Sun Pharmaceuticals Industries Ltd Vs C.C.E. & S.T (CESTAT Ahmedabad)
The Customs, Excise, Service Tax Appellate Tribunal (CESTAT), Ahmedabad, in a recent judgement, allowed Sun Pharmaceuticals Industries Ltd to apply for a remission of duty on goods that were destroyed due to an accidental fire. The tribunal held that the company had complied with all necessary procedures and was entitled to a remission of duty on the finished goods.
Sun Pharmaceuticals had applied for the remission of duty on the destroyed goods following a fire in their factory. The adjudicating authority rejected the remission application based on guidelines prescribed under a trade notice. The authorities alleged that Sun Pharmaceuticals did not take adequate precautions to prevent the fire and failed to lodge an FIR within 24 hours. However, CESTAT, upon review, decided that the rejection was unjustified. The tribunal noted that the fire occurred accidentally and Sun Pharmaceuticals had followed all required procedures, including reversing the cenvat credit involved in the destroyed goods. The ruling draws attention to the fact that, while procedural guidelines are critical, their rigidity should not be detrimental in cases where the main criteria for a duty remission have been met.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
These two appeals are directed against Order-In-Appeal No VAPEXCUS-000-APP-411-13-14 dated 16.11.2013 and Order-in-Appeal SRP/88/VAPI/2013-2014 dated 15.05.2023. The appeal No. E/11131/2014 was filed against Order-in-Appeal dated 16.11.2013 upholding rejection of remission of duty in respect of the goods lost in fire and appeal no. E/12646/2013 was filed against Order-In-Appeal dated 15.05.2013 whereby, the demand of excise duty in respect of the goods lost in fire was confirmed. Since both the matter are interconnected, we E/11131/2014 for the purpose of narrating the facts of the case.
02. The brief facts of the case are that the appellant M/s. Sun Pharmaceuticals Industries Ltd. are engaged in the manufacture of medical equipments, they have filed their application dated 26.08.2010 for remission of duty on the finished goods destroyed in fire accident occurred in their factory on 07.06.2010 with the Assistant Commissioner, Central Excise & Customs, Division-II. The said application was subsequently revised by them vide their application dated 01.07.2011 on the request of the Assistant Commissioner, Central Excise & Customs, Division-II vide their letter dated 27.09.2010 and 27.05.2011. As per the remission application of the appellant they have claimed the remission of duty of Rs. 1,38,233/- involved in the PP medicine which were destroyed in fire accident. The adjudicating authority rejected the remission application under Rule 21 of the Central Excise Rules , 2002 mainly relying on the guidelines as prescribed under trade notice. The adjudicating authority found that the appellant have not taken proper precaution to avoid the fire accident. They have also not filed F.I.R. with police within 24 hours. The adjudicating authority likewise pointed out various discrepancies on the part of the appellant and concluded that the appellant have not fulfilled the conditions laid down in the Commissionerates Trade Notice No.36/2005 dated 15.04.2005 in as much as they failed to inform the department in due time , they did not take necessary precautions to safeguard the goods, they did not insured the goods, that they failed to claim in any proper pro-forma, claim was filed by them in proper pro-forma only on 01.07.2011 i.e. after almost one year after the fire accident on 07.06.2010. On this basis, the remission application was rejected vide Order-In-Original dated 31.07.2013 against which the appellant filed an appeal before the Commissioner (Appeals) who vide Order-In-appeal dated 16.12.2013 upheld the order of the original authority therefore, the present appeal No. E/11131/2014 was filed by the appellant and other appeal no. E/12646/2013 is towards the confirmation of demand of duty in respect of same goods lost in fire accident for which the remission was rejected. The result of this appeal will be an outcome of appeal no. E/11131/2014 as consequential effect.
03. Ms. Nidhi Nawal, learned counsel appearing on behalf of the appellant submits that the appellant have admittedly intimated to the range officer about the fire accident, the officers visited the factory and recorded the panchnama wherein, no lapse on the part of the appellant was pointed out. She submits that the appellant have informed the fire brigade to control the fire and also informed to the insurance company. The insurance survey was conducted and the appellant was also granted the insurance claim. She submits that the appellant by following the provision of remission reversed the cenvat credit of Rs.92,061/- involve in the goods destroyed in fire accident.
3.1. As regard the allegation that the appellant have not informed to the police, she submits that since there is no human casualty which took place, there was no need to inform the police department therefore, no FIR was lodged. She submits that as per the above compliance made by the appellant, the remission of duty ought to have been granted by the original authority. She further submits that the fire was occurred accidentally and nothing is on record that it happened due to carelessness of the appellant. She submits that in the identical facts, this tribunal in various judgments allowed the remission of duty. She placed reliance on the following judgments:-
