COMMISSIONER OF CENTRAL EXCISE Vs. AAGOSH POLY FOAM

JUDGEMENT

(1.) The Revenue has impugned the order (Annexure A-3) passed by the Customs, Excise and Service Tax Tribunal (for short 'the Tribunal') vide which the appeal filed by the Department was dismissed and the respondents was held entitled to claim Cenvat credit on the finished/semifinished goods which were destroyed in a fire.

(2.) The respondent is engaged in manufacture of Polyurethane Foam and articles thereof falling under Chapter 39 of the Central Excise Tariff Act, 1985. They had been availing of the benefit of Modvat/Cenvat credit on duty paid input materials received in their factory for used of the manufacture of final product. On 20.1.1999, a major fire broke out in the factory premises of the respondent in which finished as well as semi-finished goods were destroyed. The respondent availed of the Cenvat credit on the inputs which were used in the manufacture of goods which were destroyed in fire. However, a show cause notice was issued by the adjudicating authority wherein the respondent was asked to refund back the Cenvat credit availed by them on the ground that as the final product was never sold, hence, they were entitled to claim Cenvat credit.

(3.) The adjudicating authority decided the show cause notice in favour of the Revenue and against the assessee. In appeal, the Commissioner (Appeals), however, set aside the order passed by the adjudicating authority and held that as the inputs were destroyed in the fire, which fact was not disputed by the Department, therefore, the manufacturer was entitled to avail of Cenvat credit under the provisions of Rules under Central Excise Rules, 1944. It was thus, held that Cenvat credit has rightly been claimed by the manufacturer.