No remission and no reversal of credit when the identity of intermediate/ semi- finished goods not established.

PJ/Case Laws/2012-13/1437

Case: - M/s HETERO DRUGS LTD Vs CCE, VISAKHAPATNAM

Citation: - 2013-TIOL-264-CESTAT-BANG

Brief Facts: - The appellants are manufacturer of bulk drugs. There was a fire accident in their factory premises and there was damage to goods. The dispute relates to CENVAT credit involved on inputs contained in "semi finished goods" and "intermediate goods". The appellants claimed remission of duty on semi finished goods and intermediate goods vide their letter. The Commissioner granted the remission vide letter in the following terms:

"The Commissioner is pleased to grant remission of central excise duty on semi finished goods and intermediate goods destroyed in fire accident occurred on 11/01/2009 subject to the reversal of CENVAT credit taken on inputs used in the manufacturer or production of the said goods."

On the basis of the condition under which remission of duty was granted, a show-cause noticed was issued and the impugned order stands issued. After granting remission of duty, a demand has been made as credit involved on the inputs contained on the said semi finished goods destroyed. Similarly, after granting remission of duty on intermediate goods, a demand confirmedbeing credit attributable to inputs contained in the said intermediate goods.

Appellant Contention:- The appellants submitted that it was by mistake, that they sought for remission on the semi finished goods/intermediate goods as there was no liability to excise duty on the said goods not being marketable in that condition.

Respondent Contention: - The learned Additional Commissioner (AR) submits that once remission was granted, the credit attributable to the inputs contained in the goods on which remission was granted has to be recovered in pursuance of Board's Circular No.907/27/2009-CX dt. 07/12/2009.

Reasoning of Judgment: - Tribunal has carefully considered the submissions from both sides and perused the records. Neither the show-cause notice nor the order of the Commissioner indicate the nature of semi finished goods or intermediate goods to determine as to whether they are liable to excise duty. Undisputedly, the question of remission of duty will arise only when the duty liability is established. The question of reversal of the credit attributable to inputs contained in the goods on which remission granted will arise only when there is need for grant of remission. In the peculiar facts and circumstances of the goods, where even the identity of the semi finished/intermediate goods are not available, the question of granting remission and consequently seeking reversal of the credit attributable to the inputs may not arise. The circular of the Board dt. 07/12/2009 sought to be relied upon by the learned Additional Commissioner (AR) may not be relevant to the facts of the present case. In view of the above, there shall be waiver of predeposit of dues as per the impugned order and stay of recovery thereof till the disposal of the appeal.

Decision: - Stay Granted.

Comment:- The essence of this case is that when the subject goods destroyed in the fire are not identifiable and it cannot be established whether they were excisable or marketable, the question of remission and reversal of input credit does not arise.

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PJ/Case Laws/2012-13/1437

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