Whether Cenvat credit of inputs allowable on loss of goods in fire when remission of duty already granted?

PJ/Case Laws/2012-13/1512

Case:-KHANDELWAL LAMINATES LTD. Versus COMMISSIONER OF C. EX., GHAZIABAD

Citation:- 2013 (289) E.L.T. 58 (Tri.-Del.)

Brief Facts:-This application by the appellant to dispose this appeal on merit. The submission of the appellant is that when the goods were kept under appellant's superdnama, fire occurred on 18-6-2004 causing destruction to those goods. The goods so destroyed by fire enjoyed remission claim by adjudication order but while passing that order there was direction to reverse the Cenvat credit availed on inputs contained in the goods valued Rs. 2,17,605/- which was subject matter of destruction in fire. Such direction is liable to be set aside.

Respondent Contentions:-The Revenue explains that occurrence of fire on 18-6-2004 is on record and intimation thereof made to the Commissioner on 29-7-2004 is patent from adjudication order dated 4-12-2009. Considering the issue of levy of penalty on earlier occasion, Tribunal waived the penalty by Final Order No. 240/2009, dated 17-3-2009 in Excise Appeal No. E/950/2007 [2009 (245) E.L.T. 756 (Tri. - Del.)]. Remission aspect being remanded by Tribunal was considered by adjudicating authority and the same was allowed. Once relief from duty was granted there is no logic to allow Cenvat credit in respect of inputs involved in that quantum and value of goods lost by fire. If Cenvat credit is allowed that shall amount to undue enrichment by the appellant.

Reasoning of Judgment:-We have heard Revenue, and also perused the order of the Commissioner on record. The Commissioner examined the remanded issue and even in absence of assessee, allowed remission noticing that fire occurred on 18-6-2004 destroyed the goods. He noticed that as against the goods destroyed on 18-6-2004 which was confiscated by Revenue, the appellant paid duty on 21-10-2004. The goods were destroyed by fire while it was under superdnama of the appellant. Those goods cannot get Cenvat credit as it is established principle of law that no one can enjoy at the cost of Revenue since the appellant was granted relief of remission and exchequer has also sacrificed duty component. There is no logic to unduly enrich the appellant when the input of respective value was destroyed and remission was allowed. Therefore, the order for reversal of Cenvat credit is justified in the eyes of law which calls for no interference to the order passed by the Commissioner. Accordingly, appeal is dismissed.

Decision:-Appeal dismissed.

Comment:- The essence of this case is that when the payment is duty has been remitted under Rule 21 of the Central Excise Rules, 2002, the Cenvat credit taken on the inputs used in the manufacture of said goods shall not allowable. Hence, credit taken on inputs is required to be reversed.

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PJ/Case Laws/2012-13/1512

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