CENVAT - Even though appellant have lodged claim that 700 MT of Sponge Iron caught fire, certificate by Insurance Surveyor pegs same at 547.982 MT - CENVAT credit reversed to said extent is proper: CESTAT
By TIOL News Service
MUMBAI, MAR 26, 2015: THE appellant vide their letter dated 25/8/2006 informed the Central Excise department that input viz. Sponge Iron has caught fire on 2/8/2006. Subsequently they lodged insurance claim with the New India Insurance Co. Ltd. for loss of 700 MT of Sponge Iron burnt which is valued at Rs. 88 lakhs. According to the appellant the assessable value of 700 MT Sponge Iron comes to Rs. 65,80,000/-. In the certificate of Insurance Company Surveyor M/s. SIB Associates it was observed that burnt Sponge Iron quantity is 547.982 MT. On the said quantity of inputs burnt in fire, the CENVAT credit involved was Rs. 6,43,615/- and the same was reversed by the appellant on 16/3/2007.
Later, the jurisdictional excise authorities issued a SCN alleging that the assessee should have reversed the CENVAT credit contained in 700 MT of Sponge Iron as that was the quantity which they claimed had got burnt in the fire.
However, the adjudicating authority accepted that the actual loss was 547.982 MT as certified by the Insurance Surveyor and not declared one i.e. 700 MT.
Revenue went in appeal and the Commissioner (Appeals) held that when the appellant themselves have accepted that the loss is 700 MT there is no reason to take different view and accordingly the demand was confirmed.
The appellant filed an appeal before the CESTAT and seeks relief from the demand. This was in the year 2008.
None appeared on behalf of the appellant although hearing was fixed on more than five occasions. Therefore, the appeal was taken up for disposal.
The AR emphasis ed that once the appellant themselves claimed that the total loss of Sponge Iron due to fire is 700 MT, it attained finality and, therefore, appellant was required to reverse the CENVAT credit in respect of 700MT.
The Bench reproduced verbatim the findings of the adjudicating authority as well as the Commissioner (A) and thereafter observed -
"From the findings given by both the lower authorities, I am of the view that even though the appellant have declared that the quantity of loss is 700 MT but on the certificate by the Insurance surveyor it was found that the actual loss quantity is 547.982 MT. I do not find any reason that when the surveyor has correctly quantified the quantity of loss how can the same be brushed aside. It is also fact that it is not case of the Revenue that the remaining quantity of 152.018 MT (700 MT - 547.982 MT) has been disposed of otherwise. If it is accepted that the quantity of fire loss is 700 MT then there is no reason why the insurance surveyor reduced the quantity from 700 MT to 547.982 MT for the purpose of insurance. It shows that actual quantity of loss is 547.982 MT and remaining material is very much available in the factory of the appellant. It is observed that Central Excise department has not conducted any physical verification in order to justify that the actual loss is 700 MT and not 547.982 MT. On careful consideration of the findings given by the both the lower authorities, I find that adjudicating authority has correctly held that the quantity of 547.982 MT is the actual lost quantity and I do not agree with findings of the Ld. Commissioner (Appeals) that once the appellant declared 700 MT there is no reason to very the said quantity."
Holding that the order passed by the adjudicating authority is correct, the order-in-appeal was set aside and the appeal was allowed.
(See 2015-TIOL-557-CESTAT-MUM)
