By TIOL News Service

NEW DELHI, JAN 27, 2015: THE appellant are a 100% EOU engaged in manufacture of handicrafts. On 08/11/07, they cleared a consignment consisting of 72 bags of handicrafts for export which was to be made through the gateway port of Mumbai. The goods were dispatched in a truck. However, on 10/11/07, the truck met with an accident in which due to fire, not only the truck but the goods loaded in the truck were totally destroyed. The appellant, filed an application for remission of duty on the goods in terms of Rule 21 of the Central Excise Rules, 2002 before the Jurisdictional Additional Commissioner, Central Excise. The Additional Commissioner rejected the application for remission of duty and the Commissioner (Appeals) upheld the Order-in-Original. The assessee is now before the Tribunal.

After hearing both sides, the Tribunal held:

From plain reading of Rule 21, it is clear that remission of duty in respect of the goods lost or destroyed due to natural causes or by unavoidable accident is permissible only when this loss or destruction has taken place "at any time before removal" - point of time when the loss or destruction should take place is the time before the "time of removal" and it cannot be read as "at any place before the place of removal"; they have to be read as "at any time before the time of removal" - Under Section 4 (3) (cc) of the Central Excise Act, 1944 the "time of removal" even in respect of the goods sold from the depot or from consignment agent's premises or from any other place, is the time when the goods are cleared from the factory, hence, in respect of the goods cleared for export, even if the place of removal is the port from where the goods are exported, the "time of removal" would be the time when the goods have been cleared from the factory and, therefore, if the goods are lost during transit, for the purpose of Rule 21, the "time of removal" would have to be treated as the time at which the goods were cleared from the factory.

In the judgments of the Tribunal in the cases of Kuntal Granites Ltd. vs. CCE, Bangalore and CCE, - 2007-TIOL-930-CESTAT-BANG Coimbatore vs. Sree Narasimha Textiles Ltd - 2008-TIOL-2126-CESTAT-MAD the provisions of Section 4 (3) (cc) have not been considered and these judgments have read the words "at any time before removal" as "at any place before the place of removal" which is not permissible while interpreting a statutory provision.

The Tribunal in the cases of S.V.G. Exports (P) Ltd. vs. CCE, Chennai - III - 2008 (232) E.L.T. 305 (Tri. - Chennai), Hind Nippon Rural Indus. (P) Ltd. vs. CCE, Bangalore - 2004-TIOL-272-CESTAT-BANG, CCE, Jaipur - II vs. Hindustan Zinc Ltd. - 2012 (275) E.L.T. 136 (Tri. -Del.) and Meghmani Industries Ltd. vs. CCE, Ahmedabad -I - 2007-TIOL-2192-CESTAT-AHM, has taken a contrary view and it has been held when the goods after clearance from the factory for exports are lost in transit, the remission of duty under Rule 21 would not be admissible.