By TIOL News Service

NEW DELHI, AUG 21, 2014: THE appellant is a cigarette manufacturer.

On 26/07/04, the appellant informed the jurisdictional Assistant Commissioner, Central Excise about a dacoity which took place in their factory at night on 24-25 th July, 2004. They informed that they have lost cigarette machines, Filter P-A-TRO machine, M-2 packers, raw materials as well as finished goods in the dacoity and they have lodged police complain in this regard.

Responding to this intimation, the Central Excise officers visited the factory on the same day and stock taking was conducted in presence of the Managing Director. Presumably, they did not find anything except the four walls, may be…

The total duty/CENVAT credit involved on the finished goods and CENVAT credit availed on raw materials found short was Rs.31,86,631/-.

A SCN was issued for recovery of the duty/CENVAT credit on the finished goods/CENVATed raw material which was reported as missing.

In the meantime, the appellant also filed an application for remission of the duty on the goods lost on account of dacoity.

The remission application was rejected by the Commissioner.

The grounds for rejecting the remission application is an interesting one - that the police authorities have informed that the case was lodged on false ground and, as such, the police report establishes that there was no dacoity at all and that this is not a case of genuine loss of goods due to unavoidable accident but is a case where the remission of duty is being claimed on the ground of dacoity when no dacoity took place.

Consequently the Additional Commissioner confirmed the duty/CENVAT credit demand of Rs.31,86,631/- along with interest and also imposed a penalty of Rs.2 lakhs u/r 25 of CER, 2002.

As the Commissioner(A) upheld this order, the appellant is before the CESTAT.

None appeared for the appellant and the notice sent was returned with remarks ‘Left'. Perhaps, the appellants did the vanishing trick just as the machinery and everything else in their factory. The Bench, therefore, decided the appeal ex-parte citing rule 21 of the CESTAT (Procedure) Rules, 1982.

The Bench after considering the submissions made by the Revenue representative observed -

++ There is no dispute that the goods in respect of which the remission of duty is being claimed are reported to have been lost on account of dacoity, which is claimed to have taken place in the night on 24-25th July, 2004. Though the appellant had lodged an FIR with the police authorities, the police authorities in their report have reported that the FIR was lodged on false grounds and that no dacoity had taken place.

++ Keeping this fact in view, the Commissioner had rejected the appellant's application for remission of duty filed under Rule 21 of the Central Excise Rules, 2002.

++ Even if this is treated as a case of dacoity the remission of duty cannot be allowed in view of Larger Bench judgment in the case of   Gupta Metal Sheets vs. CCE, Gurgaon - 2008-TIOL-1891-CESTAT-DEL-LB .

++ Since, the remission of duty on the goods claimed to have been lost is not admissible and for this reason only the Commissioner had rejected the appellants claim for remission of duty, the duty demand has been correctly confirmed against the appellant and in the circumstances of the case penalty has also been correctly imposed.

In fine, the appeal was rejected.

(See 2014-TIOL-1556-CESTAT-DEL)