2026-VIL-1091-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Remission of Central Excise Duty for Inevitable Manufacturing Losses – Appellant-manufacturer of pig iron discovered a shortage of pig iron during physical stock verification conducted after the blast furnace shut down, representing an accumulated loss of 0.55% against total production over eleven years – Appellant applied for remission of duty under Rule 21 of the Central Excise Rules, 2002, contending that the shortage resulted from inevitable and irrecoverable handling losses during the manufacturing process – Dept rejected the remission application, reasoning that the loss was not attributable to natural causes and that the manufacturer ought to have undertaken timely stock-taking - Whether inevitable and irrecoverable handling and process losses occurring before removal of goods qualify for remission under Rule 21 of the Central Excise Rules, 2002 – HELD - The Rule 21 empowers remission where goods are lost or destroyed by natural causes or unavoidable accident before removal. The expressions "natural causes" and "unavoidable accident" must be given a reasonable and liberal meaning to include inevitable, irrecoverable handling and process losses inherent to manufacturing, not confined to catastrophic events alone. The generation of pig iron chips, dust and dross is an inevitable consequence of pig iron manufacturing, and the loss of 0.55% is well within the Board's prescribed condonable limit of 2%, which constitutes binding instructions that the Revenue authority cannot ignore – Further, the Commissioner erred in referring to the erstwhile Rule 223A of the Central Excise Rules, 1944, when the application was expressly made under Rule 21 of the Central Excise Rules, 2002, the operative provision. The Commissioner was bound to allow remission since the inevitability and irrecoverable character of the loss remained undisputed and the loss fell squarely within the remissory ambit of Rule 21 - The Commissioner's order rejecting the remission application is set aside, entitling the appellant to remission of central excise duty on the shortage – The appeal is allowed
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