2010 (9) TMI 395 - AT - Central Excise

Demand - destruction of old, not fit for consumption goods - prior to destruction of the contents of 198 drums, no opportunity was given to the Department to verify the quality of the contents of the product contained in the said 198 drums - no infirmity in the impugned order confirming the demand in relation to the duty pertaining to the product contained in 198 drums Appeal is dismissed

Summary

Issues:
1. Appeal against Order of Commissioner (Appeals) partially allowing appeal filed by the appellant.
2. Duty liability on spoiled contents of fruit pulp/concentrate received by the appellant.
3. Justification for demanding duty on contents of drums claimed to be destroyed by the appellant.
4. Failure to inform the authority about the need for destruction of certain drums.
5. Verification of the quality of contents of drums prior to destruction.

Analysis:
1. The appeal in question arose from the Order dated 1-8-2007 passed by the Commissioner (Appeals), Guntur, partially allowing the appeal filed by the appellant against the order of the Adjudicating Authority. The Commissioner (Appeals) had confirmed the duty liability in relation to 198 drums of fruit pulp/concentrate along with interest and penalty imposed accordingly.

2. The appellant, a manufacturer of Fruit Pulp/Concentrate under Chapter sub-heading 2001.10 of the Central Excise Tariff Act, 1985, had shifted their factory and received 739 drums of old finished goods, out of which 566 drums were found to be spoiled and unfit for human consumption. The appellant sought permission for destruction of the products and informed the Department about the need to destroy 737 drums. Subsequently, they informed about the destruction of 935 drums, including 198 drums received in April 2004, leading to duty recovery proceedings.

3. The appellant argued that once the destruction of 935 drums, including 198 drums, was confirmed, there was no justification for demanding duty on the contents of the 198 drums. The appellant contended that the fact of destruction implied the contents were deteriorated and not fit for human consumption, hence no duty confirmation was warranted.

4. However, the Department contended that the appellant failed to provide proof of the deterioration of the contents of the 198 drums. The Tribunal noted that the appellant did not inform the Department about the need to destroy the 198 drums received in April 2004 until after the destruction of all drums. This lack of prior information deprived the Department of the opportunity to verify the quality of the contents of these specific drums.

5. The Tribunal found no fault in the impugned order confirming the duty demand in relation to the product contained in the 198 drums. The failure to inform the authority about the need for destruction of these drums prior to the actual destruction led to the dismissal of the appeal. Consequently, the appeal was dismissed based on the undisputed facts and lack of opportunity for verification before destruction.

This detailed analysis highlights the key issues, arguments presented, and the Tribunal's decision based on the facts and legal principles involved in the case.