2007 (10) TMI 72 - AT - Central Excise

Rule 21 Remission of duty on goods found unfit for use Goods removed for export but could not be exported and returned back to factory Therefore those goods found unfit, remission of duty is allowed

Summary

Issues:
Remission of duty against a consignment of pharmaceutical products due to cancellation by the customer. Interpretation of Rule 21 of Central Excise Rules, 2002 regarding remission application. Goods cleared for export under Bond but not exported due to quality issues.

Analysis:

1. The case involved a dispute regarding the remission of duty against a consignment of pharmaceutical products that were cleared for export but returned due to being found not marketable. The adjudicating authority rejected the remission application, stating that the condition of Rule 21 of Central Excise Rules, 2002 was not fulfilled.

2. The appellant argued that goods cleared for export but not actually exported should not be considered as cleared for home consumption and should be entitled to remission. They cited a previous Tribunal decision in the case of Kuntal Granites Ltd. v. CCE, Bangalore to support their position.

3. The respondent, on the other hand, contended that the appellants had removed the goods under Bond under Rule 21 of Central Excise Rules, 2002, but failed to fulfill the conditions, making the remission application invalid. They relied on the decision in the case of Ginni Filaments Ltd. v. CCE, Lucknow.

4. Upon considering the submissions and records, the Tribunal found that the goods were initially cleared for export under Bond but could not be exported due to quality issues. The Tribunal referred to the case of Kuntal Granites Ltd. and highlighted that when goods are removed for export but not presented to customs due to unavoidable reasons, they are not deemed to have been removed for sale. The Tribunal distinguished this case from the decision in Ginni Filaments Ltd.

5. The Tribunal, following the decision in Kuntal Granites Ltd., set aside the impugned order and allowed the appeal, providing consequential relief if necessary. The judgment emphasized the distinction between removal for export and actual completion of the export process, as per the provisions of the Central Excise Act.

In conclusion, the Tribunal's judgment clarified the application of Rule 21 of Central Excise Rules, 2002 in cases where goods cleared for export under Bond are not actually exported due to quality issues. The decision in Kuntal Granites Ltd. was pivotal in determining that such goods should not be considered as cleared for home consumption, entitling the appellant to remission of duty.