2008 (4) TMI 636 - AT - Central Excise

Demand - waiver of pre-deposit - Held that - It is not on record as to why permission was withheld and what was the reason for the revenue to direct the appellant to further await permission instead of granting the same. There is no explanation from the revenue as to why a period of almost 2 years was considered to be insufficient for the revenue authorities for grant of permission to destroy admittedly, the expired medicines. In any case, we find that there is no dispute as regards the destruction, which was carried out in the presence of the Food and Drugs Authorities and under their directions, the appellant cannot be held liable for delay on the part of the revenue s action - appeal allowed.

Summary

Issues:
1. Duty liability on destruction of expired medicines without specific permission under Central Excise law.

Analysis:
The case involved the appellants engaged in the manufacture of P & P medicine. A portion of their stock of medicines crossed the expiry period and were deemed unsaleable as per Drug Rules. The appellants sought permission for destruction of the expired medicines, which were ultimately destroyed in the presence of FDA without waiting for specific permission from the Central Excise officer. The dispute arose as duty was demanded on the grounds that the destruction occurred without proper authorization under the Central Excise law.

The lower authorities acknowledged that the expired drugs were not fit for human consumption and were destroyed in the presence of FDA. However, they contended that duty liability existed as the appellants proceeded with destruction despite not receiving specific permission from the competent authority. The Deputy Commissioner had explicitly directed the appellants not to destroy the goods until permission was granted, emphasizing that the destruction without authorization constituted a violation of the law.

The Tribunal found it perplexing that despite the appellants' application for destruction dating back to 1999, permission was not granted until September 2001. The Revenue directed the appellants to await further permission, raising questions about the delay and lack of explanation for withholding authorization. The Tribunal noted that the destruction was conducted in the presence of Food and Drugs Authorities, under their guidance, and concluded that the appellants could not be held accountable for the delay caused by the Revenue's inaction. Consequently, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellants.