Since, in the present case, the goods have been procured duty-free, the question of remission does not arise at all. Reliance is also placed on the decision of the hon'ble apex Court in the case of S.K.Pattanaik vs. State of Orissa 2000 (115) ELT 9 (SC) wherein a question arose as to when the bonded goods were rendered unfit for consumption and destroyed during warehousing whether duty can be demanded. The hon'ble apex Court held that, since the goods were destroyed after import, duty liability would be attracted. In the light of these decisions, it is prayed that the impugned demands are sustainable in law. 5. We have carefully considered the submissions made by both the sides. ....
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....Provided also that where such duty exceeds [One lakh rupees] but does not exceed [five lakh rupees], the provisions of this rule shall have effect as if for the expression "Commissioner", the expression "Joint Commissioner of Central Excise or Additional Commissioner of Central Excise, as the case may be", has been substituted. 5.3 In the present case, the appellant is a 100% EoU and has been granted a licence for warehousing and manufacture in bond under Sections 58 and 65 of the Customs Act, 1962. The said sections read as follows: "58. Licensing of private warehouses - (1) At any warehousing station, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may license private warehouses wherein dutiable goods imported by or on behalf of the licensee, or any other imported goods in respect of which facilities for deposit in a public warehouse are not available, may be deposited . (2) TheAssistant Commissioner of Customs or Deputy Commissioner of Customs may cancel a licence granted under sub-section (1) - (a) by giving one month's notice in writing to t....
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....ant shall insure the goods deposited in the warehouse against theft, pilferage, fire accident and other natural calamities, etc. atleast for a value equal to the Customs duty by a warehousing insurance policy drawn in favour of the Commissioner of Customs. Thus, the appellant is bound by the terms and conditions of the licence. In the present case, it is an admitted position that, the appellant failed to insure the imported materials which were deposited in the warehouse for that part of the value representing Customs duty on the imported goods. While the appellant chose to insure the value of the imported goods minus duty, they deliberately failed to insure the goods for the Customs duty portion involved on the imported goods. Thus, there is a clear breach of the terms and conditions of the warehousing licence issued under Section 58 of the Customs Act and the warehousing bond executed under Section 59 and also the manufacture-in-bond sanction granted under Section 65 of the said Customs Act. Having breached the terms and conditions of the licence and the manufacture-in-bond sanction, the appellant cannot seek to claim benefit under Section 23 of the Customs Act by remission of du....
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....eads as follows: " RULE 6. Recovery of duty in certain cases. - Where the subject goods are not used by the manufacturer for the intended purpose, the manufacturer shall be liable to pay the amount equal to the difference between the duty leviable on such goods but for the exemption and that already paid, if any, at the time of removal from the factory of the manufacturer of the subject goods, alongwith interest and the provisions of section 11A and section 11A B of the Central Excise Act, 1944 (1 of 1944) shall apply mutatis mutandis for effecting such recoveries. Explanation.- For the removal of doubts, it is hereby clarified that subject goods shall be deemed not to have been used for the intended purpose even if any of the quantity of the subject goods is lost or destroyed by natural causes or by unavoidable accidents during transport from the place of procurement to the manufacturer's premises or during handling or storage in the manufacturer's premises." As per the explanation, if the goods are lost or destroyed by natural causes or by unavoidable accidents during transport from the place of ....