2016 (9) TMI 1233 - AT - Central Excise

Seeking destruction of cigarettes and remission of duty thereupon - Notification issued by Ministry of Health & Welfare requiring adherence of specified pictorial warning on the retail packages as an essential condition of marketing - goods reached their date of expiry as per industrial standard as the Central Excise Authorities did not permit the appellant for slitting of 457 cardboard boxes containing 5482200 cigarettes so as to repack said cigarettes into retail packages having specific warning. Held that - due to issue of Notification dated 03.5.2009 it became mandatory that at least 40% of the principal display area of the front panel of the pack was required to have specified health warnings. The impugned goods were packed much before the issue of said Notification. Rules 21 of Central Excise Rules, 2002, provide that Commissioner is empowered to remit duty payable on goods which are claimed by a manufacture as unfit for marketing at any time before removal. We find that impugned order rejecting such permission is not tenable in law. We, therefore, allow appellant s application dated 14/4/2011 filed before Commissioner Central Excise, Ghaziabad, for remission of duty of ₹ 54,71,419.74 and allow destruction of 548200 cigarettes referred to earlier and direct the Commissioner Central Excise, Ghaziabad to ensure destruction of said cigarettes by following procedure provided by law for the time being in face for such destruction. - Decided in favour of appellant

Summary

Issues:
Appeal against rejection of permission for repacking and remission of duty under Rule 21 of Central Excise Rules, 2002.

Detailed Analysis:

1. Background and Request for Repacking:
The appellant, engaged in cigarette manufacturing, sought permission to repack cigarettes due to non-compliance with specified pictorial warning requirements post-packing. The initial request for slitting and repacking of cigarettes was denied, leading to subsequent applications for destruction and remission of duty under Rule 21 of Central Excise Rules, 2002.

2. Commissioner's Rejection and Appellant's Contention:
The Commissioner rejected the applications based on a verification report indicating discrepancies in the stock presented by the appellant. The appellant argued that no clarification was sought regarding perceived discrepancies, highlighting that the goods had expired as per industrial standards and were not marketable due to non-compliance with the notification requirements.

3. Appellate Tribunal's Decision:
Upon review, the Tribunal noted that the goods were packed before the issuance of the notification mandating specific health warnings on cigarette packs. Rule 21 of Central Excise Rules, 2002, empowers the Commissioner to remit duty on goods deemed unfit for marketing before removal. The Tribunal found the rejection of permission for remission untenable in law and allowed the appellant's application for remission of duty and destruction of the cigarettes, directing the Commissioner to ensure proper destruction following legal procedures.

4. Conclusion:
The Tribunal upheld the appellant's appeal, granting remission of duty amounting to &8377; 54,71,419.74 and permitting the destruction of the non-compliant cigarettes. The decision emphasized the legal provisions allowing remission in cases of goods unfit for marketing, despite the initial denial of permission by the Commissioner.

This detailed analysis encapsulates the legal proceedings, arguments, and the Tribunal's decision regarding the appeal against the rejection of repacking permission and duty remission under Rule 21 of the Central Excise Rules, 2002.