Custom, Excise & Service Tax Tribunal
Everest Organics Ltd vs Commissioner Of Central Excise, ... on 3 January, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20039 / 2014 Appeal(s) Involved: E/550/2007-SM [Arising out of Order-in-Appeal No. 33/2009 dated 30/04/2009 passed by the Commissioner of Customs, Excise and Service Tax, Hyderabad] Everest Organics Ltd. H.No:8-3-214/50, 4th Floor, Opp MCH Park, Srinivasa Colony (West), Hyderabad - 500 038 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax - Hyderabad-I Kendriya Shulk Bhavan, L.B Stadium Road, Basheerbagh, Hyderabad - 500 004, Andhra Pradesh Respondent(s)
Appearance:
Mr P. Gopi, Consultant Office No. 5, 3rd Floor, D. No. 8-2-596/F/44A, Farat Afza Building, Road No. 10, Banjara Hills, Opp. Karvy Office, Hyderabad - 500 034 For the Appellant Mr Ganesh Haavanur, Additional Commissioner (AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER Date of Hearing: 03/01/2014 Date of Decision: 03/01/2014 On 29.04.2006, a major fire accident took place in the factory premises of the appellant which resulted in the death of five workers and also loss of finished goods and inputs. Appellants thereafter filed a remission application to the jurisdictional Commissioner seeking remission of duty payable on finished goods and CENVAT credit availed on inputs.
2. A show-cause notice was issued to the appellant intimating that when matter will be heard by the Commissioner and also pointing it out as to why the department entertained a view that they are not eligible for the remission. The points contained in the notice are as under:
The assessee stated that they have given intimation about the fire accident to the Range Officials on 30.04.2006 whereas as per Range records, the intimation was received on 28.06.2006. As the assessee have not intimated about the fire accident within 24 Hrs, the Range Officers visited the accident site only on 29.06.2006. Due to this the extent of damage could not be verified by the department.
The assessee claimed remission of duty on 583 Kgs of Sulphide Compound and 2650 Kgs of Chloro Compound whereas on verification of the RG1 register on 29.06.2006, the Range Officer found that the stock of the said compounds are 20 Kgs and NIL respectively.
During the verification of stock on 29.06.2006, the assessee have not intimated about the loss of Acetone in fire accident whereas the assessee have claimed remission of duty on 7000 Kgs Acetone vide their application cited.
There is a difference in estimated loss of stock furnished in the remission application with that of the ER1 return filed by by the assessee. The assessee have not reflected the value of the destroyed goods in the fire accident in the monthly ER1 return. Hence the value of the destroyed goods have been arrived basing on the clearance made during the month of April 2006 and the particulars are given below:
Sl. No. Product As per remission application As per ER 1 Return Qty. Estimated Cost Qty. Estimated Cost 1 Sulphide Compound 583 Kgs 8,74,500 575 Kgs 10,92,500 2 Chloro Compound 2650 Kgs 39,75,000 2658 Kgs 53,12,000 3 Acetone 7000 Kgs 3,29,000 As per the input invoices produced to the department, the estimated cost of Acetone is only Rs. 2,54,518/-. The assessee produced copies of invoices pertaining to 1445 Kgs of Acetone involving Cenvat amount of s. 66,810/-. The Cenvat credit availed on 7000 Kgs of Acetone was worked out to Rs. 40,724/- BED + Rs. 814/- Education Cess. The quantum of loss of excisable goods as per the documents produced by the assessee is Rs. 51,78,500/- whereas the loss as per Central Excise records is Rs. 66,59,018/-. As seen from the (i) FIR filed with Police Station (ii) report of Fire & Emergency Services dept and (iii) compliance report of the assessee to the Deputy Inspector of Factories has observed that the cause of fire accident is different in each report. The assessee have not furnished insurance survey report.
Remission of duty on inputs, capital goods and civil works does not arise, as no duty is payable on them. After hearing the appellant the impugned order has been passed rejecting the claim for remission.
3. The learned consultant submits that no accident can be considered as unavoidable. According to him all accidents are avoidable. Unfortunately I am unable to subscribe to this view since the legislature thinks otherwise.
4. The next submission is that the appellant had taken precautions and therefore the remission should have been given. On going through the impugned order it is seen that in the order-in-original in paragraph 5 (numbered as 6 in the order-in-original) the Commissioner had made the following observation:
As per the FIR filed with Sadasivpet Police Station on 29.4.2007 which is submitted by the assessee along with the remission claim, the said fire accident took place as the company has not taken necessary precautions. Further the inspection order of Deputy Chief Inspector of Factories, Hyderabad (Rural) dated 19.05.2006 inter alia states that the cause of fire accident is gross negligence on the part of the assessee to take necessary precautions. In view of the above it is apparent that the said fire accident is not an unavoidable accident. Hence, I hold that remission is not permissible on the impugned goods in terms of Rule 21 of Central Excise Rules, 2002 as the goods have been destroyed not due to an unavoidable accident, but due to negligence on the point of the assessee. I find that it is not only the department which has found negligence on the part of the appellants but also the fire department which is nodal department to consider the circumstances under which such accidents take place and come to a conclusion. Therefore the order of Deputy Chief Inspector of Factories dated 19.05.2006 is important. Further on going through the records it is also found that the police went ahead with prosecution of three persons which finally ended in the acquittal of the persons since the witnesses produced by the prosecution did not support their case and there was no other evidence. This shows that police also felt that accident was avoidable. The fact that police prosecuted three persons would show that police treated the fire as not at all an accident which is much more serious than the accident being avoidable or happened because of negligence. The circumstances are peculiar in this case wherein police and fire department both have entertained the same views as the Commissioner. In fact their views are more disadvantageous than the view of the Commissioner. Hence, I find that the rejection of the application for remission cannot be found fault with. Under these circumstances the appeal has no merits and is rejected.
(Order dictated and pronounced in open court) (B.S.V. MURTHY) TECHNICAL MEMBER iss