Vehicle accident in transit (duty reversal)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2014 Dear Expert ,

If we are remove the Excisable goods and accident of that material in trasit withouth reach at customer end partly material damage in that condition what to do about duty charge?How to take reverse?

Arun Kumar Singh

Arun Kumar Singh (Expert)
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05 January 2014 Duty cannot be reversed if goods have been lost after removal from the factory.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

14 January 2014 Thanks Sir ,

It means i have bear it.though its payment not received from anybody do the payment to central excise.

pl explain

Thanks ,

Sandip

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 You're dealing with a common but unfortunate situation in Central Excise: excise-paid goods destroyed in transit before reaching the customer. Here's a clear explanation based on Excise law as it stood before GST (especially around 2014):
📌 Your Scenario Recap:
Excisable goods were cleared from the factory on payment of duty.
During transit, an accident occurred, and the goods were partly damaged or destroyed.
Buyer has not received the goods, and you have not received payment.
You're asking: Can you reverse the duty paid?
❌ Duty Cannot Be Reversed After Removal
This is the settled position under Central Excise law.
📘 Rule:
Under Central Excise, duty is payable at the time of removal from the factory, regardless of:
Whether the goods reach the buyer,
Whether payment is received,
Whether goods are damaged/lost in transit.
This position was confirmed in several cases and CBEC circulars.
🧾 Reference Case Law:
CCE v. Rupa & Co. Ltd. – 2004 (167) ELT 271 (Tri.-Chennai)
Duty cannot be reversed for goods destroyed in transit after removal from the factory.
CCE v. Texmaco Ltd. – 2004 (167) ELT 360 (Tri.-Kolkata)
Liability to duty arises once goods are removed; subsequent destruction in transit is not relevant for duty reversal.
🚫 No Remission Allowed in Transit Losses
📘 Rule 21 of Central Excise Rules, 2002 – Remission of duty:
Allows remission only for goods lost or destroyed before removal, not after.
✅ What You Can Do (Options):
Insurance Claim:
If goods were insured during transit, you may recover the cost and excise duty portion from insurance.
Ensure your insurance policy covers excise-paid goods in transit.
Buyer Rejection / Return (if any goods are salvaged):
If partly damaged goods are returned to you:
You may take CENVAT credit on the returned goods (if they are excisable and received back within 180 days).
You must maintain documentation like return challan, gate entry, etc.
Write-off in Accounts:
The loss and duty paid can be accounted as business loss in your books.
❗ What You Cannot Do:
You cannot reverse the duty or seek refund just because the goods were damaged in transit.
There is no remission available under Rule 21 for post-removal losses.
✅ Summary:
Point Position
Can you reverse excise duty paid on goods lost/damaged in transit? ❌ No
Can you claim remission under Rule 21? ❌ No – only applies before removal
Can you claim insurance? ✅ Yes, if policy covers excise-paid goods
Can you get credit if goods are returned? ✅ Possibly, if conditions met

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