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Issues:
Classification of product under Central Excise Tariff, exemption from Excise Duty, destruction of unsold stock, issuance of show cause notice for destruction without permission, applicability of Rule 49 of Central Excise Rules, jurisdiction to challenge show cause notice in writ petition, interpretation of duty on goods unfit for human consumption. Analysis: 1. The petitioners, manufacturers of 'Soya Milk Great Shake,' faced a dispute regarding the product's classification under Central Excise Tariff and exemption from Excise Duty. They ceased manufacturing the product due to the controversy but possessed unsold stock deemed unfit for human consumption, leading them to seek permission for its destruction from the Excise Authorities. 2. Despite informing the authorities of the stock's condition and intention to destroy it, the petitioners faced delays and objections. Eventually, they destroyed the stock after repeated attempts to involve the Department in the process. The authorities only became active post-destruction, issuing a show cause notice alleging unauthorized destruction without supervision. 3. The petitioners argued that goods unfit for consumption should not attract Excise Duty, citing the Supreme Court's decision and Rule 49(1) of the Central Excise Rules. They contended that their actions were in compliance with the rules, as they had informed the Department beforehand and awaited a response before destruction. 4. The High Court scrutinized the Department's inaction and the petitioners' proactive communication regarding the stock's condition and intended destruction. It found the Department's delayed response unjust and ruled in favor of the petitioners, quashing the show cause notice and restraining the authorities from imposing duty or penalty on the destroyed stock. 5. The Court emphasized the petitioners' bona fide intentions, compliance with relevant rules, and the Department's failure to timely engage in the matter. It concluded that the Department could not claim duty or penalty post-destruction, considering the circumstances and the petitioners' efforts to involve the authorities throughout the process. 6. The judgment highlighted the importance of fairness and adherence to procedural requirements, ultimately allowing the petition and ordering the refund of any security deposit. The ruling underscored the petitioners' legitimate expectation of exemption from duty due to the goods' unsuitability for human consumption. Conclusion: The High Court's decision favored the petitioners, emphasizing procedural compliance, the Department's delayed response, and the goods' unsuitability for human consumption as grounds to quash the show cause notice and prevent duty or penalty imposition on the destroyed stock.
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