Customs, Excise and Gold Tribunal - Delhi
Shiva Essential Oils And Chemicals vs Cce on 5 November, 2003
Equivalent citations: 2004(168)ELT121(TRI-DEL)
ORDER S.S. Kang, Member (J)
1. Heard both sides.
2. The appellants are engaged in the manufacture of chemicals and essential oils. A fire accident took place in their factory on 31.12.91 and due to the fire certain raw materials and finished goods got destroyed. The appellants filed application for remission of duty on the finished goods destroyed in fire under Rule 49 of the Central Excise Rules. The adjudicating authority rejected the application on the ground that the cause of destruction of goods was neither natural nor unavoidable. The contention of the appellant is that their factory was not even insured, they immediately informed the jurisdictional Supdt. Regarding incident of fire and after verification of the goods, they filed a detailed remission application. The appellants relied upon the Tribunal's decision in the case of CCE, Vs. Welspun Terri Towels reported in 2002-Taxindiaonline-35-CESTAT-MUM and the decision of Hon'ble Allahabad High Court in the case of Jawahar Lal Hira Lal Commission Agents Vs. CCE reported in 2003-Taxindiaonline-28-HC-UP-CX.
3. The Id. SDR appearing on behalf of the respondents reiterates that the lower authorities rightly held that it was not an unavoidable accident. The contention of the Revenue is also that the Tribunal has no jurisdiction to entertain the appeal as it is a loss of goods during the storage of the goods in the factory. We find that, the adjudicating authority vide its order rejected their application for remission of duty under Rule 49 of the Central Excise Rules. Rule 49 of Central Excise Rules provides that no duty is chargeable on the goods which have been lost or destroyed by natural causes or unavoidable accident during handling or storage in such store room or other approved premises. Whereas Section 35B of Central Excise Act only provide that no appeal lies for Tribunal in case of loss of goods, where the loss occurs in transit of factory or a warehouse or to another factory or from one warehouse to another, or during the course of processing of goods in warehouse or in sludge. We find that loss or destruction due to unavoidable accident is specifically covered by Rule 49 of Rules whereas Section 35 B of Act only covers simple loss due to any reason. Therefore, the order is appealable, therefore, we find no merit this argument of the Revenue.
4. Now, coming to the merits of the case. Revenue is not disputing the fact that the incident of fire had not taken place in the factory. The application for remission was rejected only on the ground that cause of destruction of goods was neither natural nor unavoidable. We find that Hon'ble Allahabad High Court in the case of Jawahar Lal Vs. CCE, held that discretion conferred on Collector of Central Excise to remit the duty if the goods were lost or destroyed by unavoidable accident cannot be exercised arbitrarily but has to be exercised judicially and according to law. The refusal to exercise discretion in favour of assessee must be based on facts justifying the refusal.
5. Further we find that this issue is covered by the decision of the Tribunal in the case of CCE vs. Welspun Terri Towels. The Tribunal in a similar situation held that in the absence of any proof to show that fire was caused by the assessee or by his negligence, The commissioner was not required to ascertain the cause of fire. We respectfully follow the above decision of the Tribunal and set aside the order. The appeal is allowed.