Custom, Excise & Service Tax Tribunal
M/S. Mahendra Sponge & Power Ltd vs C.C.E. & S.T. Raipur on 30 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. II Appeal No. E/52554/2014-EX(SM) [Arising out of Order-in-Original No. 14/RPR/I/2014 dated 28.01.2014 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Raipur]. For approval and signature: Honble Shri Ashok Jindal, Member (Judicial) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s. Mahendra Sponge & Power Ltd. .Appellants Vs. C.C.E. & S.T. Raipur .Respondent
Appearance:
Shri Manish Sharan, Advocate for the Appellants Shri V.P. Batra, DR for the Respondent CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Date of Hearing: 30.04.2015 FINAL ORDER NO. 51498/2015-EX(SM) Per Ashok Jindal:
The appellant is in appeal against the impugned order demanding duty from the appellant in insurance claim.
2. The facts of the case are that appellant is manufacturer of sponge iron. On 15.09.2005 heavy rain occurred in their factory and due to heavy rains finished goods got damaged. Appellant filed the claim before the insurance company for damaged goods and received the compensation. The appellant cleared these damaged goods on payment of appropriate duty. Revenue is of the view that as the appellant has received compensation for damages on the goods from insurance company and same form a part of the value of the goods. Therefore, they are required to pay duty on this compensation. Therefore, proceedings were initiated against the appellant and demand was confirmed. Matter came to this Tribunal and this Tribunal remanded matter back to the Adjudicating Authority to pass an order after considering the order of this Tribunal wherein the following directions were given to the Adjudicating Authority:
In view of the aforesaid observations, it is required to send this case back to the Ld. Adjudicating Authority to examine RG-1 record and find out whether the stock was existing before the loss by rain and exist after the loss. In the process if the goods had been cleared, levy of excisable duty thereon cannot be ignored. But it is made clear that without bringing out to the knowledge of the assessee about the appropriate provision of law for taxability of insurance claim under the Excise Law, the compensation cannot be dutiable. The authorities should afford appropriate opportunity of hearing to the appellant and pass a reasoned and speaking order.
3. In remand proceedings the appellant filed their reply and submits as under:
The noticee submit that they had not cleared the damaged stock of sponge iron on 15.09.2005 from the stock and it was shown in the RG-1 stock account alongwith other stock. The opening balance of stock account of the noticee. Copy of RG-1 daily stock accounts is annexed hereto and marked as Annexure-E. The production of sponge iron on 15.09.2005 was 129.00 MTs whereas the clearance of sponge iron was 15.0790 on 15.09.2005. The clearance of 150.790 was made under invoice as per Rule 11 of the Central Excise Rules, 2002 on payment of appropriated duty. Further 109.605 Mts of damaged sponge iron was cleared under Invoice No.1254 dated 16.09.2005, 1266 dt. 17.09.2005 and 1269 dated 18.09.2005 and these quantity were also shown in the clearance during the month of September 2005. All these three invoices bear the description of the goods as O/G Sponge Iron, the full form of it is Off Grade Sponge Iron.
4. Thereafter, the adjudicating authority demanded duty on the insurance claim which are challenged by the Ld. Commissioner (A) and also confirmed the order of adjudication. Therefore. appellant is before me.
5. The Ld. Counsel for the appellant submits that there is no provision in the Central Excise Law to demand duty on insurance claim. To support this contention he relied on the decision of this Tribunal in the case of Ratnatraya Heat Exchangers Ltd. Vs. CCE Mumbai-2011 (269) ELT 419 (Tri-Mum), in the case of Jai Bhavani SSK Ltd. Vs. CCE Aurangabad-2008 (222) ELT 370 (Tri-Del) to say that amount received as insurance claim cannot be called as transaction value of the goods, damaged goods or goods lost.
6. On the other hand Ld. AR relied on the impugned orders para 5.3 which is reproduced here as under:
In the instant case the appellant has contented that they have removed graded / poor quality Sponge Iron vide Invoice No.1254, 1266 & 1269 dated 16.05.2005,17.09.2005 & 18.09.2005 respectively without having any tangible evidences. Further, the Adjudicating Authority observed at para 12 (iii) in the impugned order that in their insurance claim, the Noticee had assessed the goods @ Rs.9000/- PMT. Therefore, contention of the Noticee that they have removed off graded / poor quality of sponge iron vide Invoice No. 1254, 1266 & 1269 dated 16.05.2005,17.09.2005 & 18.09.2005 respectively is not tenable because the goods cleared under these invoices were also @Rs.9000/- which shows the rate of prime grade material. Thus without any tangible evidences in support of their claim their contention is not sustainable. Further, in the defence submission it is found that the Appellant had pleaded that they have not cleared the damaged stock of Sponge Iron from the stock it was shown in the RG-1 stock account along with other stock. But he failed to produce any documentary evidences in support of their submission even in the Daily Stock Register Account. Without any documentary evidences their submissions cannot be acceptable. They have not shown the details of losses in the monthly returns of impugned period which is mandatory as per the Rule 12 of Central Excise Rules, 2002. If they were actually suffered from loss of Sponge Iron due to heavy rain or wind then they would have been applied for remission of duty as per provision laid under the Rule 21 of Central Excise Rules, 2002. But in the instant case they failed to do. Appellant has not produced any documentary evidences to substantiate their claim neither before me nor before the Adjudicating Authority. Thus I do not find infirmity in the order in original.
7. He further submits that the appellant has not produced the evidence before the Ld. Commissioner (A) regarding the clearance of damaged goods.
8. Heard the parties. Considered the submissions.
9. In their remand proceedings there were directions to Revenue also to tell the appellant under which provision revenue is seeking the demand of duty from the appellant on insurance claim on damaged goods. Neither both the authorities below nor the Ld. AR is able to tell under which provision duty is payable before the appellant on insurance claim received for damaged goods. In these circumstances, relying on the case laws cited by the Ld. Counsel for the appellant I hold that demand is not sustainable.
10. Consequently, impugned order is set aside. Appeal is allowed with consequential relief if any.
(Dictated and pronounced in the open court.)
(Ashok Jindal) Member (Judicial)
Bhanu
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E/52554/2014-EX(SM)