TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 832
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....cuiting, was covered by expression "unavoidable accident" for the purpose of remission of excise duty. (ii) Whether, it was correct and proper for the CESTAT to hold that the assessee was not required to reverse the credit in respect of raw materials consumed." The assessee carries on the business of manufacturing footwear which falls under Chapter 64 of the Central Excise Tariff Act, 1985. A fire occurred in its factory on 2 June 2004 during the course of which, the stored raw materials and semi finished goods as well as finished goods were destroyed. The Central Excise Authorities were intimated on 3 June 2004 and the Range Excise Officer conducted a site survey on 4 June 2004. The assessee filed a remission application under rule 21 of....
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....ause" or "unavoidable accident" under rule 21. Moreover, it was stated that on a previous occasion, a fire had broken out in the factory of job workers in 2002 due to a short circuit. The Adjudicating Officer rejected the remission application on the ground that the assessee had not reversed the Cenvat credit involved in the raw materials contained in the final product. In respect of the semi finished goods, the Adjudicating Officer observed that they had not attained a marketable status and, hence, remission was not warranted. In an appeal by the assessee, the Tribunal held that admittedly a fire had taken place in the factory of the assessee on account of a short circuit which was attributable to electric malfunctioning. The Tribunal fol....
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....n, the adjudicating authorities are bound unless the decision has been reversed by a higher appellate forum. Finally, as regards the remission of duty on semi finished goods, the Tribunal observed that if the goods had not attained a marketable status, there was no requirement of a remission of duty and the Revenue cannot call for any duty on semi finished goods. Either the goods are non-dutiable in which case no duty can be demanded or the remission would have to be granted on the payment of duty on goods which have admittedly been damaged in a fire accident. Rule 21 of the Central Excise Rules, 2002 provides as follows:- "Remission of duty.- Where it is shown to the satisfaction of the Commissioner that goods have been lost or destroye....
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....itions as may be imposed. The expressions "natural causes" or "unavoidable accident" have to be interpreted in their ordinary and natural connotation. An unavoidable accident is an event which lies beyond the control of the assessee and which has taken place despite the exercise of due and reasonable care and protection. Both the expressions have to be construed in a reasonable manner to sub-serve the object of the legislature in introducing the provision for remission of duty in rule 21. In the present case, a finding of fact has been recorded by the Tribunal based on the material on record that the accident of fire had occurred due to a short circuit. The Tribunal has, in our view, taken a broad and robust perspective in holding that thi....
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....e reversal of credit in respect of inputs used in the manufacture of such goods. The Modvat rules prohibits the credit of duty paid in respect of the inputs which are used in the manufacture of exempted goods or which are chargeable to nil rate of duty. The Tribunal in both the cases, that is Mafatlal Industries (supra) and in the case of Inalsa Ltd. (supra) held that in case the goods were destroyed due to natural cause or by unavoidable accident during handling or storage, cannot be equated with exemption to goods and the inputs can be considered to have been put intended use for manufacture of the final product. Reading of rules under which remission is granted in respect of goods which were lost or destroyed by natural cause or by natur....
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....he inputs used in the manufacture or production of goods shall be reversed. The present case, however, relates to a period prior to the introduction of rule 3(5C) and is, therefore, not covered by the modified provision. Prior to the introduction of rule 3(5C), there was no such restriction to the effect that the Cenvat credit which is taken on inputs used in the manufacture or production of goods in respect of which duty is remitted under rule 21 would have to be reversed. The law at the relevant point of time was governed by the decision of the larger bench of the Tribunal in Grasim Industries (supra). The position has subsequently been materially altered following the introduction of sub-rule (5C) into rule 3 but we are not governed in ....