By TIOL News Service

MUMBAI, DEC 13, 2017: THIS is a Revenue appeal against the order of the CCE, Belapur allowing remission of CE duty of Rs.65,07,746/- in respect finished goods that were destroyed in the Mumbai floods of July 2005. The respondent reversed the CENVATCredit on the inputs lying as such and also the inputs contained in the finished goods.

It is the claim of the Revenue that the remission had been wrongly allowed by the Commissioner since the goods were allegedly cleared without payment of any duty.

The respondent submitted –

+ That the charge of clearance of finished goods without payment of duty is based on the assumption.

+ That as regards the delay in filing the monthly ER-1 returns for the month of July 2005, since unprecedented torrential rain caused severe damages to the machinery, loss of finished goods, as well as inputs, their first priority was to revive the factory to its working condition and assimilate the records that were damaged and lost in the flood, therefore, the preparation and filing of ER-1 return got delayed which was not intentional and the same cannot be the reason for denial of remission.

+ Since the priority of the appellant was to overcome the trauma of heavy floods, they could not intimate the incidence of flood within twenty-four hours and this procedural aspect cannot come in the way of remission as the entire case of loss was taken up by the surveyor and the insurance company, which is a corroborative evidence recording loss of goods.

+ Regarding the charge that the respondent did not file FIR, it is submitted that this was not a case of theft, burglary, or looting and this is a natural disaster due to flood, therefore, there was no need to file FIR.

+ Regarding the ground that the respondent was not entitled to write off the quantity of loss of goods in floods, it is submitted that once the claim was made before the insurance agency, if the goods are lost or destroyed in flood, the goods are not existing and it has to be written off in the books of accounts. Writing off quantity of goods in the books is nothing to do with the Central Excise liability.

+ The quantity of loss of goods shown in ER-1 return is correct as the same was derived from the surveyors report and on the basis of which the insurance company settled their claim of Rs.15,51,91,320/-.

+ Allegations made in the grounds of appeal are not supported by any independent evidence andare, therefore, superfluous since based on assumption and presumption.

The Bench considered the submissions made and after extracting paragraphs 8 to 12 of the impugned order, observed –

"4.1 …, it is observed that the Commissioner has relied upon the surveyors report and the insurance claim made with the insurance company M/s. Cholamandalam M.S. General Insurance Co. Ld., wherein the insurance company has settled the total claim of Rs.15,51,91,320/- against the claim of the appellant for remission of duty on the destroyed goods. Evidence of surveyors report and the insurance company is conclusive, the department has no iota of evidence to rebut the claim of the respondent or to rebut the sanction of the insurance claim by the insurance company. The grounds made by the revenue in the appeal are indeed superfluous, which is neither flowing from the show-cause notice or from the adjudication order. There is no supportive evidence to the grounds made in the Revenues appeal…."

Concluding that there is no reason to interfere with the impugned order, the same was upheld and the Revenue appeal was dismissed.

(See 2017-TIOL-4379-CESTAT-MUM)