CCE DELHI Vs. M/S ELOFIC INDUSTRIES LTD.

JUDGEMENT

(1.) REVENUE came in appeal against the order passed by the ld. Commissioner on 8.4.2004 consequent upon review made by the board having the view that the Adjudicating Authority has committed an error holding that the assessee is required to reverse the Modvat credit involved on the inputs used in the manufacture of goods destroyed by fire. Such a review was communicated by an order dated 6.4.2005. After filing of the appeal by Revenue, the Larger Bench in the case of Grasim Industries Vs. CCE reported in 2007 (208) ELT 336 (Tri. -LB) on 7.8.06, was of the view that no reversal of the Cenvat credit account is desirable in respect of accident. Decision of the Larger Bench in the said judgment appearing at para -7 reads as under : - We find that reading of Rule 49 of Central Excise Rules, 1944 and Rule 21 of Central Excise Rules, 2002 which provides for remission of duty in respect of goods lost or destroyed by natural cause or by unavoidable accidents or in case goods become unfit for consumption or for marketing at any time before removal does not provide reversal of credit in respect of inputs used in the manufacture of such goods. The Modvat rules prohibits the credit of duty paid in respect of the inputs which are used in the manufacture of exempted goods or which are chargeable to nil rate of duty. The Tribunal in both the cases, that is Mafatlal Industries (supra) and in the case of Inalsa Ltd. (supra) held that in case the goods were destroyed due to natural cause or by unavoidable accident during handling or storage, cannot be equated with exemption to goods and the inputs can be considered to have been put to intended use for manufacture of the final product. Reading of rules under which remission is granted in respect of goods which were lost or destroyed by natural cause or by natural accident, does not provide any condition regarding reversal of credit taken in respect of inputs used on such goods, hence we are unable to support the view taken in the case of Mafatlal Industries (supra) whereby it has been held that assessee has to reverse the credit taken of inputs used in such goods on which remission is granted. Therefore, we approve the view of the Tribunal taken in the case of Inalsa Ltd. (supra) in this regard. The issue to the Larger Bench is answered in the above terms and the matter be placed before the Regular Bench

(2.) LD . DR Shri Anil Khanna supports the view of the Board and prays for reversal of the order passed by the ld. Commissioner.

(3.) SHRI Handa learned Consultant supports the order of the ld. Commissioner placing the Larger Bench decision of the aforesaid order.