Remission Benefit Allowed for Goods Lost by Fire/Arson: Central Excise Rule 21

Regency Ceramics Ltd Vs Commissioner of Central Tax Puducherry (CESTAT Hyderabad)

The case of Regency Ceramics Ltd Vs Commissioner of Central Tax Puducherry revolves around the issue of remission of duty for goods lost by fire or arson. The Appellant, Regency Ceramics Ltd, filed an appeal before CESTAT Hyderabad challenging the duty demand imposed by the Adjudicating Authority.

Analysis: Regency Ceramics Ltd, a manufacturer of ceramic glazed tiles, suffered extensive damage to its assets due to a mob attack and fire on January 27, 2012. The Appellant filed a claim with the insurance company for the loss, excluding the component of excise duty. The Insurance Surveyor assessed the damage initially at Rs. 16.58 crores, but the Appellant went for arbitration proceedings, resulting in an award of Rs. 157 crores.

The Adjudicating Authority confirmed the duty demand based on the value of the finished goods lost and confiscated by the Central Excise Department. The Appellant argued that they are entitled to remission of duty under Rule 21 of the Central Excise Rules, 2002, considering the unavoidable nature of the fire and arson incident.

The CESTAT examined the facts of the case and the provisions of Rule 21. The rule allows for remission of duty when goods are lost or destroyed by natural causes or unavoidable accidents. The CESTAT noted that the fire and arson incident was beyond the control of the Appellant and caused significant damage amounting to over Rs. 300 crores.

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