- (1.) The appeal by the Revenue arises from a decision of the Customs, Excise and Service Tax Appellate Tribunal dated 25 November 2013. The Revenue has formulated the following questions of law :- "(i) Whether, it was correct and proper for the CESTAT to hold that the fire having been caused in respondents factory on account of electric short circuiting, was covered by expression "unavoidable accident" for the purpose of remission of excise duty. (ii) Whether, it was correct and proper for the CESTAT to hold that the assessee was not required to reverse the credit in respect of raw materials consumed."
(2.) The assessee carries on the business of manufacturing footwear which falls under Chapter 64 of the Central Excise Tariff Act, 1985. A fire occurred in its factory on 2 June 2004 during the course of which, the stored raw materials and semi finished goods as well as finished goods were destroyed. The Central Excise Authorities were intimated on 3 June 2004 and the Range Excise Officer conducted a site survey on 4 June 2004. The assessee filed a remission application under rule 21 of the Central Excise Rules, 2002 on 30 May 2005 for seeking a remission of excise duty of Rs.8.85 lacs in respect of goods in process and Rs.5.12 lacs in respect of finished goods which were destroyed in the fire. The Assistant Commissioner by a letter dated 1 August 2005 recommended the rejection of the remission application on the ground that the assessee had not reversed the credit involved on the inputs which were contained in the finished goods which had been destroyed and that under rule 21, remission of duty was contemplated only on the finished goods and not on semi finished goods. In a report dated 7 February 2006, the Assistant Commissioner stated that the assessee had informed of the fire which had taken place within 24 hours of its occurrence; the insurance claim alleged by the assessee did not include the excise duty element on the destroyed goods; the quantity of destroyed goods was verifiable on the basis of records; the documents enclosed with the remission application appear to be correct; and that the accident of fire had occurred due to short circuit. The report of the Chief Fire Officer dated 18 June 2004 also noted that the fire had occurred on account of a short circuit due to overheating of cables.
(3.) A notice to show cause was issued to the assessee on 25 April 2006 proposing to reject the application for remission of duty. The Adjudicating Officer held that a fire on account of short circuit did not fall within the purview of the expressions "natural cause" or "unavoidable accident" under rule 21. Moreover, it was stated that on a previous occasion, a fire had broken out in the factory of job workers in 2002 due to a short circuit. The Adjudicating Officer rejected the remission application on the ground that the assessee had not reversed the Cenvat credit involved in the raw materials contained in the final product. In respect of the semi finished goods, the Adjudicating Officer observed that they had not attained a marketable status and, hence, remission was not warranted.;