Custom, Excise & Service Tax Tribunal
M/S Garden Silk Mills Ltd vs C.C.E. & S.T., Surat-I on 14 February, 2018
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/10631/2014-DB [Arising out of OIO-SUR-EXCUS-001-COM-56-13-14 dated 31.12.2013 passed by the C.C.E. Surat-i] M/s Garden Silk Mills Ltd. Appellant Vs C.C.E. & S.T., Surat-i Respondent
Represented by:
For Appellant: Mr. Willingdon Christian (Advocate) For Respondent: Mr. A. Mishra (A.R.) CORAM:
HONBLE DR. D.M. MISRA, MEMBER (JUDICIAL) HONBLE Mr. Raju, MEMBER (TECHNICAL) Date of Hearing/Decision:14.02.2018 Final Order No. A / 10324 /2018 Per: Dr. D.M. Misra This is an appeal filed against order-in-original No. SUR-EXCUS-001-COM-56-13-14 passed by the Commissioner of Central Excise Surat-I. Briefly stated the facts of the case are that due to an incident of fire in the factory of the appellant on 04.08.2011, inputs, finished goods, semi-finished goods and capital goods were destroyed. Consequently, demand notice was issued on 31.07.2012 for recovery of the total duty/ audit of Rs. 68,66,011/- with interest and penalty. On adjudication, entire demand was confirmed with interest and penalty. Hence the present appeal
2. Ld. Advocate at the outset submits that the appellant are not disputing the duty liability on inputs and finished goods destroyed in fire amounting to Rs. 27,53,427/- and Rs. 22,263/- respectively. However, duty demand on semi-finished goods and capital goods destroyed in fire are contested in the present appeal. He submits that as far as duty on semi-finished goods(WIP) are concerned it is his contention that since the goods had not reached the RG-1 stage and not finished goods, therefore, no duty can be demanded on the same. In support the Ld. Advocate refers to the judgment of this Tribunal in the case of Urmi Chemicals vs CCE 2014 (301) ELT 356 (Tri. Mum). On the liability relating to capital goods destroyed in fire, the Ld. Advocate submits that the capital goods have been put to use for considerable period of time and after its destruction in fire, credit availed on such capital goods cannot be demanded. In support, he refers to the judgment of Honble Gujrat High Court in the case of CCE vs Biopac India Corporation Ltd. 2010 (258) ELT 56 (Guj.). Further he submits that remnants of destroyed capital goods which could not be used had been cleared as scrap on payment of duty. Ld. Advocate further submits that the incident of fire took place on 04.08.2011 and major portion of the duty on inputs and finished goods have been paid by them on 31.08.2011. It his contention that, therefore, the imposition of penalty under Rule 15 of the Cenvat Credit Rules is not warranted.
3. Ld. AR for the Revenue reiterated the findings of Ld. Commissioner (Appeals).
4. Heard both the sides and perused the records.
5. We find that the inputs, finished goods, semi-finished goods and capital goods were undisputedly destroyed in the incident of fire on 04.08.2011. In the present appeal, the appellants do not dispute the liability of duty in relation to inputs and finished goods. It is their contention that semi finished goods or work in progress goods, since not attained the RG-1 stage and ready for dispatch, therefore, duty cannot be demanded; also credit availed on capital goods on destruction in the incident of fire cannot be demanded as the said capital goods were not lying and cleared as such but has been put to use for a consideral period. We find that these issues are covered by the aforesaid judgments of Urmi Chemicals and Biopac India Corporation Ltd.s (supra) case, following the said precedent laid down abode, we are of the view that demands raised against the appellant for destruction of semi-finished goods and capital goods cannot be sustained.
6. As far as penalty is concerned, we find that major portion of the liability has been discharged within one month and the present demand notice is issued for normal period of limitation. Also the liability to discharge duty arose consequent to the incident of fire. In these circumstances, no penalty is imposable on the appellant. Appeal disposed of as above.
(Dictated and pronounced in the open court)
(Mr. Raju) (Dr. D.M. Misra)
Member (Technical) Member (Judicial)
Neha
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E/10631/2014-DB