2017 (2) TMI 940

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....on inputs issued for 'works-in-progress' that were destroyed in fire and assessee, M/s Sharp India Ltd, is in appeal against order requiring them to pay Rs. 77,78,232/- being the duty permitted initially, as remission on finished goods destroyed in the same fire but revoked for failing to comply with subsequent direction to reverse MODVAT credit taken on inputs. 2. The first appellate authority did not find any reason to accept the contention of Revenue that rule 57F of Central Excise Rules, 1944 requires goods brought into factory to be used in manufacture of final product and that, usage in 'work-in-progress', not being final product and not dutiable, does not fulfill the purpose for which it was intended. Instead, it was held that 'wo....

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....er seeks restoration of show cause notice relating to reversal of credit on inputs used in 'work-in-progress.' This is an odd prayer as there is no provision by which a show cause notice gets erased in adjudication proceedings even if the demand in the show cause notice gets dropped. Hence the question of restoration of show cause notice does not arise. Effectively, Revenue seeks a remand to the original authority and we will need to examine whether any grounds have been adduced to justify remand. 5. On perusal of the impugned order of first appellate authority, we note that a prayer for remand to the original authority had not been included in those proceedings. Nor is there any contention that the appellate authority had not considered....

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.... 5. A perusal of the aforementioned facts clearly shows that the manufacture had used the inputs on which the duty had been paid in the manufacture of their final product. Once the product was used, then they were entitled to claim Cenvat credit on the same. In Commissioner of Central Excise, Bangalore v. Tulsyan NEC Ltd., reported as 2007 (207) E.L.T. 209 (Ker.), it has been 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. In 2004 (173) E.L.T. 187, it was held by the Tribunal that in the event of inputs being lost in fire, duty credit recovered on account of destruction can be ....