Date of Order: 19.10.2022

Facts:

• The Appellant, THE SUPREME INDUSTRIES LTD, was issued OIO rejecting the remission application of excise duty amounting to Rs. 40,47,645/- in respect of final product destroyed in fire which took place in his factory.
• Revenue contended that neither in the past nor in the present scenario there is any preponderance of fire fighting measure that the FSL report also indicate the electric wires of the company were ragged/ tattered at various places and were in a dilapidated condition which evidently indicated lethargy in their maintenance and lack of proper firefighting and checking arrangement on the part of the assessee.
• The appellant does not fall under Rule 21 of Central Excise Rules, 2002. As regard the valuation of burnt goods and reimbursement of element of Central Excise duty by Insurance Company, it is observed that as against the price of the goods i.e. Rs. 139 per KG, they have claimed the loss of Rigidex film @ Rs. 149.16 per KG. He contended that increase in price includes the excise duty, therefore, the appellant have recovered the element of excise duty from the insurance company, for this reason also the remission is not admissible. 
• The appellant have taken all the precautions to avoid the fire incident but the fire incident that took place in the factory was beyond the control of the appellant.

Issue:

• Whether the OIO is correctly issued rejecting remission of duty?

Order:

• The Tribunal observed that the main contention of the adjudicating authority in rejecting the remission application is that fire was avoidable and due to not taking proper care by the appellant, the fire took place, therefore fire incident is not due to unavoidable circumstances. 
• The appellant have been regularly installing the firefighting equipment in their factory from 1987-2014. The fire took place in the factory on 07.01.2017. The contention of the adjudicating authority is that the appellant has not made any expenditure towards firefighting measures from 2014 onwards and that is the reason the fire has taken place.
• The short circuit is clearly beyond the control of anyone and it is general that in the majority of cases fire takes place due to short circuit and the same cannot be predicted by anyone in advance.
• The authorities observed that the clear view that appellant is entitled for remission of duty in respect of final product lost or destroyed in fire incident. Needless to say that the appellant needs to reverse the cenvat credit in respect of the inputs, if any availed, contained in the final product in respect 
• of which the remission is sought for. With the above observation, the impugned order is set aside. 
• Appeal is allowed.