AI Drafter 
TaxTMI 
TaxTMI 
2024 (5) TMI 1272
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....aterials in process, capital goods for which the appellant responded that they are under process of ascertaining the details of the value of the items damaged in the fire accident and requested time for applying for remission of duty and other procedures. After that no action was taken by the appellant to request for remission of duty. During the course of audit, it was observed that the appellant had preferred an insurance claim of Rs.4,27,32,599/- with regard to the loss of raw materials and fixed assets in the fire accident. Since the goods sent for job work had not received back after 180 days, the cenvat credit had to be reversed accordingly, notice was issued and the Commissioner in the impugned order held that the insurance claim by the appellant does not bifurcate or gives details to the element of cenvat credit disallowed in the claim. He also held that the appellant had not claimed remission of duty and had not produced any documents called for by the department immediately after the fire accident and the details came to the notice of the department only through the audit party through their audit note dated 21.05.2009 that the appellant had not reversed the credit in spi....
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....invoking the extended period of limitation, the notice proposed to demand cenvat credit of Rs.57,32,477/- in respect of inputs and Rs.1,72,402/- in respect of capital goods which were destroyed in fire accident. (ii) The learned counsel further submits that undisputedly the cenvat availed goods were issued for manufacture through job-work procedure in terms of Notification No.214/86-CE and the said goods were destroyed at the premises of the job-worker and he had taken all steps to inform the Police and lodged FIR immediately along with necessary intimations to the Central Excise department. He further submits that it is well settled that when the cenvat availed inputs and/or capital goods were issued for manufacture, the requirement of Cenvat Credit Rules is fulfilled and if the goods are destroyed in a fire accident, the appellant need not reverse the cenvat credit taken on the inputs, since the inputs sent for job-work, it has to be considered as has been issued for manufacture. In support of this plea, the Appellant place reliance on the following decisions, - • CCE v. Indchem Electronics, 2003 (151) ELT 393 (Tri-Che.) maintained by Honorable Supreme Court as re....
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....these goods have to be necessarily used in the manufacture of the final products and the appellant has failed to produce these details as to how much was destroyed as inputs or work in progress or the finished products. Further, he submits that the claim of remission argued by the appellant is irrelevant since there was no request from the appellant for claiming remission of duty. Rebutting the appellants claim that the demand is barred by limitation, the learned Authorised Representative for the Revenue submits that though the fire accident happened on 17.09.2006, no details were furnished to the department. The Revenue vide letter dated 21.09.2006 had directed the appellant to provide the value of raw materials, value of semi-finished/finished goods destroyed, value of cenvat credit availed on job work goods, value of capital goods destroyed, details of insurance claim and any claim under Rule 21 of Central Excise Rules, 2002 for remission of duty. On 03.10.2006, another reminder was issued by the department and only on 16.01.2009, the appellant intimated settlement of insurance claim which was settled in November 2008 but for the audit during November 2008, this fact would not h....
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....were destroyed in the fire. Item no.5 is for finished goods and Item No.6 is for replacement cost of equipment. Therefore, the inputs which have been destroyed before putting it to use the benefit of cenvat credit cannot be extended. As per the cenvat credit rules only those inputs which are used in the manufacture of final products are eligible for cenvat credit. With regard to capital goods also, one needs to verify whether they were put to use or destroyed before the same was used in the manufacture of the final products. If the capital goods were not used then the question of extending the benefit of cenvat credit does not arise. Insurance claim made by the appellant 6. In the case of CCE v. Indchem Electronics, 2003 (151) ELT 393 (Tri-Che.) relied upon by the appellant is not relevant because admittedly the inputs were used in the manufacture of the final products as seen from the observation of the Tribunal reproduced below: "6. As we have already observed, in this case, the fact regarding fire accident and goods having been destroyed as a result there of is not disputed. The department has also not contested the claim of the assessee that the inputs were destr....
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.... and against the revenue. Accordingly, the appeal is dismissed". 8. In the case of VFC Industries Pvt Ltd v. CCE, 2017 (352) ELT 507 (Tri-Ahmd.), the Tribunal has categorically held that inputs lying in stock which were not put to use and which were not used in the manufacture of final products the benefit of cenvat credit cannot be extended. The observations of the Tribunal are reproduced below: "10. As far as the Cenvat credit on inputs lying in stock, as such, destroyed in fire, it is crystal clear that the same had not been used in or in relation to the manufacture of final product in their factory; thus the criterion of use, the basis on which the Cenvat credit on inputs contained in WIP goods, has been allowed in the aforesaid cases, is undoubtedly not fulfilled. This Tribunal in the case of Golden Polymex India Ltd. case (supra) observed as follows :- "7. As regards the reversal of credit in respect of the inputs which were lying in the appellants' factory unutilised and got destroyed in the fire, it is seen that the said inputs were admittedly neither used in the manufacture of the final product, nor even issued for the manufacture. They were lying as s....