M/S. Steelbird Hi Tech India Ltd vs C.C.E. Delhi-Ii

[Arising out of Order-in-Appeal No. 54/CE/D-II/2011 dated 03.02.2011 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Delhi].

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. Steelbird Hi Tech India Ltd. .Appellants

Vs.

C.C.E. Delhi-II .Respondent

Appearance:

Shri J.P. Kaushik, Advocate for the Appellants

Shri Rajeev Tandon, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 13.02.2015

FINAL ORDER NO. 50375-50376/2015-EX(SM)

Per Ashok Jindal:

The appellant is in appeals against impugned orders:

a) Denial of remission of duty on the goods lost in fire, and;

b) Consequently demanding the duty on finished goods, semi finished goods and capital goods lost in fire.

2. The facts of the case are that on 24.11.2002, fire broke out in the factory of the appellant and certain inputs, semi finished goods, unfinished goods, finished goods and capital goods were destroyed. These facts are not in dispute. The appellant filed the remission claim of duty on the goods lost in fire. The adjudicating authority rejected their remission claim and consequently a show cause notice was issued to demand duty on finished goods, unfinished goods / semi finished goods and capital goods. The show cause notice was adjudicated. Demand on duty was confirmed along with interest. Aggrieved from the said orders appellant is before me.

3. The Ld. Counsel for the appellant submits that while denying the remission claim under Rule 21 of the Central Excise Rules, 2002 the Ld. Commissioner (A) relied on the decision of this Tribunal in the case of Mafatlal Industries Vs. C.C.E. Ahmedabad-2003 (154) E.L.T. 543 (Tri-Bom) on finished goods. But the said decision was reversed by the larger bench of this Tribunal in the case of Grasim Industries Vs. C.C.E. Indore-2007 (208) E.L.T. 336 (Tri-LB). Therefore, they are entitled for remission of duty on finished goods. Consequently, they are not required to pay duty on finished goods lost in fire and also not required to reverse the Cenvat Credit on inputs contained in the finished goods.

4. For denial of remission of duty on semi finished goods / unfinished goods the Ld. Commissioner (A) relied on the decision of this Tribunal in the case of Deepak Tandon Vs. C.C.E. Bhubaneswar-2009 (126) E.L.T. 1079 (CESTAT), to say that claim of remission is not maintainable as goods are not marketable. He further submits that as per the decision in the case of Grasim Industries (Supra) the appellant cannot be directed to reverse the Cenvat Credit on inputs contained in semi-finished goods or unfinished goods. He further submits that on capital goods the appellant has taken the credit correctly and same has been put in use. Therefore, Cenvat Credit cannot be denied. He further submits that as they have reversed Cenvat Credit on inputs destroyed in fire, therefore, appellant is not contesting the issue.

5. On the other hand Ld. AR supported the impugned order to say that on semi-finished goods and unfinished goods denial of remission of duty is correct, relying on the decision in the case of Deepak Tandon (Supra). Consequently, appellant is required to reverse the Cenvat Credit contained in unfinished / semi-finished goods. He further submits that on capital goods, the capital goods have been destroyed before their estimated life. In that case proportionate credit is required to be denied. He also submits that the appellant got claim from the insurance company. Therefore, that proportionate Cenvat Credit is to be considered for denial of the Cenvat Credit.

6. Heard the parties. Considered the submission.

7. In this case the following issues are required to be decided:

a) Whether the appellant is entitled to claim remission of duty on finished goods destroyed in fire or consequently required to pay duty on the value of finished goods or required to reverse the Cenvat Credit on inputs contained in the finished goods.

b) Whether the appellant is entitled to claim remission of duty on semi-finished goods / unfinished goods lost in fire. Consequently, appellant is required to reverse the Cenvat Credit contained in semi-finished goods and unfinished goods, and;

c) Whether the appellant is entitled to claim remission of duty on capital goods or not and consequently the appellant is required to reverse proportionate Cenvat Credit on capital goods or not.

8. To decide the first issue I find that same has come before the Larger Bench of this Tribunal in the case of Grasim Industries (Supra) wherein this Tribunal has observed in para 7 as under:

Reading of rules under which remission is granted in respect of goods which were lost or destroyed by natural cause or by natural accident, does not provide any condition regarding reversal of credit taken in respect of inputs used on such goods, hence we are unable to support the view taken in the case of Mafatlal Industries whereby it has been held that assessee has to reverse the credit taken of inputs used in such goods on which remission is granted.

9. Therefore, I hold that on finished goods destroyed in fire the appellant is entitled to claim remission of duty. Consequently, appellant is not required to pay duty.

10. For claim of remission of duty on unfinished / semi-finished goods destroyed in fire I do agree with the contention of the Ld. Commissioner (A) relying on the decision of Deepak Tandon (supra) that these goods are not marketable. Therefore, remission of duty cannot be claimed. But at the same time relying on the decision of Grasim Industries (Supra) when the input have gone in manufacturing process, therefore they are not required to reverse Cenvat Credit on input contained in unfinished goods / semi-finished goods lost in fire as there is no provision of reversal of Cenvat Credit in respect of inputs used in manufacturing of such goods.

11. On capital goods I find that appellant has taken Cenvat Credit correctly and there is also no provision in the Cenvat Credit Rules to reverse proportionately Cenvat Credit on capital goods which was lost in fire or were not used. Therefore, I hold that the appellant is not required to reverse Cenvat Credit on capital goods.

12. In nutshell the appellant is not required to pay duty on finished goods and not required to reverse the Cenvat Credit on inputs contained in unfinished goods and semi-finished goods and not required to reverse the Cenvat Credit of capital goods.

13. With these regards appeal is allowed.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

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E/1128 & 1823/2011-EX(SM)