- (1.) We have heard Sri B.K.S. Raghuvanshi for the appellant-department. Sri Nishant Mishra appears for the respondent-assessee. This Central Excise Appeal under Section 35G(2) of the Central Excise Act 1944, was admitted for hearing on the following substantial questions of law:- (a) Whether inputs damaged in fire could be considered as inputs not used in the manufacture of final products and accordingly duty involved on such inputs liable to be recovered? (b) Whether summary disposal by the Appellate Authority without going into the merit of the case could be considered a proper and legal order? (c) Whether credit available on capital goods, which were damaged in fire and could not be installed, liable to be recovered in view of the specific provision of sub-rule (7) of Rule 57Q of the erstwhile Central Excise Rules, 1944?
(2.) A demand was raised on the basis of two show cause notices dated 16-1-1988 and 9-2-1998, pertaining to fire accident took place on 18-7-1997 and 24-1-1997, for recovery/reversal of Modvat credit amounting to Rs. 69,15,016/- and Rs. 95,04,020/- respectively. The Assistant Commissioner, Central Excise Div. III, Ghaziabad, dropped the demand to the tune of Rs. 66,37,590/- and 86,49,445.86.
(3.) The Department filed the appeals on the ground that the Adjudicating Authority has worked out the amount of Modvat credit on the basis of insurance claim filed by the respondent, without mentioning as to the admissibility/correctness of the same; the Adjudicating Authority had accepted the case of respondent on hypothetical submission, instead of checking out authenticity of the demand, and that no effort was made by the Adjudicating Authority to ascertain whether the materials were actually issued for manufacture or not. It was also pleaded before the Appellate Authority that the Adjudicating Authority has not verified the excise records relating to imported goods on which countervailing duty had been paid.;