CX - Dept. seeking reversal of CENVAT credit contained in finished goods destroyed in fire and appellant paying same with interest - denial of benefit of remission on ground that godown not registered is contrary to facts obtaining on records - appeal allowed : CESTAT
By TIOL News Service
MUMBAI, JULY 07, 2014 : VIDE an order dated 28/05/2008 the CCE, Thane-I denied remission of CE duty of Rs.11,70,405/- on cotton grey fabrics destroyed in fire on 23/05/2004 in the premises of the appellant. The ground adduced for rejection of remission application is that the godown of the appellant situated at the 1st floor of the appellant's premises at H.No. 1286, ShankeshwarCompund, Narpoli, Bhiwand i was not part of the registered premises of the appellant.
Aggrieved by this rejection the appellant is before the CESTAT and submits that they came under the purview of excise levy in the year 2003 and as per the simplified procedure they had applied for registration indicating Gala No. 4 situated at Ground floor in H.No. 1286 as the premises to be registered and the appellant was granted a provisional registration no. on 05/05/2003. Subsequently, vide letter dated 08/09/2003 the appellant informed the department that their godown is situated at Gala No. 1 & 3 of the 1st floor of the same building. It is the contention of the appellant that they had been storing finished products in the godown situated at 1st floor and had been clearing the goods from the said godown on payment of duty. A fire broke out in the said premises on 23/05/2004 and the incident was informed to the department vide letter dated 23/05/2004 and the police panchanama in this regard was also submitted to the department vide letter dated 02/06/2004. Vide letter dated 02/07/2004, the appellant submitted details of the goods destroyed in the fire and the value thereof. On 11/04/2005 the department informed the appellant that they are required to reverse CENVAT Credit on the inputs contained in the damaged goods destroyed in the fire along with interest and quantified the same at Rs.8,92,603/- plus additional TTA as applicable along with interest at 15% payable from 25/05/2004 till the date of reversal.
In response thereto, the appellant vide letter dated 06/05/2005, intimated the reversal of credit taken along with interest thereon. Thereafter on 03/12/2007 a SCN was issued to the appellant proposing to deny the remission of the duty applied for and the impugned order has been passed.
In as much as since the department did not object to the storage of finished goods in the godown at first floor which had been treated as part of the appellant's factory and wherefrom clearances took place on payment of duty, denial of remission on the ground adduced in the order is improper, the appellant submitted.
Reliance is also placed on the Tribunal decision in Sportking India Ltd. wherein it was held that when finished goods are stored in unapproved area which was destroyed in fire, the remission of duty cannot be denied especially when permission was taken from the revenue authorities for storage of the goods.
The revenue representative reiterated the findings of the adjudicating authority and also submitted that since the godown on the first floor was not registered if the goods have been stored outside the approved premises and they got destroyed, the question of grant of any remission would not arise and the goods were deemed to have been removed from the approved premises.
The Bench inter alia observed -
++ From the records, it is seen that as early as in September 2003 the appellant had intimated to the department that their godown is on the 1st floor and the department had never objected to the storage of non-duty paid finished goods in the said godown.
++ Even on 11 April 2005 when the department wrote to the appellant, they were only asked to reverse the CENVAT Credit taken on the inputs contained in the finished goods destroyed in the fire. There was no demand of duty on the finished goods stored in the godown, which also shows that the department has always been treating the godown in the 1st floor as part of the approved premises.
Holding that the ground taken by the department for denial of remission that the godown on the 1st floor was not part of the approved premises is contrary to the facts obtaining on records, the Bench held that the appellant was rightly entitled for remission of duty.
The appeal was allowed with consequential relief.
(See 2014-TIOL-1216-CESTAT-MUM)
