By TIOL News Service

MUMBAI, FEB 20, 2018: THIS is a Revenue appeal directed against an O-in-A passed by the Commissioner of Central Excise (Appeals), Mumbai-II setting aside the O-in-A on the ground of limitation.

The facts are a fire broke out in respondent's factory on 22.03.2010 wherein certain raw material was destroyed. This was informed to the Police Department on 23.03.2010 by the respondent.

By their letter dated 09.04.2010, the respondent informed the Division office about the fire accident and that the fire had destroyed their machinery, inputs, partially processed inputs. A statement giving details of the goods destroyed in the fire was also submitted in which it was mentioned that the value of affected stock was Rs.4,93,995/- involving duty of Rs.51,631/- and the same was reversed on 13.04.2010.

It is the case of the department that before the Police Officer, the General Manager of the respondent had given a statement that raw material worth Rs.2crore were completely destroyed in the said fire. And, therefore, the respondent was liable to pay CE duty on the balance of Rs.1,95,06,005/- (Rs.2crores minus Rs.4,93,995) worth of the raw material that was destroyed.

SCN demanding duty of Rs.20,09,119/- culminated in to an adjudication order dated 24.11.2015.

Since the said order was set aside by the Commissioner(A), Revenue is aggrieved.

While reiterating the grounds of appeal, the AR submitted that the Commissioner (Appeals) had erred in setting aside the demand on time bar. It is informed that the respondent had provided all the information relating to the damaged goods only on 13.03.2015 and, therefore, the show-cause notice issued on 20.03.2015 is within the limitation of time.

The respondent submitted that the letter dated 09.04.2010 was a detailed one and, therefore, it cannot be said that there was any suppression.

The Bench adverted to this letter dated 09.04.2010 after reproducing a scanned copy the same observed thus –

++ From the above letter it can be seen that the respondent have given the details for damages, this communication was sufficient for the Revenue to investigate if they deemed fit to find out whether there is some more damages of inputs or other goods. However the Revenue has not taken any step to make any enquiry.

++ It is also noted that the respondent have not filed any claim for remission of duty, in that case, it was not obligatory on the part of the respondent to apply with the provision of remission of the duty.

++ It is noticed that after submission of the letter dated 09.04.2010 the Revenue started investigation only when the issue was raised in the Audit. In my view Revenue was not at all prevented from taking up any investigation immediately after receipt of the letter dated 09.04.2010.

++ In this fact, I do not find any suppression of fact on the part of the respondent. It is also fact on record that the respondent have not claimed any insurance claim which further shows that there is no actual damage of the raw material worth Rs. 2 crore. Merely on the basis of statement given by one of the employee of the respondent to the police the same cannot be taken as gospel truth regarding the actual quantum of damage.

++ The show-cause notice was issued almost after 5 years, therefore, there is no suppression of fact on the part of the respondent.

Concluding that the Commissioner (Appeals) had rightly set aside the demand on limitation, the Revenue appeal was dismissed.

(See 2018-TIOL-598-CESTAT-MUM)