Custom, Excise & Service Tax Tribunal
Cce, Raipur vs M/S Crest Steel & Power Pvt. Ltd on 7 May, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
COURT NO. II
Excise Appeal No. 1628 of 2008-SM
(Arising out of Order-in-Original No. Commissioner/RPR/35/2008 dated 7.4.2008 passed by the Commissioner, Customs & Central Excise, Raipur)
CCE, Raipur Appellant
Vs.
M/s Crest Steel & Power Pvt. Ltd. Respondent
Appearance:
Appeared for Appellant : Shri V.K. Saxena, Jt. CDR
Appeared for Respondent : Shri Abhishek Jaju, Advocate
Date of Hearing: 13.5.2010
CORAM: HONBLE MR. D.N. PANDA, JUDICIAL MEMBER
Order No.dated.
Per D.N. Panda:
Revenue being aggrieved by the order passed by the ld. Commissioner holding that sponge iron coming in contact with rain water rendering that unfit for sale or marketing shall not be dutiable and duty thereon can be remitted under law.
2. Ld. Jt. CDR Shri Saxena vehemently opposes the first Appellate order with the argument that remitting duty as above, what has been done by the impugned order shall cause loss of Revenue. According to him, there is a procedure prescribed by Chapter 18 of Excise Manual in respect of destruction of goods by natural causes to claim remission of duty. Such a procedure if not followed, which is binding on the ld. Commissioner to follow his order does not sustain.
3. Ld. Counsel Shri Jaju appearing on behalf of Respondent brings out that in para-9, ld. Commissioner has categorically found that the damage of sponge iron was due to rain water and that remained undisputed. Ld. Commissioner has also found that damage had occurred due to natural cause and that too beyond control of the Respondent. It is further finding of the ld. Commissioner (Appeals) that the claim for remission of duty was supported by a report of surveyor and the Insurance Agent. The claim that was made before the insurance was without claim for duty element. The sponge iron being accounted for in daily stock account of the Respondent, when that is not marketable and the Respondent was ignorant of the Central Excise law and procedure, they did not remove the goods from their factory, remission was rightly allowed by the ld. Commissioner on the basis of law and precedent of Tribunal decisions.
4. In support of his arguments, Shri Jaju relies on the judgement of the Tribunal in the case of Mira Chemicals Vs. CCE reported in 2009 (234) ELT 328 and in the case of Balrampur Chini Mills Ltd. Vs. CCE reported in 2005 (181) ELT 116. Relying on the judgment of Honble High Court of Allahabad in the case of CCE Vs. Balrampur Chini Mills Ltd. reported in 2008 (223) ELT 34 (All.). Ld. Counsel submits that similar such nature of natural losses due to destruction of the goods were entitled to remission. Honble Court has appreciated the claim of the Respondent in that Appeal and the goods lost by natural causes were held to be not dutiable.
5. Heard both sides and perused the record.
6. The contention raised by Revenue that ld. Commissioner has ignored the instructions under Chapter 18 of the CBECs Manual is not a point for decision in this Appeal for the reason that neither Section 5 of the Central Excise Act, 1944 nor Rule 21 of Central Excise Rules 2002 have made provision prescribing any mandatory conditions to be satisfied by the Authority to entertain claim of remission which arise out of lost or destruction by natural causes or are by unavoidable accident or are claimed by manufacturer as unfit for consumption or for marketing at any time before removal. Section 5 of the Central Excise Act, 1944 has conferred power under Central Government to make rule to provide for remission of duty of excise leviable on any excisable goods which due to any natural cause found to be deficient in quantity. Reading of the basic provision of law with the rule throws light that following elements are to be satisfied :-
(1) There should be deficiency in quantity of the excisable goods resulting out of natural cause.
(2) The authority entertaining Application for remission should have satisfaction that the goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by manufacturer unfit for consumption or for marketing.
(3) The claimant has duty to show to the Authority that such claim has only arisen out of the reasons mentioned in Rule 21 of Central Excise Rules 2002.
(4) The satisfaction of the Authority allowing remission should be objective instead of being subjective.
(5) It is the burden of the assessee to prove that the loss has occurred for the reasons stated in Rule 21 of Central Excise Rules 2002.
7. When the aforesaid elements of law is satisfied and there is a factual finding to the said effect by the Authority considering remission Application, there is no bar to entertain remission application. In the present case, the assessee had not removed the goods which is recorded by the ld. Commissioner in para-9 of the impugned order. His finding is that the remission claim on the goods was loss due to rain water rendering the goods unfit for marketing. The satisfaction of the ld. Commissioner is clear from para-9 of the order who appears to have well understood the provisions of Section 5 of Central Excise Act 1944 read with Rule 21 of Central Excise Rules, 2002.
8. Decision of Honble High Court of Allahabad in the case of CCE Vs. Balrampur Chini Mills Ltd. (supra) was made in the context of earlier Rule 49 of Central Excise Rules 1944. The Rule 49 which was subject matter of scrutiny by Honble High Court of Allahabad is in similar parameteria with Rule 21 of the Central Excise Rules, 2002 emanating from Section 5 of Central Excise Act. 1944. The decision of Honble High Court of Allahabad is squarely on the point of law as to the requirement of satisfaction of the ingredients of the provisions of law. Honble High Court in para-4 of the judgment has held that if it is seen that if the goods have been lost by natural causes, duty is not payable. Having noticed that the present case has the features as that was in the above judgment, Revenues appeal is bound to be dismissed. That is ordered accordingly.
(Dictated & pronounced in open Court) (D.N. PANDA) JUDICIAL MEMBER RM