2017 (3) TMI 1121

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....EZ, Indore for undertaking in-bond manufacture. The appellant procured inputs without payment of duty, partly from indigenous sources and partly from importer sources, for use in the manufacture of excisable goods and its subsequent export under 100% EOU scheme. A fire accident took place in the factory of appellant on mid-night of 27-28th February, 2010. Significant loss happened in the appellants' factory by which capital goods, raw-materials, finished goods, goods-in-process, inputs, consumable etc. got destroyed. Consequently, the Show Cause Notice dated 08.09.2010 was issued to the appellant proposing to recover. i) Central Excise duty on the goods procured duty free against C.T-3 certificates from local sources. ii) ....

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....ntral Excise duty amount into Rs. 28,94,401/- pertaining to goods procured duty free indigenously. (ii) Confirmed the demand for custom amount into Rs. 2,80,69,543/- on goods imported duty free. (iii) Disallowed cenvat credit amount into Rs. 2,05,350/- in respect of inputs destroyed. (iv) Imposed penalty of Rs. 5 lakhs under Rule 25 of Central Excise Rules. (v) Penalty of Rs. 5 lakhs under section 117 Customs Act than imposed penalty of Rs. 3 lakhs under Rule 15 of the Cenvat Credit Rules. He also ordered for recovery of interest on the above demand. 5. Ld. Counsel submitted that there is no dispute that the fire incident, which happened on mid night of 27-28th February, 2010 was a pure accident inspit....

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....troyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal, he may remit the duty payable on such goods, subject to such conditions as may be imposed by him by order in writing" Sec 23 OF Customs Act, 1962: "Without prejudice to the provisions of Section 13, where it is shown to the satisfaction of the [Assistant Commissioner of Customs or Deputy Commissioner of Customs that any imported goods have been lost otherwise than as a result of pilferage or destroyed, at any time before clearance for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall remit the duty on such goods." Commi....

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....ranted on such goods. Since the inputs are considered to be put to intended use in the manufacture of finished products, it is deemed to have been consumed in the process of manufacture and since the foods are lost or destroyed due to unavoidable accident, the claim of reversal of credit cannot be countenanced, more so, when the said provision does not provide for reversal of credit, as has been observed by the Tribunal, which we approve." In the case of M/s Next Fashion Creaturs (Supra) of Hon'ble High Court of Karnataka has held as follows: "4. The facts are not in dispute, the assessee is a 100% export oriented unit. It has imported goods without paying duty. If they have performed their export obligations, they were not liab....